Ag Equipment Intelligence
On April 8, AGCO announced that it’s expanding its retail agreement with the Rural King store chain to include Massey Ferguson sub-compact, compact and utility tractors.
Most Massey Ferguson dealers that Ag Equipment Intelligence surveyed said they weren’t surprised by the announcement. While some believe it’s good move to expand the brand’s exposure, others say AGCO has taken a product with value and turned it into a commodity.
Last June, AGCO revealed that it would begin offering a variety of Massey Ferguson-brand products that included zero-turn mowers, oil, filters, belts and other maintenance products, collectable toys and branded apparel through Rural King. The lawn tractors are built by Briggs & Stratton. Recently, the rural retailer sold rebranded Foton-built compact tractors.
Beginning this month, eight Rural King stores will add “a line of select sub-compact, compact and
light utility tractors to their retail product offering,” according to AGCO. With this move, Massey Ferguson becomes the chain’s sole tractor provider.
Regional Coverage. Rural King operates 49 stores throughout Indiana, Illinois, Ohio, Michigan, Missouri, Kentucky and Tennessee. The eight stores to first offer the expanded lineup are in Mattoon and Marion, Ill., Evansville, Jasper and Martinsville, Ind., Owensboro, Ky., Wooster, Ohio and Clarksville, Tenn.
“In regions with Rural King stores, we have a great opportunity to build the Massey Ferguson brand, Rajesh Joshi, director of marketing at Massey Ferguson, told Ag Equipment Intelligence. “Rural King sends out more than 2 million fliers to its loyal customers every week. That’s going to provide a lot of brand recognition for the Massey Ferguson in its geography.”
Joshi says Rural King customers are loyal, and that 70% of them would be first-time Massey Ferguson customers. “There is an evolving dynamic in the marketplace as buying habits and needs of consumers continue to change,” says Joshi. “In response, our approach conveniently puts the products consumers want in the out- lets where they’re accustomed to shopping, plus brings consumers the benefit of long-term support.”
Massey Ferguson has trained Rural King employees at each store to discuss warranty, AGCO financing and other aspects of the purchase.
Rural King does not have specialized salesmen, however. The stores will feature a 250 square-foot Massey Ferguson-branded retail island with a touch-screen kiosk. The interactive, Internet-based program guides prospective buyers through a series of questions about options and choices of equipment suited to their needs.
Rural King stores do not have a service department, and will stock minimal spare parts. Massey
Ferguson will connect the buyer to a local dealer after the purchase.
“Once the customer purchases a tractor,” says Joshi, “we make a connection with a local Massey Ferguson dealer and the customer.”
The tractor buyer will receive a letter from the local dealer welcoming them to the brand It will indicate that the dealer is responsible for the service of those products and for the sale of accessories. “Our goal is to turn the Rural King customer into lifetime customers for the Massey Ferguson dealer,” says Joshi, “so if our dealers do a good job, they would come back and buy from them.”
Joshi says that the product line chosen for Rural King stores are the most popular items for rural lifestyle customers, and totals seven different configurations under 50 horsepower. Massey Ferguson dealers offer more than 70 different configurations of tractors under 100 horsepower.
While all of the dealers that were polled by Ag Equipment Intelligence said it would increase competition and probably lower profit margins, some believe it could lead to increased dealer sales.
Mitch Merz of Merz Farm Equipment says, “It’ll be tough to compete with a retail box store. A dealer simply won’t have the volume that a retail box store has the potential to have.
“However, other major manufacturer’s are selling their products at retail box stores and they’re still making sales, staying competitive. With the Internet and all the other tools available to potential
buyers margins are tough anyway,” says Merz.
“This venture will increase the exposure of the brand, which should lead to more overall sales for the traditional equipment dealers. The retail box store will bring in new customers that may or may not have been exposed to the Massey Ferguson brand previously.”
On the other hand, Doug Rathbone of Rathbone Sales, was somewhat surprised by AGCO’s announcement.
“In the last few years, AGCO has heavily promoted their ‘Five Star’ program for dealer excellence. Grading in this program is primarily based on a dealer’s level of service, replacement parts and sales.
“This sales agreement with Rural King is counterintuitive to what AGCO is trying to accomplish in developing a stronger dealer network,” says Rathbone.
“There are no sales professionals at these types of stores. AGCO has taken a product that has value and turned it into just another commodity.”
Rathbone says his dealership also handles Honda Power Equipment, which has taken the same route by offering its line through Mid-States Distributing of Minnesota.
“I guess I get frustrated with both AGCO and Honda Power Equipment,” he says. “In an effort to sell more product, they’re diminishing their brand names by selling through less qualified retail chains stores.
“This seems contrary to their goal of having larger well-capitalized dealers and eliminating as much inline competition as possible,” says Kevin Vivian, manager of agricultural sales for Quinn Co.,
“Luckily I do not have a Rural King store in my region, so it does not affect my current marketing efforts,” says Vivian. “I do worry that this may be a sign of things to come, and one day I’ll be competing against a local box store.”
— Ag Equipment Intelligence, April 2011