Touching base with the multistore operator – February 12, 2007
February 21, 2007
Filed under Features
By Matt Bolch
Single store or multistore, powersports dealers have similar concerns about the same broad issues: rising cost of employee benefits, lack of qualified technical help and the economy.
That’s the result of an informal survey of 15 multistore powersports dealers around the country, comparing data from those dealers with the same information collected from 400 dealers of all sizes last spring as part of Powersports Business’ 2006 Market Data Book and Suppliers Directory. While the multistore dealer survey is not scientific, it does provide an interesting insight into how the concerns of multistore operations generally are in step with those who own a single location.
While multistore owners may be concerned about the same issues facing the industry, the level of concern appears lower across the board. Out of 10 questions posed to multistore dealers, respondents in all but two cases reported lower concerns than the overall percentage of respondents to the earlier survey. For those two questions, rising costs of employee benefits and employee turnover, the difference was under 5 percent.
Multistore dealers, however, reported significantly less concern about competition from big-box retailers and Internet-based retailers than those answering the earlier survey. The latest responses were, respectively, 38.5 percent and 23.1 percent lower than the earlier ones. Multistore dealers also reported significantly less impact (16.1 percent) from low-priced Chinese imports than dealers in the first survey.
Multistore dealers said the economies of scale in running more than one store can help in some cases, but employee and general economic issues often are compounded, dealers say.
Roc Northey, owner of Sky Powersports locations in Lake Wales, Lakeland and Hudson, Fla., speaks for many when he points to employee issues as a top concern. “The cost of hiring is astronomical,” says Northey. “In addition to training, there are costs associated with the mistakes new employees make and the customers that get run off.”
He rewards longevity among his 70 mainly full-time employees, starting new workers at a lower wage until they pass their first anniversary. Northey says he generally pays good salaries and benefits, especially to those in key positions, such as the parts or service manager. “They’re the backbone of the industry, and you have to pay for that good knowledge,” Northey says.
Health-care costs have doubled in the past five years for Jimmy Allison, managing shareholder of Champion Motorsports, with locations in Roswell and Clovis, N.M. In the past year, health-care costs went up 22 percent, and the dealership now pays only 80 percent of costs for its 50 employees instead of the 100 percent it paid until a few years ago.
Possible changes in the federal minimum wage also will affect his business because Allison pays many sales and parts personnel a minimum wage, coupled with aggressive incentive programs based on productivity.
Problems in finding good employees plague Scott Britt, president at Wilmington, N.C.-based Britt Motorsports, with four showrooms in the state and a fifth under construction. “I can find only one out of five people who’s willing to step up and do what needs to be done,” says Britt. “It’s hard to find someone who wants to make a career in the motorcycle industry.”
One of Britt’s store managers relocated from Alaska, bringing his family down in a moving van after responding to an online ad placed at www.CycleCareers.com and www.MotorcyleIndustry.com.
“I can’t change the economy or the interest rates,” Britt says, “but I can overcome a lot of challenges with quality people who bring professionalism to the motorcycle business.”
Greg Mackey, president of a chain of four powersports dealers in Florida, including Honda of Jacksonville and two in Georgia, says his company would be larger if it could find good workers. “We’ve turned down opportunities to buy dealerships because we didn’t have the people to run them effectively,” says Mackey. “We’re proactive to get managers up to speed and give them the right tools to succeed before we toss them out there.”
The current economy also worries survey respondents, including Kurt Finley, president of Colorado Powersports locations in Boulder and the Denver suburb of Thornton.
Finley notes a significant decline in demand, especially in the Denver area, which has prompted the company to examine fixed costs closely.
“You have to be as ready as you can to weather any downturns,” Finley says. “The motorcycle business is cyclical, and a good sales process and efficiency are even more important in a down economy.
“You can’t create demand,” Finley says. “You can only satisfy it.”
Cost of doing business
Steve Ertle, dealer principal at Tejas Motorsports with locations in Victoria and Houston, Texas, pointed to Chinese imports as his top concern. “It impacts the entry-level market,” says Ertle, who notes the dealership won’t even try to compete with low-priced imports. However, the dealer will take trade-ins of those low-priced, mainly disposable units for $100 or so “to help customers feel a little better about their mistakes,” Ertle says.
The double whammy of high inventory levels and higher interest rates increases the cost of doing business, says Chris Watts, owner of three America’s Motor Sports in the Nashville, Tenn., area.
“Demand has somewhat softened, and when supplies are up, it puts a lot of pressure on the margins,” Watts says. Some OEMs also are setting up new dealers nearby, which also affects his business, he says.
“Inventory levels are up in general,” Watts says. “It’s not just my dealership but others around me.”