FOREST CITY, Iowa — Michael Happe is the first to understand the fine line he walks as CEO ofWinnebago Industries.
He knows the importance of protecting the RV maker’s brand name, synonymous with massive motor homes that tower over passing cars on the freeway, usually driven by someone with silver hair.
But he also knows that market won’t be enough for the Iowa-grown company to remain competitive. Winnebago is rebuilding itself, expanding its line and doubling down on smaller, sleeker and less expensive RVs that will appeal to younger buyers.
“We believe that we are one of the leaders in the RV industry,” Happe says. “However, we can’t rest on the laurels of that legacy. We can’t be complacent.”
Since Happe took the helm in January, about half of the executive leadership has turned over. And many of the company’s top leaders work out of a newly formed office in the Twin Cities, a moved announced when Happe was hired.
Winnebago has begun moving the production of its biggest coaches to the West Coast.
The company’s most ambitious change came the way of the $500 million purchase of Grand Design, which makes towable recreational vehicles that appeal to Millennials’ lifestyles.
The Forest City-based company has seen its fortunes rebound since the recession savaged the entire RV industry. Annual sales, which slumped as low as $211 million in 2009, reached $976.5 million in fiscal year 2016.
That number is expected to increase by some 40 percent with the acquisition of Grand Design, which since it formed in 2012 has become the nation’s fastest-growing RV maker, with nearly $430 million in annual sales this year.
Industry experts have paid attention to Winnebago’s changing direction.
“It’s been a very insular culture. They have been more reactionary than proactive, historically,” said Michael Swartz, an analyst with SunTrust Robinson Humphrey who covers Winnebago. “And I think that’s kind of the message here: they’ve brought in a change agent to kind of think differently about the business from the top down.”
Winnebago looks to Millennials for future growth
Like other RV makers, Winnebago considers the 55-plus crowd its key customer base. Yet the company is increasingly looking at ways to appeal to younger customers, particularly Millennials.
That generation has shown an affinity for tiny homes, minimalist living and full-time freelancing work. Plus, campers and motorhomes make it easy to get close to outdoor destinations.
In recent years, Winnebago has added bike racks, installed more USB charging stations and brought utility lines inside RVs to allow for more winter use, said product manager Russ Garfin.
Some of the brand’s newest products point to where the brand may be heading.
A new concept vehicle build on a Mercedes-Benz van chassis points to a visibly more modern look.
The four-wheel-drive coach is tailor-made for enthusiasts of mountain biking, rock climbing and other outdoor adventures. And at a much lower price point, a new retro-looking teardrop trailer is positioned to compete for younger buyers.
“We feel really strongly that there’s going to be continuous driving down of age point for RV buyers,” Garfin said. “Our current age buyers are also crossing over and enjoying those same kinds of products.”
The typical age of an RV owner is 48, according to 2011 research from the Recreation Vehicle Industry Association. That number represented a one-year decrease from 2005 data, and the organization believes the average age of customers continues to decline, RVIA spokesman Kevin Broom said.
Those figures indicate younger people, including Millennials are moving into the market, he said.