The other day, Group Editor Paul Schrimpf passed a particularly interesting Web article my way. This story discussed the precarious futures for various companies through the end of 2009, given current economic conditions and their own debt burdens.
I’ll admit — some of the names on this list were companies I have a soft spot for or use in my daily life. They include Blockbuster Video, Krispy Kreme Donuts, and Sirius XM Satellite Radio.
“It’s possible none of the firms on this list will liquidate or even declare Chapter 11,” wrote the article’s author. “But one way or another, the firms will probably look a lot different a year from now than they do today.”
The next day, coincidentally, I received a call from a researcher wanting information on our magazine’s CropLife 100 listings. Specifically, the caller wanted data on the top revenue retailers between 2000 and 2005, broken down by crop input/service. Because none of this information is available in our Web site archives (yet), I started digging through back issues of our publication to pull together the requested data.
What struck me while doing this project was just how many well-known, long-standing dealerships and cooperatives have disappeared from our industry since the start of the decade. Remember Farmland Industries? UAP? Royster-Clark? Alabama Farmers Cooperative? Agway?
At the start of the 21st century, all these retailers had annual sales between $100 million and $500 million. Each were entrenched players within the marketplace with hundreds (or thousands) of grower-customers counting on them to supply their crop inputs and services without fail. Today, 10 short years later, each and every one of them is an asterisk — either having gone bankrupt from poor business practices/market conditions or been gobbled up by larger competitors in merger deals.
Now I’m certain that every one of these retailers (and dozens of others that have disappeared over the past 10 years) expected to survive. I’ve yet to meet the company executive that says the ultimate goal of his organization is to “disappear in the wink of an eye.”
What separates the survivors from the non-survivors, you might be asking? I have a partial, rather obvious answer: flexibility. Looking at the percentage of crop input/service sales by category (fertilizer, crop protection, seed, and custom application), it’s clear that the surviving large retailers were much quicker to adapt to market changes. When crop protection product sales began to wane earlier this decade, the survivor retailers altered their crop input percentages accordingly, upping their focus on seed and fertilizer. Non-survivors, however, tended to remain static in their percentage mixes.
Given economics in 2009, I would encourage ag retailers who’ve hesitated making these kinds of changes to their businesses to jump. That way, your company will likely be a survivor and not an afterthought on someone’s editorial page 10 years from now.