RETAIL PULSE Features Dixie RV Superstore
While it puts plenty of Americans to the financial test, the Great Recession should enhance the profitability of RV industry survivors, maintains Crosby Lane Forrest, vice president and managing partner of Dixie RV Superstore in Newport News, Va.
“The downturn has made the industry leaner and will make it a more profitable center for everybody (survivors) from manufacturers down to dealers and service centers,” said Forrest, whose dealership is mapping expansion plans. “They’ve all tightened their belts and looked and clawed and searched for ways to stretch a dollar and produce income, and those lessons will not be easily forgotten.”
With the recession having trimmed down the industry’s “fat,” Forrest now sees RVs in an up trend and, consequently, is planning to add new satellite parts and service locations to bolster the service operations, which have been a mainstay of its business during the downturn.
Dixie, currently a single-site operation, offers a full line of new Class A and C motorhomes plus travel trailers, fifth-wheels, toy haulers and tent trailers, as well as utility and cargo trailers and rental units. Its new-unit sales are currently running about 13% to 14% ahead of last year, a pace that should put the Virginia retailer on track for at least a 350-unit total for the year.
Overall, Dixie is projected to do about $15 million in sales in 2010, close to pre-recessionary levels, with service revenues having offset lower new-unit demand over the past two years.
“Toward the end of 2007,” said Forrest, “we felt that we were heading into a sales downturn, and we took the approach that we could find entities within our dealership to take up the slack. We found it in service, taking the stance that service is ‘the new front end,’ and we increased our service numbers 100% in 2008 and another 100% in 2009.”
The hiring of additional service technicians and paint and body work professionals has also offset a reduction in sales personnel, enabling the dealership to maintain a staff of 30-32 employees.
Dixie RV’s enviable location in a high tourist area and its proximity to more than eight, largely recession-resistant military-related businesses and installations provides some unique advantages to its successful operations.
In pursuing more parts and service business, however, it also turned to heavy advertising and to developing more extensive relationships with insurance carriers and other vital links in the service chain to position itself as “the place for major (RV) repairs.
“Whatever anybody needs, we do it,” said Forrest, adding that the dealership also expanded its service staff to ensure that “when the work started coming in, we could handle it.”
A big proponent of Internet website advertising, Forrest is fond of saying, “We don’t know of any other form of marketing that makes you money while you’re closed. We can’t remember the last time we sold an air conditioner at 2 a.m. from a newspaper ad.”
Consider that the dealership several years ago was paying more than $20,000 a month in Yellow Pages ads and more recently has reduced that to less than $1,000. “Everything else is devoted to the Internet,” said Forrest, whose dealership is currently getting ready to sign a contract with a national provider to step up from an “organic” form of Internet advertising to an optimum level in which it pays for its name to pop up when prospective customers start doing an RV search.
“We’re contracting for a top spot, and are very excited about that,” said Forrest, hoping to quadruple the 20,000 monthly hits the dealership’s website is currently getting with the upgrade.
Having tapped out the full potential of its service capabilities in Newport News, Dixie is now scouting a satellite service and parts location in Williamsburg and Virginia Beach, Va., the latter being a more likely location because it’s closer to the RV parks and the parade of campers utilizing those parks.
On the sales side, travel trailers, with their attractiveness as an economical entry into the RV arena, continue to be the dealership’s bread and butter. But after adding some Coachmen and Monaco motorized lines, Forrest said Dixie has also been seeing “more excitement in Class A traffic in the last 30 days.”
Meanwhile, the dealership’s rental business has picked up considerably.
“When the economy took a downturn,” said Forrest, “our fleet was already getting a little more mileage than I liked. Because of market conditions, we were not able to turn it, and that hurt us.”
After finally being able to turn the aged inventory in 2008, the 12-unit rental fleet has stayed consistently booked.
Previously confining its rental fleet to Class As and Cs, Dixie’s management plans to add travel trailers — most notably Jayco’s Jay Feather hybrid — within the next 30-60 days. “Doing hybrids will give our customers a feeling that we’re open to providing various things,” said Forrest.
Forrest added that Dixie RV has seen a decided change in financing trends over the past year. While the dealership last year actually secured its own bank credit in order to finance creditworthy customers who couldn’t get their own financing, it was subsequently able to sell that debt back to the bank.
Now, during the past few months, Dixie RV has seen a “tremendous increase” in cash buyers in a wide variety of unit purchases, which, in itself, is a good thing. On the other hand, that’s made it difficult for Forrest’s finance and insurance people to upsell extra profit items like extended warranties and tire and paint protection programs.
Forrest views Bank of the West as the only national bank still aggressive in the RV financing field. “They’ve been tremendous,” he added. “Otherwise, it’s all local financial institutions — small banks and credit unions” accounting for most of Dixie’s financing.