Consumers are buying more luxury items but spending remains tight for everyday essentials such as food and dental care, a USA TODAY analysis finds, suggesting a growing divide between haves and have-nots.
Purchases of TVs, jewelry, recreational vehicles and pet supplies are growing robustly, government data show. At the same time, spending on medical care, day care and education is down in the dumps.
“The rising tide isn’t lifting all boats,” says Carl Steidtmann, chief economist at the Deloitte accounting and consulting firm and author of an index tracking consumer spending.
He says higher-income and older households, helped by a strong stock market, are experiencing increased wealth and spending more. However, high unemployment is pulling in the other direction, depressing spending among people without jobs and those anxious about job security.
Consumer spending accounts for about 70% of the nation’s economy and is crucial to any recovery. Spending rose 1.4% in the first eight months of this year compared with the same period a year earlier, the Bureau of Economic Analysis reports. Consumers are on track to increase spending for the first time since 2007.
Yet more than one-third of the 350 spending categories tracked by the government remain in decline, as if the recession that technically ended in June 2009 was still underway. Spending on new cars has fallen another 8.2% this year, on top of disastrous drops in 2008 and 2009. Consumers are spending less on prescription drugs, life insurance and a wide range of everyday essentials while spending more on watches, wine and toys. Part of the jump in luxury items is a rebound from deep lows in the recession. What’s hot now:
- Televisions. Spending is up 34.7% this year, tops among consumer items. “There is a lot of excitement” because of 3-D TVs, bigger panels and high definition, says Best Buy’s Scott Morris.
- Recreational vehicles. Winnebago Industries Inc. sales have doubled. The company added 350 workers. Buyers — typically 55 or older — are purchasing somewhat less expensive RVs, says Winnebago spokeswoman Sheila Davis.
- Pet supplies. Organic dog food, timed cat food dispensers and other high-end pet items are driving healthy increases in spending, says Bob Vetere, president of the American Pet Products Association. “People are cutting back on themselves more than they’re cutting back on pets,” he says.
Pet products illustrate how some consumers are going high end and others low end. Cheap pet food is selling briskly, reflecting the weak economy, at the same time costly items are thriving, he says. It’s the middle of the market that’s shrinking, he says.
Entertainment that depends on mass appeal is still hurting. Spending at concerts, movie theaters and casinos is down.
The revenue decline at casinos is starting to stabilize, says Frank Fahrenkopf Jr., president of the American Gaming Association. “We’re not going to see a dramatic turnaround until employment picks up,” he says. “We’re still packing people in. They’re just spending less.”
A luxury motorcoach worth more than $1.5 million will headline the North Carolina RV & Camping Show which opens a three-day run Friday at the Charlotte Convention Center, but show organizers say there will be bargain-priced recreational vehicles available also, according to the Charlotte Observer.
A 14-foot-long recreational vehicle called the K-Z RV Sportsman Classic sells for $5,995 and features what show organizers say is a retro look.
“You’ve got to see this RV to believe it,” said Steve Plemmons, president and CEO of Bill Plemmons RV World, one of the Carolinas’ major recreation vehicle dealers. “It is so lightweight and compact, and the low price makes it obtainable for more RV’ers than ever.”
But also on display will be the Featherlite Luxury Coach, brought to the show by Tom Johnson Camping Center, another major RV dealer. It is 45 feet long and features Corian countertops, a fully equipped kitchen, marble flooring, a 42-inch LCD television, custom fiber opting lighting, and more.
Nearly every driver crossing San Francisco Bay Area bridges will need to pay a higher toll starting July 1.
Wednesday (Jan 27), the Bay Area Toll Authority bumped the cost of crossing the Bay Bridge to $6 during commute hours, and the price for driving across the other six bridges to $5, according to the San Francisco Chronicle.
The move will also impact carpoolers for the first time and those who pull recreational vehicles. Truck drivers will also see their tolls increase – but not for awhile.
The Golden Gate Bridge, which is owned and controlled by an independent district, is not affected.
The package of toll hikes unanimously approved by the authority after months of public hearings brings to the Bay Area congestion-based tolling and carpool tolls for the first time. About a dozen speakers asked the commission either to kill or reduce the toll increases. Among the opponents were casual carpoolers, and recreational vehicle and boat users.
On the Bay Bridge, drivers crossing during weekday commute hours – from 5 a.m. to 10 a.m. and 3 p.m. to 7 p.m – will have to pay $6. During other weekday hours, the toll will remain at $4. On weekends, it will rise to $5. The toll will increase to $5 at all other times on the Dumbarton, San Mateo, Richmond-San Rafael, Carquinez, Benicia-Martinez and Antioch bridges. Carpoolers on all bridges will see their free ride end, as they’re charged $2.50.
Truck drivers will see the steepest increases, but in an attempt to soften the blow to struggling truckers, their increases will be delayed for a year to allow them to negotiate with their customers to cover increased costs. Trucks and other multiple-axle vehicles will be charged $5 per axle. They now pay between $6 for a three-axle vehicle to $13.50 for a seven-axle vehicle.
In what industry officials are calling the largest theft ring in their company’s history, detectives seized more than 35 stolen vehicles, heavy equipment and recreational vehicles during a 10-hour search warrant operation late Monday (Jan. 11) in Los Angeles County, Calif.
The find came following a LoJack Corp. stolen vehicle recovery system hit near the Interstate 5 Golden State Freeway and Templin Highway Monday morning, according to KHTS radio, Santa Clarita.
The deputies followed the hit to a remote 60-acre property in a rural area of northern Los Angeles County. Near the location, in the 31000 block of Faimham Street, Castaic, deputies discovered a Bobcat Skid-Steer Loader that had been stolen from the Mission Cemetery, Mission Hills, on Jan. 5. Deputies could see other potential stolen vehicles in the area and detectives from the Santa Clarita Valley Sheriff’s Station and the Los Angeles County Sheriff Department’s Taskforce for Regional Auto Theft Prevention (TRAP) were called in.
A search warrant was obtained and after a 10-hour operation, involving more than 15 detectives and sheriff’s personnel, investigators recovered vehicles and other items they believe to be stolen. All told, the property and vehicles had a value estimated at well over $1 million. During the investigation, detectives found and recovered 35 vehicles and countless other items including motorhomes, John Deere and Kawasaki Mule utility vehicles and even an Airstream Inc. camping trailer reported stolen out of Santa Clarita more than three years ago.
The detectives also recovered two boats and several trailers with missing or altered identification numbers. The discovery included boat, utility, flatbed, recreational vehicle, box, car carrier, water tank, construction and other trailers. Also recovered were two heavy duty Caterpillar tractors, generators, construction equipment, welders and off-road vehicles.
“This prolific theft ring bust underscores the ongoing role organized crime plays in the theft of assets such as construction equipment and vehicles,” said Patrick Clancy, vice president of law enforcement, LoJack Corp. “We are proud that our proven technology and processes were able to help detectives with the Los Angeles County Sheriff’s Department and TRAP (Task Force For Regional Auto Theft Prevention) West dismantle one of the largest theft rings in LoJack’s history.”
“This is a substantial discovery when LoJack officials are calling it one of the largest in their history,” said Capt. Anthony La Berge of the Santa Clarita Valley Sheriff’s Station. “I am proud of our patrol deputies and their daily proactive efforts to keep our community safe,” concluded La Berge.
The investigation is ongoing. No arrests have been made at this time and detectives are describing the property owner as a person of interest. There is no further information available at this time.
Editor’s Note: Robert W. Baird & Co. tracks the RV industry for investors and issued this client update following its survey of 100 RV dealers.
Robust orders will shift focus to spring retail season. We contacted nearly 100 RV dealers to assess recent trends. Orders are up significantly now that inventory has bottomed, consistent with recent backlog trends. At some point, retail results must improve to sustain the recovery – but the fact that inventory has bottomed is enough for now. We still prefer Thor to Winnebago on valuation, but the gap is closing.
Traffic/Retail. Motorhome demand fell slightly (down 1-10%), but towable sales improved (up 1-10%. Fortunately, the wholesale recovery does not depend on better retail results, but demand eventually will matter. In 2010, dealers expect retail demand to improve 5-10%. Traffic fell, but seasonal factors limit our concern.
Inventory/Orders. Inventory bottomed in 2009, setting the stage for robust orders in 2010. Dealers report 102 days of motorhome inventory, down from 193 days last year (109 sequentially) and 108 days of towables, down from 150 last year, but up from 90 days sequentially. Dealers plan to order 113% more motorhomes and 51% more towables in the next six months – generally consistent with the increase in RV backlog for Winnebago (+350%) and Thor (+153%). For perspective, we expect Winnebago to ship 5,300 motorhomes in F2010 (+142%), still short of breakeven guidance of 6,800-7,600 motorhomes. Some dealers are concerned that OEMs took larger orders than they can fill after slashing employment levels in the downturn.
Credit markets. Credit conditions have not worsened – but remain problematic for many dealers. Thor’s loan to FreedomRoads has raised eyebrows, but the bigger concern is the lack of competition among wholesale lenders – leaving power in the hands of key lenders (e.g., GE). Consumer credit does not appear to have worsened.
RVIA show. Dealers reported a more optimistic tone to the December RVIA trade show, consistent with our observations. Some noted less innovation and more homogeneity reflecting less investment in product development.
Outlook. We expect a robust wholesale recovery as dealers replenish inventory, which bottomed last year. Soon, the focus will shift to retail, which must improve substantially to sustain the recovery. With an uncertain economy, we prefer less speculative consumer discretionary ideas.
While all hands in the area were busy wrapping the final load of presents before Christmas hit last week, a Texas trio was taking the operation to a higher level. Paul Schurr, of Frisco, and the father-son duo of Steve and Bryan Worth — of McKinney and Plano, respectively — have made wrapping their business, opening a branch of Fast Wrap in the Metroplex, according to the McKinney Courier-Gazette.
Fast Wrap, the only national franchisor of shrink wrapping services, operates a fleet of vans that provide mobile shrink wrapping to weatherize and protect anything from recreational vehicles to buildings under construction. In March, Steve Worth heard about the franchise. An oilfield service company he had been running went out of business, and he was looking for ways to expand on a construction company his son and Schurr are partners in. Each man brings a different specialty: Steve has a background in sales and marketing, Bryan has spent decades in the construction industry and Schurr has worked as a firefighter and paramedic.
“I ran across this Fast Wrap franchise, which kind of appealed to me because it offered not only some applications for wrapping boats and recreational vehicles, but also for roofs that were damaged and disaster relief applications,” Worth said.
When he traveled to Fast Wrap’s corporate headquarters in Reno, Nev., to receive training, Worth had a chance to witness some of these applications, including the wrapping of a hospital undergoing refurbishment. He also saw the wrapping of a church well into construction before funding ran out. The building had to be sealed off to protect against deterioration and Fast Wrap was contracted. When the job was done, Worth said the transparent wrap allowed sunlight to still pour in, giving the inside of the church the feel of an open building and the sanctuary of enclosure.
Set with corporate training and a van of their own, the entrepreneurs have been pursuing some equally interesting wrapping opportunities. A company contracted by NASA to do 10-12 launches for the International Space Station per year could be one of their future customers. The company test fires rockets outside of Waco and then transports them to Cape Canaveral to be launched, a trip requiring a protective coating. Worth said they’d missed out on that deal this cycle, but were positioned for the job the next go-round.
The DFW Fast Wrappers are also maneuvering to secure jobs wrapping 747 jet engines and wind turbine blades. Recently, the wrap has been put to less dramatic use covering pool chairs for a homeowner’s organization.
“You can almost wrap anything that you want to provide a protective enclosure for,” he said.
Schurr recently bought a carwash on Eldorado in McKinney, and plans are to use that location as a demo for Fast Wrap, particularly on recreational boasts and vehicles. Still in the initial phases, Worth is happy about the new business. Fast Wrap has cited a growth-rate of 200% this year, and he’s looking forward to seeing that number take on more local meaning.
“It’s one of those products with unlimited uses,” Schurr said. “It’s just nobody knows we’re doing it.”
With the RV industry in the early stages of recovery from the Great Recession of 2008-09, the 47th Annual National RV Trade Show kicks off Dec. 1 as a somewhat smaller, yet still substantial industry showcase at the Kentucky Exposition Center (KEC) in Louisville. And the general consensus among many industry insiders is that the RV sector’s improving prospects will shed a positive light on the entire sequence of trade-only events in the Ohio River city of Louisville.
And that’s a real switch from the atmosphere most had expected only a few months ago.
“I’m thinking it’s going to be a good show,” said Recreation Vehicle Industry Association (RVIA) Chairman Jim Sheldon, a Monaco RV LLC executive. ‘”There are enough things going on that indicate it will definitely be better than last year when the Louisville Show was right on the heels of the national financial crisis.
“At that time, we were in a tailspin,” he added. “Now we know what we are dealing with. And there are a number of positive signs I see in the economy: The stock market and home sales are up and there has been a reduction in the number of job losses.”
The viewpoint that the RV industry is turning the corner on the recession is currently shared by RVIA’s Robert M. “Mac” Bryan, vice president of administration, who tracks industry wholesale shipments. “Things definitely are improving,” Bryan told RVBusiness. “The marketplace is much more optimistic and that goes beyond saying ‘It’s improved.’ We have to see the opportunity for growth before growth occurs. I think that’s where we are in the cycle.”
To make his point, Bryan noted that had shipments stayed at the same level for the entire year that they were in January, dealers would have ordered fewer that 100,000 RVs in 2009. In August, the first month in two years that shipments were higher than the same month the year prior, however, the annualized rate had climbed to more than 200,000.
In September, Richard Curtin, director of consumer surveys at the University of Michigan, predicted that 146,200 units would be shipped this year, an estimate that Bryan said would be revised shortly before the Louisville Show.
“I can already see that we likely will outperform (Curtin’s June) forecast,” Bryan said, adding that Curtin is also likely to revise upward his 2010 estimate of 185,000 total shipments. “My guess is that the new forecast will be a positive expression of the optimism we see in the marketplace for 2010.”
That said, the 602,807 square feet of space booked for the upcoming Louisville Show is 35% less than last year, which, of course, called for the show to be reconfigured without the use of the entire West Wing.
”It will certainly be a change from what people are used to,” said Mary “Mike” Hutya, RVIA vice president of meetings and shows. She said that OEM and supplier displays will be located in the KEC’s North and South wings, and that park model manufacturers will be dispersed among the regular exhibits and not segregated in Broadbent Arena as they were in the past.
Thor Industries Inc. has booked the largest amount of floor space for this year’s show, a total of 90,000 square fee. That includes 30,000 square feet for its Elkhart, Ind.-based Keystone RV Co. division plus another 60,000 square feet for the rest of Thor’s RV-building subsidiaries. The RV industry’s No. 2 manufacturer, Forest River Inc., Elkhart, Ind., has reserved 60,000 square feet.
Most of the supplier booths also will be located in the North and South wing hallways and atrium. There will be no supplier booths on the floor of Freedom Hall, where the Louisville Cardinals play basketball.
Early registrations, Hutya said, also indicate that fewer people will attend. Total show attendance last year was 8,427 — 2,934 of them registered as dealers or dealer representatives. ”My guess is that would be about 5% fewer this year,” Hutya said. ”I hope we get more, but I’m seeing the advance registrations.”
Keeping with tradition, the show kicks off Tuesday (Dec. 1) with the annual Outlook Breakfast — ”Outlook 2010: Let the Sun Shine” — with a lineup of substantial presentations that will communicate a strong message of optimism as the industry moves toward recovery, according to an RVIA.
The free event, coordinated annually by RVIA Chief Marketing Officer and Vice President Gary LaBella, begins way early — 6:45 a.m. — with a complimentary sit-down breakfast in the KEC’s South Wing Mezzanine Ballroom. Despite the lowered expectations for general show registrations this year, more than 1,000 attendees are expected to show up for ”Outlook 2010.” Lines form well before the doors open.
With Sheldon serving as host, ”Outlook 2010” will feature RVIA President Richard Coon’s thoughts on how RVIA has helped the industry weather the storm and prepare for the future. “Americans still love our products, and the forecast is for market growth in the upcoming year,” Coon said in RVIA’s release previewing the breakfast. “(The) show will help speed us along the road to recovery.”
In a segment of the breakfast dedicated to the all-industry Go RVing Coalition called “Spreading Sunshine in `09 and Beyond,” Go RVing co-Chairmen Dicky Riegel, CEO of Thor Industries Inc., and dealer Tom Stinnett, owner of Tom Stinnett’s R.V. Freedom Center in Clarksville, Ind., will be joined by RVIA’s LaBella to emphasize how in their view the Go RVing market expansion campaign promoted consumer demand in 2009.
Although Go RVing spending has been curtailed due to reduced RV shipments in 2009, the core mission of the Go RVing Coalition has been retained and the trio of Riegel, Stinnett and LaBella will unveil revised television spots and website content scheduled for launch early next year as confirmation of that fact.
Following the Go RVing presentation, RVIA Public Relations Committee Chairman B.J. Thompson of BJ Thompson Associates, Mishawaka, Ind., will team with LaBella to review the association’s public relations program “that garnered substantial positive publicity in 2009 despite the year’s gloomy news environment.”
RVIA, by the same token, is hosting an RV Centennial booth at the show at which specifics regarding the industry’s upcoming 100th anniversary will be presented.
Other speakers will be named at a later date.
Meanwhile, from 2:30 to 5 p.m. on Monday, Nov. 30, at the Crowne Plaza Hotel (formerly the Executive West Hotel) across from the KEC, the Recreation Vehicle Dealers Association (RVDA) Foundation Inc. will sponsor a special workshop on customer service by coach, consultant and author Michael Duke.
”Michael Duke is a great choice for this year’s workshop because dealers are saying they are starting to feel an end to the current downsizing in the market” said RVDA Foundation Chairman Rick Horsey of Parkview RV Center, Smyrna, Del. ”His message of building a culture of service will help dealers continue to rise to the challenges they will face as the RV industry recovers.”
During the show, several suppliers will sponsor free seminars focusing on their products, including:
- 1 p.m.: Systems 2000 Inc.
- 2:30 p.m.: RV Web Service
- 4 p.m.: SHURflo
- 9:30 a.m.: Channel Blade/ARI
- 11 a.m.: Freightliner Custom Chassis Corp./Cummins
- 2 p.m.: ADP Lightspeed
- 3:30 p.m.: Parallax Power Supply
- 10 a.m.: Coach-Net
- 11:30 a.m.: Titan International
The recession put the brakes on the sale of recreational vehicles in the past couple of years. But RV dealers say folks looking to move beyond bad times are starting to boost the business once again, according to the Kingsport (Tenn.) Times News.
“I follow trends quite closely, and for most parts of the country — this one included — there is a slow but steady rise coming back,” said Jeff Crowder, with Crowder RV Center in Johnson City, Tenn.
The Recreation Vehicle Industry Association (RVIA) reports that wholesale shipments of RVs increased 16% from July to August. The RVIA expects a total of 146,200 RV units to be shipped by the end of this year and 185,800 units to be shipped in 2010, a 27% increase.
The RV industry credits the upswing to improved consumer credit and stable gas prices.
RV sales began falling in early 2007, before the official start of the recession in December that year.
In the past few months, dealers have seen business trending upward — but not for all recreational vehicles.
“We’re seeing an increase in sales of travel trailers and fifth-wheels and pop-ups, but not in motorized homes. That’s still slow,” said Larry Stover, owner of A&L RV Sales in Johnson City.
While sales of the expensive motorized versions have been depressed for some time, sales of travel trailers and pop-up campers have increased 10% to 15% at A&L RV Sales since last winter, Stover said.
He’s still waiting on an uptick in the motorhome business. In that arena, he said, “it’s a buyer’s market, needless to say.”
“Everybody in our industry says if we can hang in there until springtime, why, it should bust open in the RV industry. So that’s our goal right now,” Stover said.
At Crowder RV Center, Jeff Crowder said his company exited the motorized RV business two years ago and has sold only travel trailers and fifth-wheels since then.
“We saw that (decline in business) two years ago, and after 35 years with Winnebago we called it quits with them. Thank God we are not a part of that business,” Crowder said.
He said 80% of people now registering new campers are buying either travel trailers or fifth-wheels.
“Many people already have a truck sitting in their driveway. So for them to be camping just means purchasing the camper part,” Crowder said.
And for people who love to travel, investing in a camper can pay off in the long run by allowing them to take their accommodations with them, he said.
“For people who camp, it’s a lifestyle choice. Ultimately, depending on how much a person travels, it can become very cost effective,” Crowder said.
The NFL’s Buffalo Bills announced that they have renewed their sponsorship agreement with Buffalo RV for an extended three-year term.
The relationship began last year when the company signed for the first time as an official team sponsor on a one-year trial basis, according to buffalobills.com.
As part of the new agreement, Buffalo RV’s dealership will offer discounts and specials to all Bills fans that stop in on their way to a home game at Ralph Wilson Stadium. Fans attending a Bills game in an RV can stop at Buffalo RV for special discounts on propane, free refreshments and use of their RV dumping station.
“Ralph Wilson Stadium is the perfect venue for Buffalo RV to showcase their vehicles and services,” said Bruce Popko, Buffalo Bills senior vice president of business development. “Bills fans are passionate about their recreational vehicles. Every week through Buffalo RV, fans will have the opportunity to see the newest and best RV’s on the market.”
Don Strollo, president of RV Direct Group Inc, parent company of Buffalo RV, said, “The association with the Buffalo Bills has been an outstanding partnership and has proven to bring both organizations mutual benefits over the past year. The 2008 agreement marked the first time our company partnered with a professional sports team of this caliber and it’s been nothing short of spectacular. The team is well managed from all aspects and the loyalty they have with their fans is something we want to part of for an even longer period of time. We’re also very excited about the 2009 team line.”
Buffalo RV was founded by western New Yorkers Anthony and Kathleen Strollo, in the early ’80s. Now retired, the Strollos’ sons, Don, Mark and Matt, handle the company operations. The company has grown to four other locations in the United States including Albany, N.Y., Des Moines, Iowa, and Orlando, Fla.
Recently, the dealership expanded in western New York by opening a new, 10-acre facility in West Seneca, just 4 ½ miles from Ralph Wilson Stadium.
For Buffalo RV local store information contact Mark Strollo by phone at (716) 652-4500, via e-mail at MarkS@RVOne.com or visit www.RVOne.com.
”Larry Andree and his family have a great reputation in the greater Detroit market area in providing quality products with great service,” said Pat Terveer, Newmar director of sales. “This is a perfect match for Newmar to be able to provide our mutual customers with the opportunity to do business with such a fine dealership.’’
A&S will sell Newmar’s Bay Star and Canyon Star gas-powered motorhomes and the Ventana diesel pusher.
“A&S RV Center is pleased to carry Newmar motorhomes,” said A & S RV Center President Larry Andree. “We always seeks to partner with manufacturers who have similar values and objectives and Newmar, a family-owned company with a focus on quality and excellent customer service, is a great fit.”
A&S is a third-generation, family-owned dealership in operation since 1960. The company recently finished an expansion that doubled to nine acres it’s outdoor display area while adding service bays, increasing the size of the parts and accessories store, and adding a large indoor showroom.