Since reaffirming its “servicing dealer only” distribution model roughly a decade ago, STIHL Inc. has doubled in size, amassed a network of 8,000-plus U.S. independent servicing dealers, and is now recognized as the largest-selling handheld OPE brand in America.*
Two of the key architects behind the servicing dealer-only business model in the U.S.—president Fred Whyte and vice president of sales and marketing Peter Burton—share some thoughts on how they’ve done it, and how they’ll continue doing it despite the fact that the economic outlook is filled with uncertainty, population growth is slowing, consumer buying habits are changing, and the total number of available dealers continues to shrink.
Q: In the 2000-2002 timeframe, when many of the other big names in the outdoor power equipment industry had concluded that venues such as Home Depot and Lowe’s would be essential to capturing consumer sales, what gave STIHL the courage to do the opposite?
FW: Both Peter and I had been in the industry a long time. We saw what happened to some other companies, namely Homelite and McCulloch in the handheld segments. Combined, they probably had 80% of the chain saw market at one time. But when they went into the mass channel, they cheapened their product to accommodate a mass market. As a consequence, their entire brands were eroded. People thought they were buying the same high-quality product that existed years ago, but they weren’t.
We recognized that fact and decided that STIHL couldn’t try to be all things to all people. We’ve been very successful in the dealer channel. Things maybe go a bit slower and a little more deliberately, but we’ve been successful. I can honestly say that we have never seriously considered going the way of the mass channel.
PB: You have to remember that this is not a new philosophy. All we’ve done for the past 10 years is to stay the course we set nearly 40 years ago. We were profitable and growing our position in the marketplace. We knew that if we could remain in the position we were in, maintaining credibility with dealers and helping them grow both professionally and personally, we had all the faith in the world that we could continue growing.
Q: In the mid-2000s, just a few years after STIHL’s bold “Why?” campaign announced where you can’t buy STIHL products and promoted independent servicing dealers, we began to see the emergence of the “pro-sumer” market. As a result, have consumer lawn and garden sales shifted back to the dealer channel at all?
FW: That’s hard to measure. I can say that a very large percentage of our consumer end-users are second-time buyers. They bought on price the first time. But they weren’t shown how to load the trimmer line, sharpen the chain or adjust the carburetor. Furthermore, it doesn’t matter whose product you bought, eventually it’s going to require service. This is where dealers continue to have the advantage.
PB: Yes, there is a large market of very price-sensitive shoppers. But there’s also a large market of consumers who want something better than they’ve owned before. The bitterness of poor quality remains long after the sweetness of low price.
Q: Would you point to the “Why” campaign as the “aha moment” where consumers started to draw a distinction between dealer-sold product and big box-sold product?
PB: That was just the tip of the iceberg. Our investment, for example, in dealership merchandising systems was tremendous. We needed consistency across dealerships, and it needed to be retail-friendly.
But the “Why” campaign was definitely important. We had research that said 60% of consumers thought we were in Home Depot and Lowe’s. That was something we had to correct. The “Why” campaign also told our dealers that we weren’t going into the mass channel. There are always rumors, but this helped put some of these concerns to rest.