While sitting in the New Orleans airport back in March, impatiently awaiting my delayed return flight back home, I grabbed a deserted copy of The New York Times to hopefully kill another half hour or so. The front page of the business section had a headline which read, “Eye on Sales, G.M. Offers To Reinstate 661 Dealers.”
As you might recall, G.M. actually terminated more than 1,000 dealers late last year as sales plummeted; they said they needed fewer dealers so their remaining dealers could be more profitable. But now, as the economy stabilizes and consumers hopefully start spending, G.M. says it wants more dealers out there selling again.
When I read that article, I immediately thought about something power equipment dealer Chad Theriot had just told me a couple days prior (check out his dealership at GreenIndustryPros.com/video, click on “Business”). Chad and I were talking about the challenges faced by a New Orleans-area dealer operating in a post-Katrina, present-economy environment.
As I surveyed the Theriot’s showroom, I’d noticed that one of the dealership’s staple mower lines was nowhere to be found. Chad told me he stopped selling that brand because the distributor, excited by the success Theriot’s had been enjoying with the product, decided to set up several other dealers in the area. This distributor’s line of thinking was: Theriot’s has been selling a bunch of these mowers, therefore demand must be out of this world, therefore we should set up more dealers so we can sell even more mowers.
Long story short, the distributor set up more dealers, but lost his pioneering dealer in the process (Theriot’s). I wonder if it was worth it.
I can understand a supplier’s plight. It’s not like there are millions of people begging to become outdoor power equipment dealers every day; so when one comes along, it’s probably very hard to tell him “no.”
That said, do some suppliers think about the long-term damage setting up the wrong dealers can inflict on a brand? First of all, you can lose strong dealers like Theriot’s. Secondly, the reputation and product demand your best dealers helped build can be brought down by a handful of dealers you should have said “no” to.
There’s still a lot of talk about “how many dealers there are?” and “how many will there end up being?” and “how many do we really need?” To me the real question a manufacturer would want to ask is: How good are my dealers?
Back to G.M. They want to start selling more cars, so now they want to have more dealers again. What happened to “we want fewer dealers so our best dealers can be more profitable”?
Truth be told, a catalyst behind G.M.’s sudden desire to reinstate more than half of its recently terminated dealers is G.M.’s concurrent desire to avoid a rather costly, lengthy arbitration process with those dealers. Oh boy, talk about a badly damaged brand name. Here’s to building and selling American-made lawn and garden equipment.
