Dealers and suppliers are waiting for the dust to settle after the latest round of distribution wars resulted in the merger of the two largest distributors and the entry of another large distributor into the RV market.
Though the deal between Coast and NTP-Stag owner LKQ awaits closure, competition hasn’t gone away, as earlier this week, Meyer Distributing threw its hat into the ring, buying 5 Seasons in Portland with plans to leverage its existing automotive infrastructure into a national RV distribution network.
The results of those two deals remains to be seen, but dealers seem to be cautiously optimistic about the potential competition among the distributors.
On the West Coast, the once vibrant competition among distributors has all but dried up, according to Richardson’s RV Co-Owner Steve Richardson.
“There’s not a lot (of distribution) options,” Richardson said. “We had several, but now everybody’s getting gobbled up, so it’ll be interesting to see how competitive they are with parts as we go along.”
Like many dealers, Richardson prefers options when choosing RV parts and accessory distributors. If one company doesn’t carry a part, maybe another will, or if prices become prohibitive, there’s always another buying option. Although prices haven’t gotten to that point, Richardson said that it’s still nice to have options.
“Competition is good. When there were three or four (distributors) it was amazing what the difference in prices were,” he said. “If price goes up, it ultimately goes to the consumer. It trickles down, and as it trickles down it hurts business.”
Many dealers along the East Coast are waiting to see how the distribution market will unfold with similar anticipation, according to New England RV Dealers Association Director Bob Zagami.
“Overall the dealers were a little disappointed in the Coast acquisition and what LKQ is doing in terms of consolidation,” Zagami said. “But on the same hand, I think it’s an incredible opportunity for others to move into the marketplace.”
Zagami said he suspects that recent distribution acquisitions will open up the marketplace to regional sellers, or new competition, such as Meyer.
“Some of these suppliers are going to be squeezed out. It’s inevitable because you can’t carry all the products that all three companies were carrying,” he said. “So those suppliers will have to try to find another distribution route or try to do it on their own. So from a timing standpoint, LKQ did the industry a favor because now these suppliers can get in touch with Meyer or get in touch with Keller, or whoever.”
Richardson agrees that there’s an opportunity in the market for distribution businesses, but until the market settles, he’s left watching the bottom line from the sidelines.
“It’s no different than when you take, say, a Camping World. The larger they get, the more control they have over the market,” he said. “I don’t think that’s necessarily great for the consumer, and I don’t mind them because I think they’re good competition, but there is a point where you could become the Walmart or the Costco of the industry. And I don’t know, is that a good thing?”