Growing Season, The
Dealers share thoughts on how they plan to find growth in 2006 as forecasts call for flat-to-declining overall industry sales.
Wright’s Small Engine
Our sales were up just a tad last year. A bit of it came from equipment sales, but the majority was from increased service revenue. We raised our labor rate last year, which helped. But more than anything we really started pushing the fact that we’re only going to service the brands we sell.
Turning service work away actually helped us increase revenue. We know the brands we sell inside and out. By only working on that equipment, our shop productivity greatly improved, as we were able to turn repairs around a lot faster and push more through the shop. Plus, our customers who’ve bought equipment from us didn’t have to wait as long to get something back from repair.
We closed 2005 on a strong note. Being up here in Minnesota, we do a pretty good snow thrower business. December 2005 was a great month for us-for snow thrower sales and repairs. But after the first of the year we didn’t see much snow for a while so business dropped off. We sold a few more snow throwers in February and March, but not many. Thankfully, since December was such a good month, we aren’t stuck with too many units to hold over for next year. I’m seeing a consumer trend toward smaller, single-stage snow throwers in the 7- or 8-hp range.
We’re looking forward to this season. The way I look at it, at least in our area, people still have money, and they’re still going to spend it on lawn care products. Their lawn is their biggest concern. It’s a little different with snow throwers. As long as it rains I think we’ll be all right.
One of our key suppliers has come out with a great co-op advertising program that is really going to help us create a big marketing splash in the community. Rather than doing these little 3″ x 6″ ads, we’ll be able to do half- or full-page ads. It’s worth a shot and I’m looking forward to it.
The consumer zero-turn market continues to grow. I’m focused on selling our customers the product they needand a durable one. I’m shifting emphasis from one brand to another this year since that first brand doesn’t seem to be holding up in the field.
On the other hand, the lawn tractor market continues to shrink. We used to sell 75 or 80 a year. Now we’re selling around 30. We try to qualify the customer when he comes in here. Customers usually have an idea what they want in terms of horsepower or zero-turn vs. tractor. We try to help him figure out what he actually needs.
Gardenland Power Equipment
Everybody says the economy is improving, and the last few months seem to indicate a positive direction. The weather hasn’t been cooperating, though. A cold, wet month of March has kept our off-season quite slow.
High gas prices have also played a role. They really took a toll on us last year. Our overall 2005 revenues were almost identical to the previous year. We would’ve seen some growth last year, but the sharp rise in gas prices hurt us in September and October, which are normally good months for us.
We’re expecting a lot of the same this year. If fuel prices climb back up we’ll see another flat year: in unit sales, parts and service. If gas prices stay below $2.50 and the weather improves, we’ll probably see a good year.
One thing we’re sure of is that we want to continue consolidating our equipment lines in order to streamline our business.
J’&I Power Equipment
Our overall sales increased 25% last year with strong gains in equipment sales. Billed service labor also increased 12% while parts sales increased 17%. We saw a lot of growth in commercial equipment. Commercial walk-behinds increased 30% while zero-turn riders increased 60%. Our off-season, which runs from October-February, was up 22% from a year ago.
Our 2006 budget is calling for an overall sales increase of 20%. The bulk of the increase is expected to come from mini-excavators, skid steers and zero-turn mowers. Though we also expect an increase in consumer handheld equipment and mowers, the larger equipment mentioned earlier will generate the bulk of the dollar increase.
Billed service labor is budgeted to increase 20% this year. Half of this increase will result from our higher shop labor rate, and the other half will come from the implementation of more flat rate charges.
We expect the commercial landscaper and maintenance business to continually grow in our market area for some time. The development of home building sites will also be strong in 2006, increasing the market for larger equipment.
One of the most dramatic changes we are making this year is our advertising. A few of our major brands are using a national firm to purchase and place our advertising. This will ensure that we have a consistent, and probably more professional, advertising program than we’ve been able to execute in the past.
We have dealt with box stores since day one. We opened a couple blocks away from a Sears store in 1974. Over the past 10 years, we have seen a Home Depot and Lowe’s each open within a mile of us. Over the past three years Home Depot has added two more stores and Lowe’s will be adding another one shortly, all within 10 miles of our dealership. Even though these guys are now offering more name brand equipment and to some extent service, our continued growth has come from changing with the times. We have upgraded our facility over the years. Numerous other dealerships in our market have come and gone. Most of these dealerships did not change with the times, and for the most part, carried the brands now in these box stores. Our success has come from sticking with the brands that support the dealer network.
We opened a second store in early April. Our current market area covers roughly a 20-mile radius. With the ongoing development and growth of our county, the driving time has doubled for the outer-area customers to our store. So we looked at where our largest concentrations of customers were coming from at the outskirts of that 20-mile radius, along with the projected population growth in those areas. We chose a site about 20 miles away between two large markets that have the most potential for growth. Our growth will continue to depend on our ability to differentiate ourselves from the box store in terms of knowledge, service and product lines.
Morgan Power Equipment
Last year was a record year for us in almost every category, including astronomical record sales in snow blowers. But, since the lack of snow this past winter won’t create that strong fall demand for snow blowers, we’re anticipating a drop in snow blower sales of about 70% this year. Thus, we’re also anticipating a flat year overall.
Without snow thrower sales, it’s pretty hard to make it up in other areas. All we can do is try to grow other areas of the dealership to make up the difference.
For the past 10 years, we’ve eliminated quite a few lines. We’re pretty much down to three core lines. Now we’re looking to venture into new product categories altogether. We added a line that gives us a good high-end consumer walk mower and generator lineup. We’ve also added a compact diesel tractor line. We’re targeting the “gentleman farmer” with this product. We’re in a very rural area, and there are a lot of people with horses around here. I think a few of our landscape customers will also take to this product.
We’ve really focused on the landscaper to keep our business growing. Record 2005 snow blower sales notwithstanding, most of our other product categories also performed well. I attribute that to a program we came up with a few years ago. We maintain abnormally high stocking levels for parts. We stock a part as a regular part if we sold two the previous year. An accountant would say I’m crazy. But it allows us to service our landscape customers while they wait.
We provide free over-the-phone tech support to all our landscapers for the life of their machines. We also put on service schools where we teach our landscape customers how to become technicians for our main commercial mower line. We’ve been doing that for 10 years. We had 150 customers at our school last year. When you put all these little pieces together, and you do them year after year, it’s going to help you strengthen relationships and grow sales.
Fun Wheels Power Equipment
Our sales were way up in 2005-in all departments. The commercial market is growing by leaps and bounds here. We are also growing our residential business.
We are expecting another banner year in ’06. The economy here is really booming.
We’re coming off an excellent off-season. We had a great Christmas, took a couple weeks off, and came back to a lot of business. The winter was very mild here, which has allowed the landscapers to continue working through it.
We’ve added a couple more commercial mower lines this year, in addition to the two we’ve been carrying. One line, which specializes in front-mount models, has really taken off. Its opened up a whole new market of commercial customers to us. We’ve also added an entry-level brand to help us with the new landscapers who can’t quite spring for a brand new high-end mower.
On that note, we are offering low start-up-cost package deals for landscapers who are just starting out in the business, which include all the equipment they’ll need to start maintaining lawns that same day. So far this has been bringing in a lot of new business.
In regards to marketing, we will continue our aggressive targeting of the commercial market. We are adding e-mail communications, commercial user specials, and are in the process of revamping our Web site.
We are also targeting homeowners more heavily this year. We are taking advantage of a supplier’s national advertising plan, and also look to do some billboard advertising to build product awareness. We have a couple of dealerexclusive product lines that continue to gain interest as more customers hear about how well those products are built and how competitively priced they are.
We’re expecting an increase in service business this year, which has been the trend for quite a while. We only service what is purchased from us. The more equipment we sell, the more service work we have. Since our equipment sales have been growing every year, our shop work has continued to increase.
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