If there’s anything we’ve learned from recent world events, particularly those centred around the economic crisis in the US, it’s that globalization is turning out to be much more that anyone bargained for. As expected, the opening up of free markets can reduce import and export costs, lay the ground work for more accessible international trade and increase the viability of business relations on many levels. What we are seeing now is that there is a darker side to working in a global economy that affects some business owners – namely, the smaller ones – in ways that can be difficult to manage.

The adage, “When the US sneezes, the rest of the world catches a cold,” needs no explanation in the shadow of recent news, and with Canada being that country’s closest neighbour and a significant trade partner, Canadian dealers are feeling the pinch of fluctuations in the dollar value. Most people realize that the stronger the Canadian dollar, the better it is for consumers of US goods and services – much to the chagrin of Canadian retailers offering the same goods and services outside of Canada and especially in the US. As consumers raced to capitalize on the long reach of a high-value loonie, powersport dealers felt the effects almost immediately. 

According to some dealers, customers reacted to the high dollar instantly – some in mid-sale – and now that the dollar is rebounding, and headlines are whispering the doom and gloom of a Canadian recession, consumer dollars are basically on hold when it comes to leisure items. 

Marq Smith of Western Powersports, based in Langley, BC says that the biggest impediment to consumer spending right now is fear generated by news headlines. “Generally, because of the scare tactics in the media right now, people are afraid to buy.”

Another worry is the perception that Canada is about to face a credit crunch, similar to that in the US. “People are credit-challenged and that’s a big problem,” he says. “The perception is that everything is horrible and not doing well, so consumers aren’t trying to obtain credit; they are waiting to see how things will go.”

While he acknowledges that lenders have tightened the purse strings a bit, he doesn’t feel the problem will ever reach the magnitude it has in the US. “The stock market has turned around the last couple of days, so that’s a good thing, and people need to have confidence in the Canadian banking system because it’s a different system than the one in the US.”

Smith and his staff of 14 are weathering the storm for now and working harder on processing the credit applications they do receive. They also remain committed to their already high level of service, which includes focusing on face-to-face interactions and developing relationships with consumers based on the buyers’ interests, needs and expectations.

“We try to make it fun when customers come into the store. Let’s face it: it’s a leisure activity; they don’t need to have a bike. We try to keep the customer happy and make the experience entertaining. It’s a challenge, but it can be done.”

He also says it’s important to explain to Canadian consumers that the cost of doing business in this country is higher than in the US, and that when prices go up it’s manufacturers and distributors that benefit financially, not the dealerships. 

As a smaller store, Western Powersports is able to respond faster to market fluctuations and has more control over creating deals and specials that can suit consumers’ needs given the circumstances. The company also offers perks like free seasonal bike storage and an exclusive line of parts and accessories that give it a competitive edge, even in the worst of times.

One flip side to a skyrocketing dollar is that smaller businesses that may not normally be able to afford productivity-enhancing software or equipment will find these items less cost-prohibitive. Anyone carrying debt in the US is looking at a great time to settle up, and its a good time to expand investment portfolios to global markets outside the US. 

Compounding economic challenges is the ever-impending threat of Big Box retailers – hardly a new concept, but one inspiring heightened levels of worry given the state of the economy. But confidence in the Big Box advantage might be over-estimated. Smith notes that the overhead costs on a huge location are far higher and that the whole concept behind the success of a Big Box is high-volume sales. 

“I’m not sure they can offer prices that much cheaper,” he says. “And if people aren’t buying, they aren’t buying.”

The thing to keep in mind is that when consumers are financially challenged, they are going to be scouring the earth for a deal and this is where smaller dealerships can garner far more recognition for products and services they offer that bigger stores can’t.

Service is the number one factor in the smaller store advantage. A staff of ten, some or most of whom ride are going to be able to offer a more complete and knowledgeable experience than a staff of one hundred in a store that also sells toilet paper and birthday cards. Staff training, often offered by manufacturers, as well as allowing staff to do product testing can make a huge difference in the level of service they provide.

A special report from TD Economics says that 2008’s economic backdrop means “businesses will have to be nimble, changing with the times and constantly striving to improve efficiency and profitability ... [calling] for innovative strategies to attract and retain high skilled workers and to reduce costs wherever possible.”

Because the powersport industry already experiences a high labour turnover, business owners are going to have to get creative and widen the labour pool. The report recommends thinking innovation when devising hiring processes and worker retention programs. Performance-driven evaluations, bonuses, benefits and training are all great ways to encourage employees to stick around, as are paying consideration to employees’ need for family / work balance and flexible scheduling.

Smaller stores can be pro-active in seeking out and serving niche, specialty or under-served markets, and they have more freedom to make changes or carry new products when they aren’t tied to a corporate parent. Marketing and sales techniques can focus on service and exclusive product lines and the more direct the technique, the more affordable.

Western Powersports gets its name out to the community through involvement with rides and events held by local riding clubs including The Greater Vancouver Motorcycle Club, The Lower Mainland Motocross Club and the Fraser Valley Dirt Riders.  “The clubs are where the enthusiasts go,” says Smith, adding that the company’s involvement in such events allows them the opportunity to find out what riders want and build relationships.

Perhaps the most important consideration when facing worldly pressures is that like all things cyclical, there are better times ahead. Staying focused on making the best of the moment and on what the brighter future may bring might lend the sense of optimism needed to inspire new ideas. n