Summer 2020 was quite unlike any other. While experiences may have varied slightly due to government orders, this was the first summer in memory without any blockbuster movies or baseball games. Park district pools were closed. There were few, if any, summer camps. Birthday parties were cancelled in lieu of paraded, distanced celebrations. Barbeques were small and infrequent—typically consisting of one’s own “quaran-team.”
So where was the fun? Well, the industries Wells Fargo Commercial Distribution Finance™ (CDF) serves were undoubtedly having a moment. For more than 65 years, CDF has provided inventory financing to the marine, recreational vehicle (RV), motorsports, lawn & garden and electronic & appliance industries. The recent shifts in consumer behavior brought on by COVID-19 have directly impacted these specific industries in unique but similar ways. In this piece, CDFconnect® Program Leader Nicole Hummel invites you to explore the different ways that, anecdotally, each of CDF’s industries held its own during a summer unlike any other.
Marine: Sharing a lifestyle
In a 2019 interview for a previous CDFconnect® article (PDF)i Bruce Van Wagoner, Commercial Leader, Marine, indicated that the marine industry had to overcome the hurdle of the younger generation’s busy-ness to gain their interest and affection. As COVID-19 cleared calendars and cancelled plans across the globe, summer of 2020 was free of scheduling conflicts and families flocked to watercraft.
Some say you never know how many friends you have until you own a lake house. The same might be true for a boat—and it’s likely never been more true than during this summer of physical distancing. According to Van Wagoner, “We went into this worried we were looking at a similar situation that we faced during the downturn of 2008/2009. We were all so far off base. More families are boating than any other time I can recall. Inventory is lower than I can ever recall. The biggest challenge is for manufacturers to build enough product. May and June were record months and July and August continued that pace. It’s been an incredible run. Dealers are doing great, but they can only sell what they can get their hands on. We expect inventory levels to remain low and likely won’t return to normal until next year.”
In late June, a dear friend and avid fisherman invited my family to Green Lake, WI and he took us for a spin on his boat. My 5-year-old daughter, Charlotte, got to “drive the boat” and her exhilaration was palpable. I’ve been reflecting on the happiness that’s so apparent in this moment because it reminded me of another sentiment Van Wagoner expressed in that interview last year: Boating is a lifestyle. The industry will become adopted by a new generation only once they’re exposed to that lifestyle and subsequently fall in love with it. As predicted, ever since we left Green Lake, Charlotte’s been asking us to get our own lake house—with a boat.
RV: Room to roam
America the beautiful—with wide open spaces, iconic landscapes and web-like interstates making a bounty of mainland parks and destinations accessible by road travel. For these reasons, the road trip—one of the country’s most quintessential past-times—is arguably the comeback kid of Summer 2020. After several months of sheltering in place and with deep-seated reservations toward air travel, Americans are finding freedom and comfort in traveling by RV.
The RV industry has been growing in popularity for years. But as vacations were cancelled and calendars were cleared in the wake of COVID-19, a “let’s not do nothing” mentality took over. According to RV Commercial Leader Tim Hyland, “COVID-19 really pushed consumers who had entertained the idea into action. They’re buying any variety of RV that suits their need because there’s a product for everyone. June was one of the biggest months the industry has ever seen. Many dealers can only source a fraction of what they actually need because demand is so high. In fact, a lot of product is sold before it even heads out to the dealer. For families that have been cooped up, want to maintain physical distancing and don’t want to get on a plane—a natural next thought is to go RVing.”
Personally, I’ve always been an enthusiastic car camper. As our family has grown, so has our car. And we’ve added a roof rack. And a trailer hitch. And we’re still stuffed to the brim with all of the equipment kids necessitate. The exercise of packing and setting up is exhausting in itself. When compounded with anxiety about COVID-19 with any reservations one might have toward public restrooms and outhouses, the privacy and safety of one’s own RV has clearly grown more attractive for many—including me. The freedom of the outdoor experience strengthened my family’s morale this summer as it did for many others. As Americans realize the flexibility and privacy RVs afford, this airfare alternative is becoming the answer to their wanderlust.
Powersports: Hitting the road—or all terrains
The sights and sounds of suburbia. The white picket fences… The bark of the neighbor’s dog… The brrrrrraaaaap of a dirt bike? That’s right. The cacophony of three ill-prepared months of distance learning was punctuated by a summer of motorsports. As featured by Wells Fargo Stories, it turns out Powersports were everywhere: Riding well-worn trails and blazing new ones across the country.ii
You can physical distance on motorcycles, ATVs and dirt bikes. While on-road motorcyclists are finding more time for recreational riding, Motorsports Commercial Leader Jeremy Jansen explains that, specifically, off-roading product is seeing consumer spending in droves. According to Jansen, “Baseball’s cancelled and you’ve got to get the kids out of the house before they break something. Youth dirt bikes are up 79% YTD. It’s truly exciting what is going on. This is a giant step forward for Powersports—which has seen flat new retail sales since the great recession. With the new riders being attracted to the sport(s), I am confident we have immediately injected new retail into this industry go forward—it’s a step change function.” But as COVID-19 drags on? “With winter approaching, I expect a similar retail phenomenon in the snowmobile sector, if Mother Nature cooperates. As the economy continues to heal, we have more free time and we’re spending it with family (less occupied in the near term with organized sports and vacations) — that would be best case scenario for Powersports. Most likely, sometime next year we’ll start wading back into our traditional patterns. But this year’s retail will go down on record as the best ever.”
Back in suburbia, crowds are gathering around the newest dirt bike posted up in the neighbor’s driveway. Louder, faster and more fun than its predecessors, it is inspiring a whole new generation of riders to motorize to keep up. It seems that this higher-octane recreation choice is more than just a fleeting trend. I expect to see more dirt bikes buzzing around the neighborhood in fall—and for as long as Chicago weather permits.
Lawn & Garden: The grass is greener where you water it
Thanks to COVID-19, I start my mornings a bit differently these days. My commute has been replaced with a walk around the yard. I pull weeds that seem to grow overnight and I treat my beloved hydrangeas to some water. Then I settle in at the patio table for a day’s work. This gives me the vantage point of witnessing others behaving much the same way—sizing up one another’s lawns and hedges. I see the delivery of lawnmowers and watch neighbors fire up brand new grills. We’re home more, we’re using our homes in different ways. Physical distancing during the summer of COVID-19 has us embracing outdoor living while we can.
Outdoor Products Commercial Leader Mike Horak confirms, “People are staycationing big time. People are redoing their patios. There’s a lumber shortage for decks. You can’t find an above ground pool right now. People are looking at their yards and they’re doing something about it. Hand held equipment is up nicely. COVID-19 is creating more interest for end users to buy more equipment; they want to maintain their primary asset—their home.”
Turns out that keeping up with the Joneses doesn’t just pertain to ones’ neighbors: During this interview I learned Horak is an avid rose gardener. He proudly shared that his neighbors admire all 120 of them. I may have become a little green with envy. I may be planning to plant my own this fall… But I’ll need to purchase a rototiller first.
Electronics & Appliances: Your home is your castle
When my family of four sheltered in place this March, there was no workhorse more essential than the fridge. Filled to the brim with anything we could have delivered and purchased in bulk. Serving up three square meals a day—plus snacks! Sometimes the kids would open it up just to see if anything had magically appeared since the time they last walked past it. Which puts a lot of wear and tear on an already tired appliance.
Electronics & Appliances Commercial Leader Chad Lyon confirms, “People at home are using their appliances way more than they were a year ago. There’s a solid replacement cycle that exists in the business because you can’t live without them. This constant use is accelerating the replacement cycle. People are buying freezers, they’re in and out of the refrigerator more, they’re not traveling or dry cleaning. They’re using everything more. Not only that, the discretionary cycle is big right now. People are watching cooking shows, they’re dreaming about entertaining, they’re realizing they want more burners on their stove. There’s big time demand—off the charts hot. But there’s nothing to buy. There’s nothing left.”
With all of that in mind, we will continue to service our refrigerator and try not to work it into the ground. We are thankful for the little luxuries that make our house a home and make physical distancing more comfortable during these times. Though they are unprecedented indeed, we will get through—together.
Reflections on a season like no other
Summer 2020 certainly felt different from summers of the past. All of the smallest changes in our behavior have built up extraordinary pressures within the industries that CDF serves. “Traditionally, consumer demand for boats, RVs, appliances, motor sports and lawn/garden equipment has been dictated by pent up demand related to economic cycles, product replacement lifecycle and product innovation,” Chief Commercial Officer Scott Barber explains. “The pandemic has altered our current state. We have never before seen so many first timers embracing new outdoor activities. New riders, participants, users, and social likes are discovering and exploring the majesty of nature, strengthening familiar bonds and creating closer relationships through products and experiences made possible by our industries.” It seems that the experiences we manage to share—whether together or apart—may very well be a silver lining during these extraordinarily unprecedented times.
Wells Fargo Commercial Distribution Finance™ (CDF) is the trade name in the United States and the trademark in Canada for certain inventory financing (floor planning) services of Wells Fargo & Company and its subsidiaries. CDFconnect® is a registered trademark of Wells Fargo & Company.
The information contained herein is for informational and discussion purposes only and is not intended as a recommendation. Some of the information may have been obtained from or may be based on third party sources which have not been independently verified. CDF does not guarantee the accuracy, completeness, adequacy, or timeliness of any information and any and all expressed or implied representations or warranties are specifically disclaimed. All valuations, opinions, projections, and estimates are subject to change without notice and CDF assumes no duty to update the information contained herein.
Nothing contained herein shall be construed as (i) an offer, promise, representation, approval, or commitment to provide financing or other services by CDF to any person; (ii) financial, legal, tax, accounting, or other advice; or (iii) any guarantee or promise of profitability or generation of revenue of any kind whatsoever.
The presentation shall not be relied upon in taking or refraining from taking any action. The use of the information contained herein is at your own risk. CDF is not and makes no representations to being an agent for or advisor to any party, nor does CDF have any fiduciary obligations to any party based on this presentation. 20CDF056 Exp. 12/21