Editor's Note: This article originally appeared in the Fall 2009 issue of Rural Lifestyle Dealer.
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.
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 Sno-tek snowthrowers (a lower priced brand manufactured in China).
“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.
“I 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…” – Daniel Ariens, President/CEO, Ariens Co., Brillion, Wis.
“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 lawnmowers 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.”