Nov. 30, 2009 – Making changes in a changing market

Operating in a vastly different retail market, it’s little surprise to hear Arctic Cat CEO Christopher Twomey speak of substantially different business practices for the manufacturer both within the last year and going forward.
Twomey, in a Q&A with Powersports Business, highlighted a number of those changes, including the company’s efforts at changing its ATV dealer ordering system as well as striving for inventory reductions, both at the factory and dealer levels.
“We have to recognize that since times are different, we need to do business differently,” Twomey said.
“We have changed a number things about the way we’re doing business at Arctic Cat and I am excited every day by the reports I get about how dealers have also changed the way they are doing business and are seeing positive results, in some cases, even better than last year’s results.”
However, part of the change in the retail environment — Arctic Cat’s sales have declined nearly 21 percent since last year — could mean a change in the company’s dealer network. Twomey said the company has lost “a number of dealers” and in some cases won’t necessarily be replacing all of those retail points.
“Even in today’s difficult business environment, we are adding new dealers to replace many of the ones that have left the business,” Twomey said. “However, we will not necessarily try to replace every dealer that has left the business.”
Besides looking at retail points, Arctic Cat also has made strides in cutting inventory levels. Twomey noted several improvements, including a 30 percent reduction in ATV dealer inventory the company had at the end of September.
“You always need to be concerned that with fewer dealers and lower inventory, your ability to grow your share of the market may be negatively impacted,” he said.
However, that hasn’t been the case as Twomey said the company has seen market share gains in both the ATV and snow markets in 2009.
Part of the inventory change reflects the different ordering process the company now has for its ATV dealers.
Those dealers now have three separate ordering periods rather than the traditional annual ordering process.
“This has had a number of positive effects,” Twomey said. “First, our dealers don’t have to make their order decision at one time early in the retail year. They can instead closely watch the market and decide which models will best sell at what time and order accordingly. Secondly, it gives our dealers and our district sales managers more opportunities to interact.”
Another change for Arctic Cat: Twomey said the company has made changes in its PG&A return policy so dealers can adjust their inventories in the difficult retail environment. “The dealers have actively been utilizing these programs,” he said.
Twomey noted Arctic Cat continues to expect a challenging sales environment as unemployment rates remain high and consumer confidence remains weak.
“I think it is real important for all of us to understand that ‘sluggish spending’ does not mean ‘no spending,’” he said. “Customers are still buying snowmobiles, ATVs and parts, garments and accessories, just not at the same level as they did a couple of years ago. If we forget this, we can all sour on the business and end up in a downward spiral.” psb

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