2013 Ag Retailer Outlook: The Boom Effect

With at least two successive years of what may well be the largest agricultural gold rush in centuries immediately behind us and heading into what is touted to be an excellent 2013, those companies fortunate enough to still be involved in agricultural retailing are likely to fall into one of two categories:

  1. Those who understand agriculture is a volatile industry and the recent market conditions are largely responsible for their remarkable performance. They also realize sometime down the road (likely not 2013, by the sound of things) historically documented downturns will ultimately return.
  2. Those who have a four-year memory in a business noted for five-year cycles and conclude that their recent company performance is somehow based on their remarkable personal talent. These companies also believe subsequent years will simply be a re-run of 2012.

Which category respective companies fall into is largely a function of leadership capabilities and principles. 

Category A companies understand and live by the adage “fix your roof while the sun is shining.” They relentlessly work toward positioning their companies to not only understand and meet the changing needs of the grower of today, but also to be a production partner when times change. To quote the late Jack Simplot, “I love the tough times. It drives out the suckers who shouldn’t be in this game in the first place.” That quote makes as much sense now as it did away back then.

Category B companies are simply less disciplined, the result generally of inferior leadership and management skills. These entities are prone to allow greed, complacency and arrogance (or that perception among stakeholders) to sneak into their culture. They lose sight of the fact that customers have choices and that, according to Purdue surveys, the larger growers become the more they see most retailers the same. Funny, but price-chasing retailers do have a way of all looking the same.

So, what do I see as 2013 plays out? Simply put, a widening of the existing performance gap between category A and B retailers.

As the best companies pro-actively and systematically engage innovation and technology in a value-creating way to improve constantly, they continue to position themselves to be the supplier of choice for the grower of tomorrow. They know his needs. They help him plan.

At the same time, poorly run companies either rest on their recent laurels or, at best, try to get better at the things they do now (some of which border on obsolete), which, according to business guru Peter Drucker, is the proven recipe for failure. They are order takers, at best.

It is impossible to explain how any company is better without explaining how it is different. You can be different from the rest of the pack without being better, but you cannot be better without being different. Positive competitive differentiation always has been the brand of the best-run retail operations, and always will be. It is the gap-widening device used by the best.

As 2012 vanishes into the sunset, my hat is off to those top-tier retailers who, in spite of market swings, constantly out-perform industry standards. 2013 promises to be very kind to you.

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