STRATEGIC PLAN
Board Interview Highlights
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Perceptions are very consistent on a number of important points. This meeting began with a brief recap of the situation as described in these interviews with an emphasis on the forces which will be driving change in the next five (5) years. The key trends and change drivers identified by the group include:
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Consolidation among retail dealers leading to a split, with a few large, well-managed dealerships and many small, one-person operations who survive on low overheads. the industry is projecting a drop to half the current number of dealers in 5 (plus or minus) years.
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Consolidation by OEM organizations primarily by buying down the distribution channel to date. OEM organizations are re-thinking their distribution strategy and the value of aftermarket companies. As OEM's buy up family-owned businesses in the industry, they bring a corporate mentality toward money, market share and control, which is changing the face of the industry.
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Big-Box Retailers (Lowes, Home Depot and others) are continuing to expand, forcing OEM's to build to price points, increasingly offering the high-volume parts to their customers, and generally shaping the retail environment.
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The Web is already changing the way the industry operates. It will drive further change, though exactly what kind is not well understood.
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The EPA is targeting small engines as the next major pollution source to be controlled. This will impact our industry over the next five (5) years.
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Throw-away Values in society appear to be increasing, leading to a preference for replacement instead of repair. This is being fostered by OEM designs which cannot be repaired at costs which make replacement unattractive.
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Parts Quality is much improved, with parts being made to strict specifications. The industry won a major victory in California recently as CARB ruled that parts meeting OEM specifications did not have to be separately tested for compliance with air quality regulations. This should be a big boost for the industry.
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Landscapers are an increasing force in the industry. Early in a landscape firm's existence, it buys on price from the cheapest source. Later, it demands and gets better quality products currently from branded dealers in most situations. Once big enough, they go around dealers to get lower prices on quality equipment, as well as developing their own repair and maintenance shops.
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Globalization is opening new sources of parts around the world and introducing new OEM competitors as well.
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The Outdoor Power Equipment Aftermarket Association
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