Mark Bebb, Joint MD,
Salop Leisure Ltd
22nd October 2020 | 4 minute read
- A surge in staycations is proving very positive for the industry
- Current sales volumes should make up for lost revenue
- Parts and accessories sales have mainly moved online
- Maintaining stock levels is a significant issue
- There is a real opportunity for the industry to maximise growth
Having worked with dealers throughout the pandemic, we’re committed to sharing their experiences of COVID-19, both on their businesses and the industry as a whole. We hope their insights will put your own situation into context and provide food for thought to help you continue adapting.
In the first of a series of conversations with our leisure dealers, we spoke to Mark Bebb, Joint MD of Salop Leisure. One of the Midlands’ largest dealerships, his business also includes an accessory superstore, garden centre and holiday village at Emstrey near Shrewsbury. We interviewed him in early August 2020 about how his business has been faring both during and after lockdown.
In the first of a series of conversations with our leisure dealers, we spoke to Mark Bebb, Joint MD of Salop Leisure. One of the Midlands’ largest dealerships, his business also includes an accessory superstore, garden centre and holiday village at Emstrey near Shrewsbury.
We interviewed him in early August 2020 about how his business has been faring both during and after lockdown.
How has COVID-19 affected the leisure sector?
One thing that's remarkable is that 71% of the touring caravans and motorhomes we sold during June went to first-time buyers - people who would typically holiday overseas. The media are causing people to worry about foreign travel, and that’s driving them towards our industry. A lot of older people simply won’t travel abroad again.
"71% of the touring caravans and motorhomes we sold during June went to first-time buyers."
Whether you own or rent a caravan or motorhome, as a self-contained unit it feels a lot safer. And the locations we are in are very rural, which also helps. Added to that, there’s a strong sentiment about wanting to drag children away from technology into nature. With a caravan or motorhome, you can do that every other week. You’re investing in your family, in your children and grandchildren’s future.
It's also worth remembering that the majority of caravans and motorhomes are made in the UK, so it’s not only a staycation that buyers are investing in, but also a British product.
What has been the impact on sales?
The industry is picking up incredibly fast. On current trends we’ll more than generate what we lost during the closure. In terms of retail finance, we’re running at 160-170% of normal. By year-end we’ll have moved more static caravans and lodges than we did last year.
"In terms of retail finance, we’re running at 160-170% of normal."
By comparison, the touring industry is under more pressure. Driving licences, supply, all sorts of things mean we won’t reach the same levels as last year, but we won’t be far off.
How have you adapted your operations both during and after lockdown?
The business closed to the public during lockdown, with about 80% of staff furloughed and the rest operating behind closed doors.
It was exceptionally difficult to re-open with all the pressures on the industry. However, we could open slightly earlier than the competition because we have the garden centre on-site and everything was treated as one business. We followed guidelines from the National Caravan Council, BHAPA, and the Horticultural Society. It was great to have their insight as the situation changed several times.
As always, customers want to view our product in person, but parts and accessories have mainly moved online. The pandemic has driven many people online that wouldn’t have considered it previously.
Then there’s PPE. It’s a significant investment, but you have to do it to keep everyone safe. As you walk into my showroom you have to wear a mask, but we can’t ask people if they’re in the restaurant. And we currently have 1000 people on-site in the Holiday Home Village - it’s like a huge hotel. You can't police it all the time, so you have to rely on people being sensible and taking responsibility for themselves.
What are the main challenges your business is experiencing post lockdown?
Prior to reopening, we didn’t expect the customer levels that we’ve seen. Our business would normally be very strained in July and August, but it's running at around 350% of normal this month. The increase in interest is a challenge, but it’s a nice one to have.
There are also significant problems with some of the supply chains being closed. We really need to nurture our new customer base and I’m worried that, as an industry, we’ll let new buyers down if something goes wrong and we can’t get the components to fix the issue.
Stock is also an issue. We don't go to auctions as they’re few and far between for leisure and very expensive, so we create our own stock via trade-in. As things stand, stock levels in the autumn will be the lowest we’ve ever seen.
"As things stand, stock levels in the autumn will be the lowest we’ve ever seen."
It’s not just us either. I was talking to one of my dealer friends last week, and he has less than 12 caravans on each site. He typically has a stock of 60 caravans at each location. It’s ironic because we’ll have the best cash flow we have ever seen, but we can’t sell if we don’t have the stock.
How have Black Horse supported you through lockdown and beyond?
We have had an extension of credit lines between the manufacturer and Black Horse, which has been really very useful.
What do you think the outlook is for the industry as a whole?
My one concern is that once furlough finishes in October, how many unemployed people will have the money to invest? And how many people who own caravans will no longer be able to afford to pay for them? It's always been a fluctuating market, and that’s tricky for manufacturers, who always need to produce one less than the market needs to maintain demand.
Higher prices won't help demand either. With inflation running at 2-3% and the added influence of exchange rates, new products will go up 3-5%, and residual values will also increase.
Having said that, we’ve never had a better opportunity to get things right as an industry and build on consumers’ sentiment around staycations. Currently, the industry deals with about 2% of the population - if we dealt with 2.5% we would probably fall over. Overall we feel that we’ll be very busy for the next two to three years.
"We’ve never had a better opportunity to get things right as an industry and build on consumers’ sentiment around staycations."
We hope Mark’s insights offer some inspiration as you work with your team to take your dealership further down the road to recovery. Look out for future Dealer Conversations, and in the meantime, explore our Dealer Resource Hub for other useful articles.