Dealer Evolution

[twistedtree]

My profession is high-tech. I'm just a weekend worrier with saws and forestry. But in the tech business, this issue of box stores undercutting smaller shops (Dell, CompUSA, Best Buy, etc.), paying more for access to qualified support (your local computer store), etc. is an old story. Some companies have managed their way thru the transition well, others have not. It's a real lesson in Dawin at work.

So, I'm real interested in how this is evolving in the chainsaw industry, including Stihl's approach, and Husky's approach. Both models have been shown to work in other industries, but they are oviously very different.

To try to understand this, I've got a few questions for those of you who are dealers.

1) What percentage of your revenue comes from saw sales, and what comes from parts and service?

2) What percentage of your NET comes from sales versus service and parts?

It's very interesting to me that dealers are resistant to separating saw sales from service. Is it economically driven? Do you make more money selling than servicing? My guess would be that there is just as much margin in service as in sales, if not more, but I don't know.

It also seems to me that as a small shop with service capabilities, you have something that the box stores don't, and never will have, and that you can take advantage of that. Isn't there money to be made servicing all those saws sold by box stores? If I were a saw repair shop, I'd be looking to work a deal with the local box stores to refer all their customers to me for that service/checkup after the first few tanks of gas, and I'd charge the customer for the checkup. I'd make those customers feel welcome in my shop, not shunned, so every time they screw something up, I can charge them to fix it. Over the life of the saw, I'd expect to make more $ off that customer than the box store. It seems like a great opportunity, but I must be missing something. Is this just resistance to change?

 

[eyolf]

You've got in mind a business model that works well for some shops in some places. Near me is a local shop that is working just this philosophy; they are a Jonsered dealer, but have signed an agreement to service Husqvarna saws sold out of a box store in town. His experience is that often the box store will prefer to have an arrangement with just one store in town, no matter whose product is involved. Whether it is so or not, I don't know, but Husqvarna supposedly has tried and failed to strongarm some box stores into dealing with their local dealers in situations like this one, but has had no success...the chains do not want to bother with small local issues like that. Husqvarna's only option is to help the local dealer grow into being competitive enough to gain this trade...and we're seeing this trend as Husky is starting to demand that chainsaw dealers stock other OPE stuff!

I've had a couple of discussions with the manager of the local full-line store; his opinion is that not only is there plenty of margin to be had in parts and service, he wants to be well known to the customer ready to move up from the "Murray grade". He stocks very little product that is available in the box stores, preferring to refer loss-leader shoppers to the box stores. This store is owned by a firm that has a few other stores...they aren't all OPE dealers, but all are in the business of serving people that outgrow the box store's ability to service their needs.

OTOH, I know of dealers in fringe/rural areas that still adhere to the older business models. You just gotta know your market.

 

[Fish]

To be a shop willing to repair these big brands, you need to be able to get the parts.

To be able to get the parts, and look them up easily, requires a shop to be a dealer.

Husky requires a lot out of their dealers, and also lets the big box stores sell the
product without any responsibility to the customer. Stihl requires a lot as well, even
more, but protects the dealer's area jealously, even on the internet.

 

[eyolf]

<i>To be a shop willing to repair these big brands, you need to be able to get the parts.

To be able to get the parts, and look them up easily, requires a shop to be a dealer.</i>

No argument there, but the Jonsered dealer had no trouble getting a new air filter and clutch side seal for my Husky 395. My stepdad has a Husky 345; he wanted a new gas cap and I got him one for it there, that could be a Jonsered 2145 part too...But it might also be that one of the other stores in the family IS a husky dealer, so they are back-dooring it in that way. Two of the other stores are OPE dealers, and there are some appliance stores. These people are working hard at building trade, they have invested heavily in parts inventory and up-to-date service shop, the parts people insist that if it is out there somewhere they'll find it.

The Husky and Stihl dealer in that town, and the next sizeable town east and west are all part family owned chain of John Deere dealers. They have the Deere ag, light and heavy commercial franchises, so aren't all that concerned with "small potatoes" I guess. Kind of leaves an opening for someone else.

But that's just my general area. I was at a little chainsaw shop in Wisconsin last year and it looked like they hadn't changed their business strategy for 40 years. That's the kind of guy that is threatened when K-mart throws up a store in the next town and starts selling saws.

My old Jonsered/Husky/Homelite/McC dealer called it quits a few years ago when he read the handwriting on the wall...get bigger or die, and he didn't want to sell lawnmowers and snowthrowers. He has stories of being able to buy some McC and Homie models at box stores for within a dollar or two of his cost...and it bugged him to no end, until he realized that most of them were sold to people that were'nt really his customers anyway. Part of his problem was modern logging and pulping; chainsaws last a lot longer when they onlly trim a little here and there!