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Perspectives on the Rural Lifestyle Market:
Mower Manufacturers

There’s no denying it: The last 12 months have been tough for equipment manufacturers with a major stake in the rural lifestyle market. They’ve been challenged by stagnant or falling sales, a sagging housing market, overcapacity issues and a credit crunch.

But as fall arrives, there are new signs of encouragement on the horizon. Housing starts were up late this summer, and experts believe the U.S. recession has probably run its course.

A look at our primary research of dealers reveals even more optimism. Nearly 70% of equipment dealers told us they expect sales of lawn-and-garden equipment in 2010 to be as good or better than in 2009.

What this means is that rural lifestylers could soon be returning in greater numbers to dealerships looking to buy tractors, mowers, implements and outdoor power equipment.

For manufacturers of mowers and outdoor power equipment, rural lifestylers aren’t just another market segment — they’re the lifeblood of the customer base.

In this special report, the editors of Rural Lifestyle Dealer touched base with some of the industry’s best-known manufacturers of mowers and outdoor power equipment to get their observations on the rural lifestyle market, and what the future holds for their companies and this unique market.

We use the term “rural lifestyle” as an all-encompassing description of a diverse market that includes hobby farmers, acreage owners, landscape contractors, golf course operators and more.

Our editors asked the manufacturers how they define the rural lifestyle market, how they distribute their products and what their best dealers are doing to be successful.

The aim of the interviews you’ll read on the next several pages is to offer equipment dealers broad insight into what it takes to better understand the uniqueness of this marketplace, and more importantly, be profitable in serving these customers.

 

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Ariens: Diversity in Products, Distribution Brings Sales Strength

Interview with Daniel Ariens, President/CEO,

Ariens Co., Brillion, Wis.

Mike Lessiter, Editor/Publisher

The Ariens Family Brands

“The Ariens brand consists of premium-value residential consumer products. Because Ariens started as a tiller company, our identity tends to be in the rural markets. The Gravely brand is similar in terms of its market access. It’s for rural and big properties, and is really a high-end homeowner and professional product. We sell a lot of our large zero-turn mowers to 1 to 10-acre properties. And then we have two brands that we bought in Nebraska in 2007: EverRide and Great Dane. These are commercial mowers that have given us more access to the cities. And then, we have a large aftermarket parts business in Stens. Together, these brands take us from our own wholegoods to the spare parts needed to fix anything in the outdoor power equipment industry.”

A Diverse Distribution Model

“With all the brands, we have about 2,300 dealers total. Ariens and Gravely products are sold direct to dealers while Ariens is also sold at Home Depot (HD). The EverRide and Great Dane products are sold through two-step distribution, as they were when we acquired them. To change it would upset the channel and we don’t want to go backwards.

For those two brands and their current smaller volume, it’s a lower cost way to market than with a direct sales channel. In the commercial markets, there’s been a lot of success with two-step distribution. We’ve always sold direct with Gravely, though we had been two-step with Ariens for many years.”

Home Depot Arrangement

“We’ve been selling snow blowers and chore products through HD since 2001, and started with zero-turn mowers this year. HD views us as a premium alternative to the other brands it carries. Two things we do with HD are unique. First, we work closely with them to manage inventory. Back in 2003-04, there were too many snow blowers in the pipeline and having to liquidate units was troublesome for everybody. We’ve learned from that and manage inventory at HD just as carefully as with our own dealers.

“Second, we’ve said we’ll be singularly focused on HD as our partner. Other box stores have asked to sell our products, but we’ve said no. We’re not going to do business with multiple box stores to hedge our bets.

“Because we’re not muddying the water with multiple boxes, it also makes it easier for our dealers. We constantly suggest to them that they figure out a way to develop a relationship with the local store manager at HD. Whether the dealer wants to be involved in the relationship is up to them, but if the dealer is willing to manage the relationship, it can be good for both parties.

“In terms of sales, HD represents about 25% of our revenue. The bigger the demand is for snow handling, the more sales we’ll do through HD. In the future, it may represent one-third of our sales, not because of a decline in dealer sales, but with the growth opportunities with a large and growing retailer.

“For the customer, they can buy from a dealer that offers setup, delivery and warranty. Or, they can buy from a retailer that’s open Sunday and late at night, but won’t receive the same level of support. The products are the same and prices at both are carefully managed — that’s the only way it works. The last thing HD wants to do is discount the prices in the store.”

A New Frontier…Utility Vehicles

“While utility vehicles are outside of what we’re known for — cutting grass — we’ve looked for an opportunity for a long time. We always thought utility vehicles would fit the Gravely dealer network, particularly those dealers with municipal and commercial customers, as well as rural customers. Because of small margins, it didn’t make economic sense unless we manufactured the units ourselves, but the right opportunity hadn’t arisen.

“So, when Land Pride decided to exit the utility vehicle segment earlier this year, the time was right. The Treker is a well-designed, robust unit with high ground clearance and fits our standard for quality at a good value proposition. It integrated well into our plant in Nebraska, and we’ve been able to apply what we know about lean manufacturing to gain efficiencies.

“After seeing this unit perform on our track, I’m really excited about it. If you’re working on rural space, on the farm or are just a hobbyist like me that wants to go into your woods and haul logs, gravel and debris, it’s a great working vehicle. This is new business for us in 2010, and we’re continuing to look for dealers for it.”

The Good, the Bad & the Ugly

“Our best dealers are well-balanced in three areas of their business: retail sales, parts and wholegoods. The good ones have also learned to become excellent merchandisers — understanding how to display the product, upsell and enhance their margins.

“But in looking at all dealers from top to bottom, there’s still a lot of room for improvement. There are still too many stores where you wouldn’t want your wife to come in and use the bathroom. People don’t want to sit on a unit that’s covered with dust or have to navigate a cluttered showroom to get to a piece of equipment.

“Since dealers get to the store long before the first customer arrives, why not take 15 minutes to clean everything, wipe down the equipment and organize the shelves?

Everyone focuses on moving the equipment where it can be seen but then ignore the inside of the store. Merchandising is the ability to tell a story about the equipment — which is something Home Depot can’t do well. If the dealer does things right, he can differentiate himself and be seen as the expert — the whole reason to do business with an equipment dealer in the first place. Dealers need to know the product, but they also need it clean and well-displayed so it’s not an intimidating experience for those walking in the door.

“Another common thread of the good dealers is they’ve figured out how to really retain solid people, particularly in the service shop. Yet some dealers still haven’t figured out how to make the shop a profit center. I still hear dealers say you can’t make money in service, but that’s a crock. If you’re not making money in your service shop, you don’t belong in the business. I say that because many dealers have figured out how to measure their techs and the efficiency in their shop.”

A Sales Rebound in 2010

“We finished our 2009 fiscal year with a 3% increase in sales. We’re even more optimistic about next year and expect a bounce in sales for two reasons.

Take the landscape contractors. For 4 years now, they haven’t replenished their equipment and that’s too long — they’re limping along. From our Stens parts business, we can see that the repairs are being made, but we know much of the equipment is beyond its effective life. It’s the same story for homeowners. The typical life of lawn mowers is 3-7 years and our industry has been in 4 years of decline. This industry has never seen more than a 2-year decline in the last 25 years. So replacement cycles are calling for a rebound next spring. We also see nice demand for our newly formed Gravely Turf brand, which will focus on the sports, golf and municipality grounds markets.

“As for the snow products, we receive weekly reports on the weather forecast, including an analysis through the end of winter. We watch the weather and closely manage our order board, inventory and build schedule. It looks like early snow in the Midwest, starting in November and then a fairly average winter after that. Early snow is huge, so it could bring a good early retail season. We’ve already seen strong retail for snow products as of August. New England is expected to have strong snow after the first of the year, so January through March looks like a strong season in snow. Our goal is always to have everyone’s inventory run out, and but we can still fill in product in February and March if the demand is there.”

New Products for 2010

AMP Rider (All-electric 34-inch riding lawn mower); Ariens Precision Log Splitter, Gravely Pro-Turn 200 (professional grade ZTR in cutting widths of 52, 60 and 60 inches) and Snotek snowthrowers (a lower priced brand manufactured in China).

 

 

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Dixie Chopper: Improving Its Product Focus

Interview with Gary A. Morgan, President & CEO, Dixie Chopper, Coatesville, Ind.

Dave Kanicki, Executive Editor

Moving Beyond Commercial Mowers

“Dixie Chopper is in the mid-mount mower business. We estimate that around 300,000 mid-mount mowers are sold annually in the U.S. Traditionally, most of our sales have been commercial mowers for landscapers and municipalities. This is where we’ve done very well over the years. We’re also developing a loyal following among large property owners — people with 5 acres or more. We’re looking to expand this segment and become more consumer-oriented with some new products we’ve introduced. We’ll be introducing others later this year, so our dealers will need to adapt. Our focus isn’t really changing because we’ve always aimed at the rural lifestyle-type customer, but now we’re doing a better job of getting to them.

“A couple of years ago, we introduced the Iron Eagle, which is our residential unit. I call it more of a ‘prosumer’ unit because it has a lot of the same features and benefits that our Silver Eagle and Xcaliber professional models do. It has a different engine and doesn’t go as fast as our commercial equipment.

"Otherwise, we’re not differentiating it by cheapening these mowers. But some of our dealers struggled with it because they’re used to selling to commercial cutters and didn’t know how to go about selling this type of product. Some just had their minds made up that they couldn’t sell them. But the dealers that have gotten on board have done a fantastic job of selling them. We sold out of most of those models by the middle of May. We’re very pleased with it.”

No Box Stores

“In terms of distribution, about 90% of dealers that handle Dixie Choppers specialize in the lawn and garden businesses and 10% are farm equipment dealers. We don’t necessarily have a preference between the two because we look at what’s best for each individual market. Our dealers must be able to service our equipment and customers. We haven’t done anything with the big box stores and have no plans to do anything with them or the mid-boxes like Tractor Supply Co. Art Evans, founder of our company has an expression: ‘Our product doesn’t come in a box, so you can’t buy it in a box.’ If they don’t have service capabilities, they can’t sell our equipment. The closest thing we’ve come to a chain is Theisen that has 9 locations throughout Iowa.”

Higher Dealer Standards

“We currently have about 540 dealers. We know that 60% of our business is being done by 40% of our dealers. We’re in the process of evaluating each one and seeing where things stand.

“We’re implementing programs to help our dealers improve and we’re making some recommendations on how they might do so. We’re here for the long run and we want our dealers to be here for the long run. We want them to properly represent Dixie Chopper. With time, we’ll be initiating standards that dealers will need to live up to if they’re going to sell our product.

“We’re the manufacturer, but when the customer comes face-to-face with a Dixie Chopper product, he’s coming face-to-face with a dealer. It’s absolutely essential that our dealers are capable of handling whatever complaint or need our customers have. So we’re very concerned that the dealers understand how to get it done.

We’re in the process of putting together Dixie Chopper University that will be a technical service school held here at the factory. I struggle when technical training only involves PowerPoint presentations with nobody getting their hands dirty. We’ll supplement the factory training with videos that will be available on the Internet for our dealer service people. So when they run into a particular problem, they can go on the Internet and watch a video to show them how to resolve the issue.”

Opening a Company Store

“We’re in the process of opening our first factory store in upstate New York. We spent 6 months trying to find a dealer in the area to take on the product with no success. I’m very familiar with the area because that’s where my car dealership was. Besides the store, we’ll also have a parts warehouse there. It’s going to be a center of business for us.

“We’re going to see how this one gets up and running before making plans for any more, but Art Evans, has already given me his recommendation on where we should put the next one. My preference is not to have company stores, but I’m going to represent the product wherever I have to. If that’s what it takes, that’s what’s going to happen.”

As Good or Better Margins

“The number one characteristic we’re looking for in our dealers is a commitment to Dixie Chopper. That means that they’re not just out there selling our products as an afterthought, such as ‘Oh yeah. I’ve got this other brand, Dixie Chopper, if you want to look at it.’

“And there’s good reason that they should be committed to the brand. In a lot of cases, our larger dealers that sell tractors and more expensive equipment are finding they can make similar margins selling our mowers as they can selling the larger ticket items. One dealer told us, ‘I used to think that the $80,000 or $100,000 tractor was where all the money was. I’m finding that I can sell a Dixie Chopper and get as good or better margin and I don’t have to negotiate as hard as I do on a $100,000 tractor.’ They certainly don’t have as much money tied up in the entire process either.”

A Written Plan

“Our best-performing dealers have a written plan to look back on and refer to. They know where they want to go. They know what they’re trying to accomplish. They know how many lawnmowers they want to sell in the next 12 months and they know whether they’re meeting their own plan or not.

“They also know that the secret to selling this equipment is to getting the customers in the seat and letting them try the machine. One very good dealer personally follows a qualified prospect home to let them demo the mower on their own property. We’re working on some plans to make this easier for our dealers to do. Demonstrating the equipment is absolutely critical and something our best-performing dealers do routinely.”

Dealer Purity is Shortsighted

“I know from my days with New Holland what kind of pressure farm equipment dealers are under to not carry other brands at their stores. I believed then, and still believe now, that dealer purity is shortsighted on the part of the tractor makers. I believe that what’s good for the dealer is probably good for the manufacturer. If a dealer is getting the job done for us, I don’t care what else he sells. He can sell toasters as far as I’m concerned. A partnership needs to be good for everybody.”

New Products for 2010

“We’ll be introducing the Eco-Eagle, our new mower that runs on compressed natural gas. We recently finished testing it so we know it meets EPA and California Air Resource Board standards. We’re also going to be the first in the industry to offer a 4-cylinder Caterpillar diesel engine on a zero-turn lawnmower. It’s the smoothest running engine out there as far as diesel engines go.

“We also have another model unveiled at the GIE Show, October 29-31 in Louisville. It will be between our Iron Eagle, which is our prosumer model, and our commercial machine. It is ideal for the rural lifestyler who doesn’t want a completely commercial machine, but it’s heavier duty than the Iron Eagle. It’s got a commercial engine on it and has a nice deck.

“We recently demonstrated a GPS-guided lawnmower. You mow with it once, and the next time you come back you push a button and it does exactly what it did the first time. The good news about it is it’s accurate to within half an inch.”

 

 

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Schiller Grounds Care: Rededicating Brands, Expanding
Dealer Networks

Interview with Tony Weber, Brand Manager, BOB-CAT, Schiller Grounds Care, Johnson Creek, Wis.

John Dobberstein, Associate Editor

Rededicating the Brands

“Schiller Grounds Care was established January 1, 2009 by the merger of Schiller-Pfeiffer, maker of Classen, Little Wonder and Mantis gardening, landscaping and turf care equipment, and Commercial Grounds Care, which makes BOB-CAT, Bunton, Ryan and Steiner grounds care equipment.

“Since the merger, Schiller has created an individual brand-strategy business plan that starts with emphasis on brand identity and product enhancements. We’ve hired dedicated brand managers and formed a senior management team, expanded our sales and marketing teams and enhanced our web sites to offer customers a wealth of product information.

“We’ve also created online sales and service schools for our dealers and their technicians so that they can learn at their own pace. When we did a soft launch earlier this year for the BOB-CAT FastCat Pro 61, a commercial zero-turn mower, we developed a mini web site for that product that shows why it’s different than anything else out there. These activities drive more people to look at our stuff and head back to our dealers.”

“We’re investing a lot in product development right now, which is good because it’s really easy to get stagnant in an economy like this and not do anything.

“Some of our products fit really well with the rural lifestyle market. Steiner makes an articulating four-wheel-drive tractor with multiple attachments that fits our target customer — hobby farms and small acreages. The reason Steiner tractors have done well over the years is the capability of doing multiple tasks with them, like mowing lawns, plowing snow and pushing dirt. There are 21 different attachments for the tractor. It competes in the compact tractor market but it’s not as expensive. In the Ohio Valley, the Steiner name is well-known and well-respected.”

Growing the Dealer Network

“Right now we’re looking at increasing our number of mower dealers. I’d love to double our mower dealer network. The issue is not just adding dealers in markets where you’re already established, but also adding dealers in the places where you don’t have good market penetration.

“I don’t want us to make the same mistakes some of our competitors have made where they’ve put a dealer on every corner. That’s had a negative impact. Those dealers don’t have a market they can call their own and that makes it tough for them to stay in business. We work with our distributors to ensure each dealer has ample territory to be successful in selling our products.”

Various Ways to Distribute

“We use several different types of distribution channels based on the product. Mantis home and garden products, you’ve probably seen them in TV commercials, they enjoy a large sales and service dealer network. Mantis is also successful through direct sales (mail order and online) and through various rental and retail outlets. Steiner is sold through dealer organizations. The other products we handle are through two-step distribution.

“We’re seeing some consolidation in distribution — fewer distributors, but with bigger territories. The dealers haven’t changed too much. We don’t actively go after dealers that only carry residential products, but we are aware that residential users are becoming a bigger part of the commercial dealers’ customer base. Our focus is commercial products and we look for dealers who can sell and service those products.”

Saying No to Big Box Stores

“A lot of our competitors have gotten into box stores. We don’t put any BOB-CAT commercial mowers or Steiner Turf Equipment into box stores. We do distribute and sell some of our products through a variety of sales channels, but our commercial equipment is sold through commercial dealerships. They support our commercial lines with service and we support the dealer through territory protection, which offers customers the best possible service after purchase.

“Everybody in our organization has a different view of box stores. My view is that I don’t want to irritate our dealers. I’ve resisted them and sometimes I get criticized for it.

“There are very few box stores that have the capability of taking care of a product after the sale, so you need a dealer organization to do that. A lot of dealers I’ve talked to are now embracing box stores and they do really well with warranty work and parts sales.

“Depending on the area, many dealers remain steadfast that they will not service equipment purchased from a big box store.”

Reaching Out to Consumers

“We know a lot of our commercial mowing products are attractive to residential customers because they see value in the durable, robust designs and simplicity of operation, and the speed and quality of cut.

“We’ve positioned some products so the consumer has the opportunity to get commercial-grade equipment at a little lower cost. What drives some consumers is they may have gone to a box store early and bought a $2,995 zero-turn and had it for a couple of years before it had to be replaced.

“Instead of going to a box store, they go to a dealer, who tells them if you want a good product you will pay a little more for it, but it will last you longer.

“We will take a product and use a more affordable engine solution, instead of a full-blown commercial engine. For a residential customer, that isn’t going to have a lot of impact on them because of the limited number of hours they’re going to run the machine. We try to go where we can get a little more affordability by trading some longevity. Most commercial engines are designed to run 2,0003,000 hours. For a residential customer, 500 hours in a mower’s lifetime is going to be extremely long. We don’t want to cheapen the product, just give customers features that are going to mean the most to them.”

Dealers Are the Key

“I firmly believe the dealer makes or breaks you, because if he’s not happy with your product or doesn’t think he’ll make money with it, he’s not going to sell it. It’s as simple as that.

“We’ve got to give the dealers as many tools as we can, including service training, sales training, retail financing, marketing and promotion. We’ve got to help them as much as possible so they can be more profitable.

“One of the comments we hear is that there’s not as much brand loyalty out there anymore. That’s a scary thought, that you’ve pushed dealers to where they feel there’s no option but to go with someone else. I don’t think we treat our dealers like that. We’re just the opposite. People are starting to find out why BOB-CAT is an up-and-comer and why we’re promoting that brand. I don’t know how many times I can say it: The dealer is the key.”

Thoughts on Consolidation

“You’re going to see more consolidation. Based on what I’m seeing in the field, I don’t know how some manufacturers in the commercial field are going to survive. We’re very lucky. We’re very financially sound. We’ve got a very good control on inventory in the field, and we’re in a pretty good position going into next year.

“A lot of manufacturers are in the opposite situation. They’ve got too much inventory and their dealers are angry. Floorplanning costs are up, and the more inventory you throw on top of that the worse it gets. Are we going to lose some manufacturers? I believe so. It could be consolidation, or it could be some brands that just disappear.” RLD

New Products for 2010

“The BOB-CAT FastCat Pro 61 is a commercial zero-turn mower that offers high performance at a fraction of the weight of larger, harder-riding units. It makes an inexperienced operator look like they’ve been riding a machine for some time, because it’s so easy to operate. The quality of cut is phenomenal. We’re trying to position the BOB-CAT brand as being very affordable, very durable and high performance, and I think that has a lot of appeal to our customers right now.”

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