In the current issue of Service Dealer, out on 1 May, we have conducted the first of new series of quarterly surveys amongst dealers. Business confidence is as high as we have known it for some years.
The economic climate is improving, weather conditions have generally gone with us, the housing market is picking up in many parts of the country – and as a result, the picture is of a season that has got off to a flying start. Possibly the best start for seven or eight years – and it’s not even May.
However, lurking beneath the surface are growing concerns about long-term profitability in the internet age. Certainly judging by the raft of comments, in response to my editorial in the Friday newsletter of 11 April, about heavy discounting of certain products and the seemingly inability (or willingness) of some suppliers to prevent their products being devalued, it’s an issue that will long dominate the independent specialist sector.
Of course, the answer is startlingly simple. Manufacturers set out their trading policy in unequivocal terms, and jump hard on those who transgress. Dealers drop those product lines which are subject to heavy discounting.
Long term gain would surely follow any short term loss.
But would that it were that simple! As with business in general, evolving a sustainable sales strategy involves many twists and turns. Often influenced by external events.
We’ve been here before. Remember when B&Q introduced the sub-£100 petrol lawnmower in the early 1990s? It was a load of c..p, but at a stroke it almost halved the perception of the entry level price for a petrol powered rotary mower – and provided dealers with a really hard sell for a while.
So this season, given the good start, it is a question of confidence, holding your nerve.
We can all understand the pressures that build up when selling conditions go totally against us. But when the season is as it is now, then sensible and profitable trading has to be the order of the day.