There is a compelling argument that the boating industry is poised for increased demand and success over the coming years. A quick review of the key economic data provides the key indicators for increasing consumer confidence and spending. As an example, the economy grew 3.1 per cent over the last year and productivity was up 3.3 per cent. Household spending has continued to rise and one sector (new cars) saw a rise of 6.6 per cent. When these are considered in combination with low inflation, low unemployment and stable low interest rates there is certainly an economic framework that promotes growth and spending.
So what are the factors that influence someone to buy a boat for recreation? Discretional spending relies on desire, confidence and perception. The past few years have made purchasers conservative however confidence and self perception of wealth are continuing to rise based on the following key factors:
Income security – Low unemployment, economic growth and low inflation promote stability in the labour market increasing job security. Importantly, there is limited capacity in the labour market to absorb growth so there is potential of labour shortages ahead.
Perception of wealth is affected by real estate prices and the stock market whilst real estate in the major capital cities has shown modest growth in recent years the Australian stock market is up 50 per cent from the lows of 2009 having a significant effect on investments and super funds. However, tightened banking conditions over recent years have limited the supply of residential real estate leading to a potential for pent up demand and associated future price rises. This is starting to manifest itself with Auction clearance rates up significantly on the same time last year.
Taking all this into account, the future for consumer sentiment and spending is bright. But what do the buyers want? Our biggest competition remains alternative forms of recreation, whether, for example, that be overseas holidays or caravanning. It is up to all of us to position boating as the preferred affordable recreation choice. One thing is for sure, consumers won’t be looking for what they have already had. That is, we need to deliver new products, new ownership options and new lifestyle choices to meet the changing market. We need to find new ways to engage with kids in boating, to encourage families and to provide pathways for older Australians (the largest growth sector) to get into boating.
There will always be winners and losers. The high Australian dollar has certainly created opportunities for importers and headaches for exporters. For the consumer, there has never been a cheaper time to buy a boat, new or second hand as business models adapt to the new world. This has forced often painful changes within the industry. Without downplaying the significance of this to individual business, this is the commercial reality of changing economic circumstances. What will be interesting to see is which businesses adapt to fill the areas of demand and opportunity in the market as it grows over the coming years, as it inevitably will.
As we head into the boat show season we will see the continuing trend for the shows to be more than just a place to see and buy a boat. Greater emphasis on festival style entertainment and lifestyle is the key to greater engagement. It’s all about the lifestyle and a sense of belonging within the friendly boating community, and after all, the boat is just the tool to deliver the lifestyle. Interestingly, much of the promotion of boating and boating products still feature the product as the hero. In my view, this is a mistake, as the key motivators are the outcomes that boating provides whether it be better fishing, the adrenaline of tow sports or relaxing with friends and family in locations you can only access by boat.
There needs to be industry wide collaboration to set the boating lifestyle apart from its competition. The marine13 Conference in Sydney in April this year provides the opportunity for participants from all sectors of the industry to come together and set the direction for the industry for years to come through the sharing of ideas, information and inspiration. With over 60 speakers committed to present over two days there is an unprecedented opportunity to learn from the experience of others and put new ideas into practice in our own business lives.
The glass is half-full and there is reason to be optimistic about the future prospects of the boating industry in Australia. The economic framework is right, the financial capacity and wealth has returned and consumer confidence is on the rise. After years of uncertainty, we are six months away from the federal election that will, hopefully, deliver political certainty, notwithstanding the result and lead us into a period of confidence and prosperity that will make the Spring and Summer of 2013 a time of record sales and activity. Only if we believe this is truly possible, and put all of our effort into achieving this goal, will we have a chance of making it a reality.