It is easy to state that 2020 was not like 2019, or any other year of recent memory. Clearly, the ebb and flow of 2020 were so volatile that no two consecutive months were the same, and if they were for you, it did not feel that way.
It is equally as easy to state it is slightly more difficult to predict what the future lies ahead. So which adage will you glom onto? The ‘past is history, and the future is a mystery,’ or rather ‘history repeats itself’? Perchance a pragmatic approach is taking pieces from each axiom to benefit the future of your dealership.
It is January 2021. Currently, many dealerships are in the final planning stages navigating an unusual period trying to establish important decisions regarding forecasting, planning, inventory ordering, staffing, process, marketing, and pricing, to name a few. Dealerships will continue to expect the unexpected.
If there were any learnings from 2020, it was that there was no playbook dealing with the COVID-19 onslaught. Dealership owners and management needed to use common sense. No surprise many have this trait. Independent dealers and retailers have and will continue to remain resilient, resourceful, and deft, just how they have been for years past.
Heck let us be clear about volatility. I acknowledge that by the time this article gets published compared to when it was written in December of 2020, current affairs may be different. Vastly? I doubt it, but who really knows. The key point is preparedness for what could happen is as critical as to be agile for addressing the unexpected. This is non-negotiable in business and life. Those dealers and retailers that did adapt quickly in 2020 not only survived, but many thrived – with unimaginable record growth. Waiting around to have your business be as it was in the past, is not a smart option.”
Business health matters
Retail defines survival of the fittest.
According to Constellation Software, a leading provider of dealer management systems, the vast majority of outdoor power equipment dealers reporting their sales reached a historic growth YoY in 2020. And we mean serious double-digit growth. Who would of ‘thunk’ in mid-March 2020 after corners of the US were immediately being ordered in lock down that dealers would realize such impressive numbers?
For Q3 YoY, 2020, 74% of dealers nationwide had grown >10% for whole goods revenue. During the same period for whole goods, nationwide revenue growth was a 32% increase. Certain regions, such as the North (New England, New York, New Jersey, Pennsylvania) was up 45%. The South was 38%. This is during the time when the stimulus discussions stalled out, the original PPP package was nearing its end, and the fatigue of learning about rising cases of COVID-19 were back in the fold across certain regions across the US. Let’s not forget the election noise too.
To claim dealers were able to capture 100% of this massive CAGR YoY, 3rd quarter growth doing business as is, is a stretch. The high growth dealers adapted by applying material changes to their operations during a time of uncertainty. Management called audibles like a 2-minute drill and marshalled the resources in lightning speed.
One could even speculate the laggards, resulting in the estimated 15% of the dealers who shrunk (-10%) or more in Q3, may struggle to ever keep up - unless both declining dealer segments quickly adapt for the future.
“Wait, I forgot my mask.”
Keys, wallet, kids, car seat.
Heading out of your COVID-19 cave to run some errands? Add a mask to the requirements list.
Whether you do, or do not, advocate for masks, sometimes the higher ups have a lot to say about your personal freedom and candidly, your operations. So, let us just say for arguments sake, certain corners of your marketplace today still have mask mandates before entering your store. No biggie. You already adjusted in 2020 to address traffic flow, stickers on the floor, large signs telling customers DO NOT COME IN UNLESS but pretty please we really do need you to so you can buy stuff. No more than X customers allowed in the store at the same time. One person allowed per aisle. You know, the customer satisfaction protocols handed down to you from your prior generations of retailing.
Enter the immediate emergence of curbside shopping for small independent retailers. It has completely redefined the physical point of sale (POS). POS is outside. In the parking lot. In the rain. With runners trying to find the right black Ford 350.
This is the antithesis of executing in-store merchandizing strategies, or to be the solution hero to solve their need through insightful customer interactions. So much for “counter-back selling” strategies. Just when you got annoyed pre-COVID-19 provided too many of the best parking spaces closest to the doors at Walmart. Think again.
I ordered a gallon of paint and a 16 oz. Budweiser
There is a segment of buyers who embrace customer convenience. Maybe at the same time a hint of control. For them, having the package delivered to their car is akin to expecting valet approaching your car at a hotel, when previously they would normally park their own car. No doubt, this extra benefit costs you money by redirecting labor resources from one department to another. Is it possible for you to address this new process of buying to be sustainable and profitable? After all, you can buy coffee, go to an ATM, head to McDonald’s, pick up prescriptions, get your dry cleaning, and get an oil change without leaving the driver’s seat. Why not a gallon of Benjamin Moore paint, or a leave blower, or a six pack of Bud-Lite? Its real and it is happening now.
E-commerce is not a novelty. The father of ecommerce was born in 1941, and Amazon is about 25 years old.
2020 brought change. Now it is time for more dollars.
Get, keep, and grow your customer-base.
If you were fortunate enough to gain greater customer transaction in 2020, there are basic questions to help guide your 2021 market outreach efforts. For example, who came in the store in 2020 for the first time, what did they buy, what will they buy, and how will the buy it in 2021? The loaded question is if you can convince them buy from you on the next purchase.
First, are you aware of their prior buying experience that could set the table for repeat purchases, or not? One simple tactic is to always ask, whether that be in store, a text soon after purchase, gain online reviews, etc. The customer feedback loop informs how to improve processes, creates efficiencies and thereby effectiveness.
For repeat customers, the same theorem applies to get them to buy transaction 3,4, or 5 and so on. To execute Customer Relationship Management (CRM) effectively, which you can if you capture purchase, timing, market basket, and product info, develop targeted lists to segment customers for cross-selling and upselling parts, products, and service (i.e., who bought product A but not Product B).
Be the hero for the buyer. Provide long-tail, yet short form content for your market. For example, instructional videos on maintenance such as how to sharpen your blade, or how-tos such as cutting limbs, or safe riding tips for UTVs. This content can be shared by consumers via smart phones, thereby increasing your web hits and improve your SEO store “presence” digitally.
Operationally, if your growth in 2020 was well beyond forecast, prepare for a 2021 surge in parts and service demand, and thus a protracted backlog. To realize this revenue quicker, create a real-time coefficient to adjust for parts ordering, and staffing. Track the trends weekly to determine YoY growth difference by key models, by customer type, new/repeat customers, etc.
Necessity is the mother of invention
Whether you weathered COVID-19 in 2020, and grew beyond expectations, or you dodged a bullet, one thing holds true. Change occurred, and you had to hug the bear to get through it.
Now is not the year to take the foot off the pedal. Lead the charge of change in 2021.
Learn to appreciate how you quickly adapted, embraced digital transformation, reliance on analytics to help drive smarter and faster decisions, and changed processes to better serve you customer. Fine tune the more recent new retail operations and explore even more to make 2021 a banner year.