This week was busy here in Virginia, conducting seminars and a two-day field trip for my senior-level problem solving class. We visited eight businesses representing 15 entities or enterprises.
One destination during our trip was near Rocky Mount, VA, the moonshine capital of the U.S. Many of the stock car drivers from NASCAR got their driving skills by running moonshine on the winding mountain roads in that section of the country!
Visiting the John Deere dealer, we found that at least one third of the dealers nationwide will disappear in the next five years. He was positioning himself for success by breaking his customer base into tiers I, II and III.
Tier III customers were the commercial producers. He was stressing service on a 24-7 basis. He said the margins on equipment had been reduced from 10 percent to nearly 3 percent. He found his marketing radius is now 200 miles, where 12 years ago it was 25 miles.
The Tier I customer was the lifestyler. His margins were greater but starting to shrink because of globalization. Store hours on Saturday and Sunday, and on-site repairs were the ways he was focusing on the Tier I customer.
The Tier II customers were the people with off-farm income who owned farms larger than a lifestyle farm. He says September 11 and prospects of war were slowing down this segment.
Other ways he and other owners were staying in business:
Investing is 40 percent of what it used to be.
Sales and service staff focused by customer segment.
Diversification.
It was interesting that many of the owners were indicating that the economy had not hurt business.
The winery indicated that people were drinking more.
Dairy farms felt they paid less interest.
Horticulture businesses said landscaping sales were up.
The equipment dealer was focused on service.
Farm Credit indicated that volume was up as banks were leaving agriculture.
Next Week
I’ll be traveling to Arkansas and Enid, OK.
My e-mail address is:sullylab@vt.edu
Editors' note: Dave Kohl, Soybean Digest Trends Editor, is an ag economist at Virginia Tech. He recently completed a sabbatical working with the Royal Bank of Canada. He is now back at Virginia Tech with his academic appointment, which is teaching, extension, and applied research.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
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