Are Equipment Dealers Outgrowing Their Distributors?

Equipment dealer consolidation is occurring and leading to a market of fewer, larger dealers. Distributors, regional “warehousers” that supply local dealers with equipment and parts, are also consolidating more and more. After all of this consolidation, we have to wonder how service to the end-user, such as the landscape contractor, will be affected. Will having fewer, larger dealers help to bring prices down but cause customer service to suffer?

Distributor consolidation is a big topic of discussion on the Professional Power Equipment Congress (ppecongress.com) forum, where many dealers suggest that this will be an ongoing trend. One dealer writes: “You will see more of this as time goes on. The distributors need to grow or sell.”

As distributors consolidate, what does it mean for their dealers? As they take on more dealers, are they becoming overloaded and their dealer services suffering, or are they becoming stronger? The same questions arise for growing dealers and the quality of service they provide the end-user, such as the contractor.

Here’s one more thing to think about. As dealers consolidate, will distributors continue to service these larger dealers or will manufacturers service the larger dealers directly? Ariens and Husqvarna are examples of manufacturers that service dealers directly and do not use distributors. One dealer on the PPEC forum questions if distributors will be necessary, saying: “As dealers get larger and fewer in number, distributors will become less important. And factory-direct, along with bigger margins, (will be) the norm (for dealers) ... I hope.”

If the large dealers are allowed by manufacturers to operate factory-direct­–and have the benefit of better margins–we could see the big dealers getting bigger, and the smaller continuing to disappear.

 

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