I’ve generally been someone who takes pride in supporting my neighborhood merchants, primarily because of the convenience and the customer service.
But in the last few months, I’ve seen two local institutions within walking distance from my home disappear — casualties of a nearby retail development that no doubt eroded the business of these single-store shopkeepers to the point of extinction.
Such is capitalism, I suppose. Still, passing by the now empty storefronts got me thinking about what the ongoing consolidation of companies playing in the precision farming arena will ultimately mean for those independent dealers selling and servicing technology?
John Deere’s pending acquisition of Precision Planting, to include access to the Climate Corp.’s FieldView data management tool, has independent precision dealers wondering if they will remain a part of the company’s retail network in the future.
While Deere has said that it intends to leave Precision Planting’s distribution model intact, there is nevertheless concern among independents now that Deere has access to data collection tools.
Looking at the results of Precision Farming Dealer’s recent poll, 86% of respondents say they are “concerned” or “highly concerned” about the acquisition and what it could mean for independent dealers’ business going forward.
Partnering with other precision ag manufacturers is one option dealers can explore, but with that comes a risk that those companies too, will someday become integrated into a major brand.
Another option is to consolidate with other independent dealers. At least one independent precision retailer sees this as a possibility in the future.
“The only way we may be able to compete as small businesses is to consolidate into one so that we can compete with the John Deere’s and the Case IH’s,” he says.
Taking this thought a step further, another dealer suggests that perhaps the independent dealers with the most progressive and profitable business models may serve as parent companies of satellite offices.
“The most successful dealers may be able to more effectively run several remote dealerships,” he says. “A franchising model of sorts.”
In theory, this model could help elevate the profile and expand the reach of the top independent dealers. At the same time, there is potential that rapid growth could dilute the quality of service and support loyal farm customers have come to expect.
It will be worth watching to see if further acquisitions and mergers in precision ag trigger consolidation among independent dealers, and how quantity will impact quality.