Service Dealer convened a group video call yesterday with a selection of dealers from around the country, to gauge the network's mood at the start of this new year.
We were joined by some regular panelists, as well as a few new faces, all of whom we are most grateful to for giving up their valuable time and for being so open and frank about the challenges they are facing.
Supply crisis
It will hardly come as a surprise to learn that the topic at the top of everyone's agenda right now is the ongoing supply crisis. Everyone we spoke to was suffering with this in one way or another. Several remarked in fact, that they were glad to hear other dealers in different parts of the UK relating just the same problems that they had. They were grateful to have it confirmed that it "wasn't just them". Whilst it doesn't change the reality being faced, I hope our dealer subscribers reading this today, will have a similar feeling. It's not just you - everyone is facing significant hardships in obtaining stock.
People on the groundcare and domestic side were saying they still hadn't received stock they had been promised for January, with expectations for delivery, perhaps now being March / April. This gave real cause for concern because the feeling was if it's as bad as this already, how will supply pan out when we get into the season proper? Items such as chainsaws and brushcutters were in particularly short supply - but with unabated customer demand.
It was also mentioned how it was ironic that over the past few years, manufacturers had encouraged dealers to get into cordless products in a big way, only for it now to be a real struggle to get hold of any batteries!
Dealers we spoke to yesterday in the agricultural sector meanwhile, said they are expecting massive increases in the market this year, and whilst there is a bit of supply left at the moment, that will soon run out. We heard that the wait for customers on certain products is going to be so long, the item purchased is likely to see two separate price rises on it before the customer even takes ownership.
Apparently demand for agricultural machinery over here is facing all the same worldwide supply chain stresses as groundcare, but is being stretched further via the large increase in the European ag market. The combine market is particularly increasing on the mainland for example, following EU post-Covid investment in farming. This is making it even harder for machinery to reach these shores.
Matters made worse
The consequences dealers are facing day-to-day in not being able to get hold of wholegoods and spare parts are both obvious and significant. However it gets worse we were told, with other factors compounding these problems. Firstly, there are ongoing staff absentees due to Covid infection and isolations. But moreover, there appeared to be great misgivings in the network regarding a lack of messaging - or by unreliable messaging - from suppliers.
We had dealers relating these complaints to us last year, that certain manufacturers just weren't being open and honest with them regarding delays and deliveries - and unfortunately matters have not improved so far this year. In fact, with one major manufacturer currently being described as 'leaderless' and thus 'rudderless' by more than one dealer on the call this week, some have gone backwards by the sounds of it.
As well as the natural frustrations of not knowing when or what to expect and therefore not being able to answer customer queries, there are bigger issues with this communication breakdown at play. Dealers told us their ability to plan ahead is being severely hampered. Their manufacturers are asking them for their forward orders and telling them to plan ahead, but how are they able to, they ask? If the information isn't there for them, what can they do?
We heard dealers assert that some manufacturers' representatives don't seem to know what it's like at the sharp end of running a customer-facing dealership. Which isn't ideal.
A tough year ahead
One dealer described feeling lately like a punchbag. Getting hit from all sides is how they put it. From their suppliers and from their customers - but also from wage demands, energy bills, staff shortages, recruitment woes etc. The pressures are coming from each and every facet of running their dealership.
It was concerning to hear that some dealers feel their suppliers' reps have 'gone to ground'. Obviously Covid has impacted on in-person visits, but we were being told that they simply are not seeing or hearing from reps from one month to the next. It's hard to have conversations to establish what the situation is, if there's no one making themselves available. The postponing of shows and events also haven't helped with this lack of face-to-face contact.
Not wanting to be all doom and gloom about it, but there did appear to be a consensus that however tough 2020 and 2021 have been, all indications are that 2022 is shaping up to be the toughest challenge yet for dealers.
Part of the reason for this will be customers will start to think the worst is over, with their lives returning to a normality. However, the industry has some significant hurdles to surmount in order to get back on track. And unfortunately, these won't be quick fixes.
What can be done?
What could be steps taken to alleviate some of these pressures is a question that inevitably arose? And of course there's no easy answer.
Dealers talked about being flexible and giving themselves options with suppliers. For dealers without a significant tie to one or two majors, we heard that getting on the phone to manufacturers who they don't always deal with, to see what they could provide, has been helpful. Some cited this as a saviour during the past couple of years as a means to attempt to fill product gaps.
Diversification into other, but related, product areas works for some we heard. But as discussed before (extensively in the Dealer Digital Toolkit), moving into other niche areas needs a specialised focus and expertise. Getting into bicycles for example, isn't something easy or to be taken lightly. Any move into new markets needs to be done with care and with maximum effort - after all it's your name and reputation that's on the line.
Another question that came out of the conversation asked whether dealers felt that the increase in online ordering seen during the pandemic, meant that physical showrooms would see an ever dwindling footfall? Again without a functioning crystal ball it's impossible to call definitively, but most hoped there was a way to run a hybrid business with a quality digital offering supporting a bricks and mortar dealership.
What the increase in website ordering did generate as a genuine worry for some though, was that this might be the start of a process of certain manufacturers cutting out the dealer completely and going straight to the end-user. There were some strong opinions voiced that this is a genuine desire for some suppliers, who perhaps are already experimenting with this by stealth tactics?
To counter this theory though, there was agreement that currently most manufacturers simply aren't set up to deal with end-users and their accompanying problems - certainly not whilst they have everything else on their plates.
But what do you think? Should alarm bells be ringing for dealers this year? Or is it another set problems that whilst significant, will be negotiated by a resilient network. Let us know in the comments below.
