Deflation in the Scuba Market

[Jim Lapenta]

Don't even get me started on DEMA! They are so full of shiite it's oozing out of their pores. Exotic places do not for the most part attract divers that help shops survive. There is way too much focus on quickie certs and then jet off somewhere. Frank's model works because he is attracting divers who go to dive. They are from his posts, for the most part, skilled, competent, and know what they are doing. While Bonaire was nice it was also disgusting to see people banging off the reefs, not know how to set up their gear, and swim with some version of the doggie paddle. Puerto Rico was even worse. The first dive of the second day I replaced two tanks underwater for divers who were completely oblivious to their situation. And I didn't even know these people! But the instructor in me had to help and also insure that one of these nitwits did not hurt themselves and shorten my dive!

It also does not cost 5 grand to outfit 4 vacation divers who may only do this once or twice a year. It can be done for less thanks to ebay, leisurepro, scubatoys, and others who not only markdown last years stuff but also sell used equipment. I saw a good basic warm water bc on LP's page used for 99 bucks! Would I use it myself? Hell yeah if conditions were suited to it. And I may buy it to have for students and a new friend who will only dive warm water. The new Sherwood Brut is going to retail for around 250 and if you look for closeouts a warm water reg can be had for less than that. Training is where the bucks come in. Good training anyway. Not these one or two weekend get em in get em done courses. May work for some but most who take these courses are just surviving instead of really enjoying the dives.

And for God's sake get them to do some local diving between trips south to stay current. This where the industry is failing itself. By not encouraging local diving they are in fact cutting themselves out of gear sales, air fills, and repeat business. The shop/instructor that does not have students excited about seeing a bluegill or catfish really deserves to go under. And DEMA is helping kill them by not supporting and promoting the benefits and advantages of diving local.

 

[Superlyte27]

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Again, if you think that retail gas stations work on a 3% margin, you don't understand the full story.

As a once upon a time convenience store owner, I can assure you, gas stations are lucky if they make 3% on a gallon of gas. The whole story is, unless you are doing a sick amount of volume, the gas barely covers the cost of equipment, inspections, blah blah blah, and is a means to getting people into the store.

I'd like to see the numbers on Racetrack and Hess here where there are 30 pumps in each store. I'm sure they are doing okay, but with my simple 9 pumps, we were making a few pennies per gallon.

 

[Superlyte27]

Oceanic's base package comes with a very decent BC, A GT3 regulator and octopus, and a console with computer and compass for $800.00 That's a pretty fair deal imo. My first set of gear that wasn't anywhere near as good as that cost about $1500

I agree that every time a peice of gear moves from hand to hand there's about a 100% markup, except on very high end components like scooters and cave lights. And here's why.

It's risk vs. reward.
Let's say we have to buy (and this is a low number) 30 regulators to get the best price. So we have 30 regulators sitting on the shelf that have cost us several thousands of dollars. We risked several thousands of dollars hoping that we can flip those regulators before they become obselete or someone else comes out with the next best thing. All the while we have bills to pay like rent, electric, etc. Sure 100% markup seems high at first glance, but we got to be able to make enough money to cover the cost of the building, the cost of the stupid amount of licenses, the cost of labor and insurances. At the end of the day, I don't know a rich dive shop owner who got rich owning a dive shop.

 

[natew]

Deflation? I'm not sure we are seeing real deflation, or that we will ever see it in any industry. What we are seeing is a reversal of the skyrocketing prices of goods, mostly caused by the runup in oil, from 2007/2008. Remember that? Most industries saw near overnight price increases of 20-50% on goods now they are realizing that that gravy train has crashed and are back tracking and trying and dump goods that they overproduced expecting to sell at massive price increases. Once those goods are dumped we will see some price stabilization as production has already been cut. And infact this is already happening, try ordering something that is not in stock you'll be waiting as much as two weeks to get it. That's a huge change from earlier years where you could order just about anything and have it in your hands in 24 hours whether it was in stock or not.

As for diving gear, many have mentioned it already. The business model has shifted significantly and those shops who can't keep up with the change will be gone. Dive shops need to now learn that it is about customer service and repeat business. Their money makers need to become courses and dive trips sold to local, loyal, repeat customers. That means providing good service and having a good attitude. Dive shops might also consider monopolizing on other aquatic sports, expanding their business to basic swimming, snorkeling, kayaking, surfing, etc. and using those recreational areas to try and lure people into scuba by getting them in the shop and interested.

 

[Quero]

I've recently joined a consortium of independent instructors who've banded together to offer an alternative business model to the dive shops in our area. Our focus is on providing quality training at a premium price and helping our students get gear at reasonable prices. They pay more for the training and less for the gear ... and in the long term they get better quality products and services at lower cost.
... Bob (Grateful Diver)

This is essentially what I do here at my school. Thailand is known for it's very cheap dive training, but I refuse to cut corners in order to price the courses that low, so I offer fuller courses for more money. I also don't carry a stock of gear for sale; instead I take my divers shopping so that they get the gear that suits them best, and then I rebate part of my sales commission to them to make it cheaper than if they bought it directly from the local retailer.

In response to the OP, I haven't seen any reduction in pricing of gear, but our service prices have been stable without significant hikes for the past 3 seasons now. Course prices have increased a little in response to the higher cost of PADI mateirals, but otherwise, I see neither inflation nor deflation here.

 

[billsreef]

Wrong. The scuba market needs to figure out how generate more customers willing to pay an arm and a leg!

Which company do you think is more profitable, Rolex or Timex? (PS - it's not even close)

So, either the SCUBA industry needs to figure out how to get more people earning enough money to have that sort of disposable income, or is SCUBA supposed to be a sport for only the rich?

BTW, even if I could afford a Rolex, I couldn't justify spending that sort of money just for a watch. Just because there are people out there that can, does not mean that entire sports and industries should only exist to serve those.

 

[MXGratefulDiver]

Personally I wouldn't own a Rolex. I'd either break it or lose it.

But a $1700 dive computer? No problem ...

... Bob (Grateful Diver)

 

[natew]

So, either the SCUBA industry needs to figure out how to get more people earning enough money to have that sort of disposable income, or is SCUBA supposed to be a sport for only the rich?

BTW, even if I could afford a Rolex, I couldn't justify spending that sort of money just for a watch. Just because there are people out there that can, does not mean that entire sports and industries should only exist to serve those.

You can walk into any shop and buy a full setup of gear for under $1500. How is that only a rich person's sport? That's baerly more than $100 a month, or $28 a week. If you consider that gear will last you 5-25 years that's really not a huge expense. Non-rich people are perfectly willing to buy $25,000 cars every 7-10 years, $5000-10000 motorcycles and dirt bikes that last 2-3 years, $2000+ flatscreen 3D tv's that will last 2-5 years, $500+ Ipads and iphones that will last less than two before being discretionally replaced, $1000 surfboards that they will replace next season, but $1500 for scuba gear for 7-10+ years is too much? You have to be "rich" to afford that? Maybe if you are buying all the aforementioned crap you don't need, but people gotta make decisions. I have nice dive gear, I don't have a 3D TV, I don't have an ipad, i don't have an iphone, my car is now 9 years old, and I don't have a dirt bike or a motorcycle. Yeah, you have to be "rich" if you want ALL of that stuff but some of us are perfectly fine to make a choice between those options.

 

[RJP]

Personally I wouldn't own a Rolex. I'd either break it or lose it.

I've owned a few over the years, but I'd never dive with one!

:shocked2:

 

[RJP]

So, either the SCUBA industry needs to figure out how to get more people earning enough money to have that sort of disposable income, or is SCUBA supposed to be a sport for only the rich?

BTW, even if I could afford a Rolex, I couldn't justify spending that sort of money just for a watch. Just because there are people out there that can, does not mean that entire sports and industries should only exist to serve those.

You're missing the point. I'm not saying scuba's only for rich people. Rather, that scuba diving has a certain value and if you don't think that value is worth the money, then don't pay it. But don't cry that you can't afford it.

There are people that genuinely can't afford a ball and bat, but you rarely hear anyone complaining that a pick-up game of baseball is too expensive. For some reason there's this sense of entitlement among lots of people that diving should simply "be cheaper." As a consumer I would love it if that were the case. As a marketer I know that the answer is to create an environment where people willingly pay the asking price. If someone complains about price it doesn't mean the price is too high, it simply means they don't want the product badly enough. That's an easy fix from a marketing standpoint - if you're willing to tackle it properly.