As we’re all dealing with the current coronavirus pandemic, the priority is keeping people safe. But for those of us who are not ‘essential workers’ and have time at home, we can start thinking about what comes next.
At one point, we will emerge from the coronavirus pandemic — one way or another. It doesn’t mean that we will be ready for the next virus or major disruptive event, but businesses will start reopening. What will it mean for local dive shops, dive resorts, charters, and liveaboards?
There will be a bunch of things that we will do differently, here and there. For one, we will see more systematic cleaning of rental dive gear as customers demand it.
Beyond that, there’s the question of the role of the local dive shops in the dive industry.
The current scuba diving industry business model is built around a series of small businesses (local dive shops) at the frontline of promoting, selling, and providing scuba diving products and services to consumers.
For the most part, these local dive shops are still, unfortunately, depending on the retailing of scuba diving gear to sustain their operations. Sales of dive gear correlate to sales of scuba diving courses. And both sales of dive gear and classes depend heavily on the availability and the participation rate in scuba diving activities, which are linked to travel.
Therefore, to plan for life in the scuba diving industry after the coronavirus pandemic, we need to ask ourselves what will happen with travel, training, and retail.
We can safely expect that life will not ‘go back to normal’ as quickly as flipping a light switch — or doing a giant-stride entry.
For a while, unemployment will be higher than before the pandemic.
During the next few weeks, many small businesses will run out of cash and be incapable of reopening. Large corporations are unlikely to recall all employees at the same time. Governments, businesses, and people will come out of this pandemic with increased debts.
The chief economist at Moody’s, Mark Zandi, predicts 3 phases, in an article published on March 21, 2020:
- We’re in the first phase: Businesses close, and the economy grinds to a halt.
- The second one is a phase of job losses.
- Finally, consumer spending will dive. This dive will be significant among baby boomers once they realize they are worth a lot less.
The economy will not bounce back instantaneously and miraculously. It will take time. And baby boomers are still the prime market for the scuba diving industry.
This slow and gradual economic recovery means that luxury items and activities like scuba diving trips, courses, and gear will be in lower demand than before the coronavirus crisis — for a while.
How will travel fare? It’s hard to say. Once a vaccine is produced, we can expect people to lose their fear of traveling. But the economic slowdown, unemployment rates, and debt levels will most likely keep tourism travel at a lower level than 2019 — for a while.
There shouldn’t be a massive impact on scuba diving courses, as long as people have money to spend and they travel. However, the trend toward more online learning will be even more significant. Currently, during the pandemic, students all over the world are forced to discover how to ‘learn online’ as schools, colleges, and universities close their physical facilities. Online learning will keep on growing.
The biggest hit on the scuba diving industry will be on retail sales.
While local retail stores are closing their doors to limit the risks of propagating the virus, Amazon is hiring hundreds of thousands of people. People are ordering online while staying at home.
Even when retail stores will reopen, I suspect that the percentage of sales done online will remain higher than pre-crisis. Many people will have discovered online retail advantages and will stick to its convenience.
“Cramer worries that post-coronavirus US could have just three retailers: Amazon, Walmart, Costco” ~CNBC, March 20, 2020
Beyond the issues facing all retail stores, the current dive industry business model was already in trouble before the coronavirus crisis.
The typical local dive shop is an undercapitalized small business operating on small margins and low volume. It’s not a recipe for success! The coronavirus pandemic may fairly well be the kiss of death for numerous small local dive shops that could barely cover their operating costs from one month to the next, in normal times.
Please sit down with your accountant and a calculator. If you are one of those dive shop operators who can’t survive the next three months with no revenues, there is no point in spending the last bit of cash you have on keeping your local dive shop on artificial life support. If, at the end of the day, you will close, do it while you still have cash. As I discussed in a Scubanomics article on “Scuba Diving, The Coronavirus Virus, and The Dive Industry”, your cash flow is the most important number you need to keep an eye on during the crisis.
Either way, the dive industry will emerge from this pandemic with fewer local dive shops. Since the scuba diving industry business model relies on local dive shops as ‘the entry door’ into scuba diving, it spells troubles for the industry.
We were already facing issues surrounding an outdated business model and a shrinking number of dive shops. The pandemic crisis amplifies these concerns. Pre-coronavirus, the dive industry was already at a turning point, in need of a new business model.
It is sad to think of all the local dive shop owners who will end up losing their small business during this crisis. However, on the good side, it is a perfect opportunity for serious investors to plan a new disruptive business model and be ready to step in once the scuba diving industry is ready to reopen. This will ensure the success of the dive industry for years to come.
It is time to review what scuba diving consumers expect now — how they shop, how they live, and they travel — and adapt our business model to their needs instead of forcing a prehistoric business model on modern consumers simply because we’ve always done it this way. Now is the time to change.
The dive industry will never be the same. It can’t. And it shouldn’t.
You may be interested in the latest articles about the dive industry and the COVID-19 pandemic.