September '18

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150 • RV PRO • September 2018 rv-pro.com B U S I N E S S Scouting RVs in a 'Wild West' Environment Certainly, there's a history of common issues with shows and OEMs. For example, dealers have long struggled with deep model year rollouts. OEMs run a new model year while the prior year is still rolling off the line. The RV industry has never made the transition from a push inventory to a pull inventory like the auto industry. Our inventory is pushed by what the OEM is building – rather that what is being bought at the retail level (the pull). I've always believed that this is because the OEMs tend to look at the dealers as their end customer. That would change if the OEMs were more focused on a product meeting the needs of end cus- tomers – rather than what they think will move onto the dealer lots. Of course, dealers don't have fran- chises. Mind you, I'm not advocating for them. I'm only saying that the mindset would change. It's unclear to me if that would be for the better. As it is currently, with 130 plus brands, we have a Wild West environ- ment – and the dealers are the cowboys. Granted, it gives the dealers a lot of freedom to move between brands. That should help to drive a better product. However, dealers don't always buy the best products. Sometimes selections are made only to fill a gap in product lines. Sometimes it's to prevent a competitor acquiring a particular line. And sometimes it seems to be based on a dealer's gut feeling. Use Your Head – Not Your Heart Whatever the case, it seems to be that decisions should be based in fact – not emotion. The proper stocking in type and inventory levels must be a balance of many factors to help you to become suc- cessful. Successful dealers seem to fall into two distinct camps, which I'll cover in a bit. For now, let's think about the critical importance of the proper balance. Obviously, your balance must fall to the proper point of having either too much or too little. Having too much puts you at a financial disadvantage in paying too much overhead and floor- plan expenses. What's more, dealers with too much inventory tend to end up with aged units. Once that model year rolls around, those older units get even harder to move. What's more, the sales staff starts to walk around them because the units quickly become stale. Having too little and you'll miss sales because the unit the customer is looking for is on someone else's lot. Not every customer will wait for an ordered unit. That seems to be truer these days, as low inventory causes you to miss sales. There's also a balance in having the right inventory. You can have a reasonable amount of the wrong product. Maybe fifth wheels aren't selling in your market. Or maybe motorized is dropping off. Personally, I've heard discussion recently in 20 Group meetings that some dealers are backing out of motorized because they are remembering when the bottom fell out of the market in 2008. As another twist, you can have the wrong amount of money in your used product. In the end, what counts for the actual cash value (ACV) must be derived from the value at which that unit will be sold. No other factor really counts. Your sales manager should know, without a doubt, what the market is for each piece taken in on trade. Don't fall into the trap of buying new unit deals by overpricing used ACVs. What Is Your Stocking 'Identity?' Some dealers carry a full line. Others are "towable only" dealers. I know of several dealers who move between the two. The dealer carrying only motorized is rarely encountered these days. As long as we're thinking about inven- tory structures, it bears mentioning that we now have mega-dealers that may not carry a brand in your particular market, but that are willing make it avail- able through another store. I hear less these days about OEMs planting clone product next door to saturate a market. In any event, it's a matter for serious deliberation when considering what types and brands to carry. It takes rea- soned analysis and a clear understanding of the local market and competition. Like I mention earlier, those decisions should be made on fact – not feeling. Alas, emotional purchases usually come with pain in the end. Planning, buying and setting up stocking levels for inventory during Open House is a matter that is both strategic and tactical. Getting balance in those multiple factors is a key. Buy Only with Logic Dealers shouldn't make emotional buying decisions. Instead, they should sell on emotion but buy on cold hard fact-based logic. It is important to recognize that the reps for the manufacturers are selling, much of which is naturally based on emotions. It goes something like this: "You need to carry this or someone else will" (intended to create a fear of missing out). Or "It's a very appealing product for your customers" (appealing to the desire to have customers who are pleased). And the close will be similar: "In order to carry this line, you'll need to stock at this spe- cific level." Remember that, with rare exceptions, a deal is a deal because it is good for the seller. Otherwise, they wouldn't offer it. It is still up to you, as the buyer, to decide if the deal fits your plan and needs. A Specific Amount to Spend Planning, buying and setting up stocking levels for inventory before Open House is a matter that is both strategic and tactical. So, what's the best way to handle the balancing act? Most successful dealers I've seen over the years in managing inventory fall into two camps. The first of those camps – and by far the largest – is governed by available funds. It's in two basic categories: 1. How much of your own money will you put at risk in inventory? 2. How much can you raise from other people's money to put at risk in inventory?

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