Service Dealer recently held another of our regular video calls with a selection of representatives of major industry manufacturers and suppliers.

These sessions have now evolved from when we instigated them during the height of Covid, to be formed of smaller, more compact groups. The hope with making this change is to generate increasingly open and frank discussions regarding current and future industry issues. To help engender this candour, we shall be keeping who specifically joined in on each call anonymous. 

To those who gave up their time and candidly contributed to the debate, we offer our genuine thanks.

Stock

We began as we have many times over the past year or so, by hearing the thoughts of our panel regarding the current stocking situation - and it'll be no surprise to any dealer reading this today to learn that it's still far from ideal!

In terms of any bright points gleaned, we did hear that perhaps the domestic end of the market is seeing some improvements. Although this was clarified by noting that whilst some increased domestic machinery production is taking place in factories around the world, the movement of this stock through ports, customs and transportation logistics, is still just as hard.

Unfortunately we were told that this production optimism isn't quite the same when it comes to commercial machinery, with the more complex nature of those goods leading to increased hold ups. Agricultural machinery meanwhile, is partly suffering from a major issue with microchips in Asia that means that some supply that was expected to arrive on these shores this year, will now not appear at all.

There was concern expressed that this prolonged period of shortages could have led to the market over-ordering. The fear amongst suppliers appears to be that the extraordinarily high level of customer orders placed with dealers could end up being fruitless and cancelled if alternative purchases can be sourced from anywhere. This could eventually lead to warehouses full of ordered, produced, but ultimately unwanted stock. Whilst we're clearly a way off this situation becoming a reality, it is the dark cloud on the horizon that manufacturers are giving serious consideration to.

A theory was proposed to deal with this out of control demand, that may sound counterintuitive, but was argued to be necessary to take the wind out of a maxed out market - a recession.

It was said that what we're seeing at the moment is far different to normal supply and demand. Currently, demand is far outstripping any capacity that any producer is able to match - a ballpark figure was suggested of something like 140% of normal levels. To deal with this, a dramatic change such as a recession needs to happen it was proposed, in order for the market to re-set and reveal 'normal' levels of demand.

Whilst this is perhaps an occurrence that most people do not want to hear, from a manufacturer's perspective who simply cannot meet the current unrealistic clamour for machinery, it's a logical solution to an almost impossible situation.

Changing customer trends?

The conversation progressed to consider whether the events of the past couple of years has or will lead to markedly different customer buying trends?

Whilst this is of course the million-dollar question, one area where the panel did think that change would be seen amongst consumers is in increased forward purchase planning. Customers it was felt, now realise that buying off the shelf is not an option. Therefore improved advanced purchase scheduling would be required - and that should be helpful for dealers and manufacturers alike.

However, would this extra planning in turn lead to an end of the 'just in time' manufacturing philosophy? Frankly, no. Manufacturers are still beholden to shareholders and to maximising profits, so if anything the process would become even slicker.

In the short-term, customer buying habits might also shift more towards repairs rather than buying new it was proposed. This, of course, can be hampered by a lack of spare parts availability. How long this will continue is hard to say, because no one is sure what a 'normal' season is these days. Since 2018 we've had drought, then Covid, and now supply issues - therefore predicting market conditions for what might be considered a regular season, is extremely tricky.

Dealership offerings

One thing agreed upon to keep customers coming back, was that dealers need to be offering exemplary service and a unique experience.

It was felt that dealers should give serious consideration to who their customers are though. It was said that for garden machinery dealers, the wealthy would likely wish to continue buying high-end, big ticket items in person. But perhaps the lower end, domestic machinery sales might naturally migrate to online retailers. So stocking the right brands that offer decent margin and attract the right customers would be key.

It was also felt that there would be a continuation in the rationalisation of dealerships that the network has seen over recent years - with mergers and buy-outs continuing apace. It's clear to everyone that some of the bigger manufacturers desire fewer and larger dealer groups representing their brands.

Smaller, independent dealerships it was said, will need a strong point of difference and a clear identity to continue into a future that will more closely resemble the U.S model of corporatised dealer groups.

A customer value proposition, where a quality online presence is essential, will be vital to ensure survival.