EDITOR’S NOTE

By Robin Hartfiel

DID 2020 REALLY GO UP IN SMOKE?

As I write this on 4/20 Day, the second hand smoke had me curious as to how high the dirtbike sales were last year... and if they will be high enough to continue carrying the market past the pandemic? How did powersports fare compared to the ‘real’ world and how can we keep the momentum going despite the supply chain problems? Is NORML the new normal... And where are those Doritos? (Just kidding, no dope was smoked in the making of this column and I don’t really have the munchies).

Actually, the National Retail Federation (NRF) says holiday sales were high and 2020 closed with a buzz. “Retail sales during the 2020’s November/December holiday season grew unexpectedly to a high of 8.3% over the same period in 2019... up to $789.4 billion, exceeding NRF holiday forecast despite the economic challenges of the Coronavirus pandemic,” NRF said. The numbers include online and other non-stores sales, which were up 23.9% at $209 billion. For the powersports industry it seems like this high has continued through Q1, despite increasing inventory issues on both the OEM and aftermarket side.

“Despite unprecedented challenges, consumers and retailers demonstrated incredible resilience this holiday season,” explains NRF President and CEO Matthew Shay. “Faced with the rising transmission of the virus, state restrictions on retailers and heightened political and economic uncertainty, consumers chose to spend on gifts that lifted the spirits of their families and friends and provided a sense of normalcy given the challenging year.” NRF Chief Economist Jack Kleinhenz adds consumers shifted into high gear in December, giving the holiday season a strong finish. The 8.3% holiday season increase was more than double the 3.5% average holiday increase over the previous five years, including 2019’s 4% gain.

“There was a massive boost to most consumer wallets this past holiday season,” Kleinhenz claims. “Consumers were able to splurge on holiday gifts because of increased money in their bank accounts from the stimulus payments they received earlier in the year and the money they saved by not traveling, dining out or attending entertainment events.

“Some families are still struggling, as are some retail sectors, but the promise of a new round of stimulus checks after a deal was struck before Christmas helped increase consumer confidence. Consumers were also encouraged by the news of COVID-19 vaccines becoming available, which helped offset concerns about increased infection rates and state restrictions on activity.”

NRF had forecast that sales during the 2020 holiday season — defined as November 1 through December 31 — would increase between 3.6% and 5.2% over 2019 to a total between $755.3 billion and $766.7 billion. Instead, sales were up 8.3%! The forecast called for online sales to increase between 20% and 30% to between $202.5 billion and $218.4 billion. These numbers excluded automobile dealers, gasoline stations and restaurants… and we already saw how the powersports market responded in 2020 and early Q1.

Our own Dr. Leinberger adds that we are facing an inflection point. These holiday numbers could be the gift that keeps on giving throughout 2021. “Pent-up demand is driving much of the optimism. Many venture capitalist firms expect consumer spending to explode in the coming months. As consumers emerge from their cocoons, VC firms expect consumers to let loose this summer as we are about to experience the next “Roaring Twenties.”

But be careful what you ask for, he cautions. “There is a danger that consumer spending might shift away from powersports and towards categories where pent-up demand is the strongest – like travel, restaurants, bars, nightclubs, live entertainment, fashion and selected retail. I am not predicting such a scenario, but if the data suggests a shift in that direction, you need to be ready to take decisive action. Alternatively, if the economy expands dramatically and powersports sales follow suit, you need to be sure that the supply chain issues that developed in 2020 will never happen again.”

Supply shortages, the Suez shipping SNAFU and inventory issues are seemingly bigger limitations than consumer demand for powersports products. While it is not exactly the time for a chorus of “Don’t Worry, Be Happy” it is time to step up and meet the demand. “Whatever the future brings, the message remains the same: change brings opportunity if you are ready to act decisively when circumstances change,” concludes Leinberger.

Put that in your pipe and smoke it!

Former Editor-in-Chief and publisher of Dealernews circa 19902003, Robin returns to the magazine. In addition to having been instrumental in creating the Dealernews Top 100 program (still the industry’s ultimate accolade for a motorcycle dealership), Hartfiel has worked for most of the B2B publications in the Powersports arena. Prior to the trade side, he worked as a beat reporter for a local newspaper and was an editor of publications ranging from All About Beer to VW Trends.