Tennessee lost its last single-store John Deere dealer in March, but it didn’t lose a dealer. Clifford Pugh, owner of Tri-County Equipment in Crossville, Tenn., announced recently that Deere informed him in March 2020 that they would be terminating his contract on Sept. 2, 2020 because of lower than expected market share performance.
In the release informing customers, Pugh didn’t hold back on how things played out. In the statement he said, “After lengthy negotiations with John Deere and their single, specified potential buyer, I decided not to sell and let John Deere terminate the dealership. They then told me that March 15, 2021, would be my final day as a John Deere dealer.” He goes on to say that on March 15, Deere showed up with several trucks and loaded their equipment and took down the John Deere sign.
While that was understandably a hard day for Pugh and his staff, they brushed off the dust and looked to the future. Tri-County Equipment might not have a John Deere contract, but they’re not going anywhere. Instead, they are adapting and focusing on serving their customers like they always have. The dealership has already announced the addition of Simplicity lawn mowers and Ferris zero-turn mowers. Pugh says they signed on with Yanmar and TYM for compact tractors and just signed on with McCormick for its full line of 20-290 horsepower tractors.
“The brands may be different but the service will remain the same. Nothing has changed in Tri-County Rental nor in Tri-County Parts & Equipment (Federated Auto & Truck Parts),” Pugh wrote.
Single-store Deere dealers (or any other brand for that matter) closing of course isn’t a new trend. But it still always stings a little. According to Ag Equipment Intelligence’s 2021 Big Dealer Report, 91% of John Deere’s estimated 1,544 ag stores are part of a “big dealer” (meaning groups that operate 5 or more ag locations). That leaves about 144 stores that are not part of a large organization in the U.S. and Canada. Looking at the industry as a whole, the report estimates there are 7,000 total ag stores in the industry and about 32% of those stores are operated by a big dealer.
Responding to the news article on Farm-Equipment.com, one dealer said, “We were told ‘you’re a buyer or a seller.’ How much is enough, do you really want the headaches of an additional store? So, if you don’t go along with company’s plan, you will be judged by market share. The problem is the company is in control of your AOR, and the discounts that go along with it.
“Plus, they control your inventory level and what you’re allowed to have on order. Basically, the company is in control of how much you can sell in your AOR, thus your market share. They have become a stock market driven manufacturer. No matter how long you have been a dealer, there is no loyalty.”
When situations like this arise, brand loyalty — whether to the OEM or dealer — gets put to the test. In Farm Equipment’s most recent customer brand loyalty report, published in June 2020, only 63% of farmers described themselves as “brand loyal.” This is a 12% drop off in the past 3 years, which returns brand loyalty levels back to those seen in the first study, 10 years earlier.
The report also surveyed dealers for their take on farmer brand loyalty. Some see less brand loyalty as being traded for “dealer loyalty,” where customers are more focused on the quality of service and communication from their dealership rather than the dealership’s specific mainline OEM. If that is the case for Tri-County’s customers, the dealership should be in good shape going forward.
If you were to ask Pugh if there’s life after Deere, he would tell you “yes.”