Here Is the Biggest Threat Facing Ag Retailers Right Now

With time being increasingly precious and everyone in the industry so busy, it’s rare when you get the opportunity to have a protracted conversation these days. So when it happens, it’s a real treat.

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Such was the case one day in early September, when a single-subject interview evolved into a fantastic, rambling, multi-dimensional journey into the work of one particular retailer. I could use the topics we discussed to fill out editorials for the remainder of this year, but there was one particular point of discussion I found interesting.

We got to talking about the biggest threats that ag retailers are facing today. The retail manager I was speaking with said that, without a doubt, the biggest threat is basic manufacturers going around retail to reach the farmer-customer, and its twin monster, the manufacturer loyalty program.

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“If you don’t buy 95% of your stuff from us, we are not going to support your business the way we have in the past,” the retailer said, laying out the prevailing basis for loyalty programs.

When I attended the CropLife America meeting last year, my encounters with the basics, many of which were emerging from months of organizational uncertainty following mergers and acquisitions, were champing at the bit to “get back to normal” with new marketing programs. The reduction in the ranks did nothing to change the prevailing approach to the market.

Then, there’s the rash of technology investment by the big manufacturers that wade into agronomy, from sensors on drones to discover and diagnose pest problems to satellite imagery and pest infestation models that add to the intrusion on the traditional role of the trusted adviser. It’s easy to start drawing a line from manufacturers adding information to the mix to tying the information up with program purchases in ways that heavily influence the ultimate product and program decision.

“For them to come in and say, ‘We don’t really need you, we are going to turn you into an order-taker … our portfolio is broad enough that, no matter what you are concerned about, you can get a whole plan from our portfolio,’ that’s not always true,” my retailer friend said.

The conversation eventually came around to what the retailer can actually do about it. I suggested that broadening the retail portfolio deeper into post-patent companies might help, but my contact was quick to stop me. “Post patent without discovery does nothing for me,” the retailer explained. “They may be cheaper, but what price do we pay? There’s no discovery, so what’s next? Nothing.”

So, one of the biggest threats is also a critically important factor in sustaining the retail distribution channel? As if things aren’t complex enough out there.

Depending on how you see your business and how you deliver value, the threats and opportunities will certainly fall at different places on the continuum. But the moves that manufacturers make in connecting directly with farmer-customers, and how those influence marketing programs, will be increasingly important to monitor and react to. We need the innovation that research brings but also the freedom to create solutions for farmers that are local and responsive to specific needs.

Despite the overtures, no single company has it all, and Mother Nature never stands still. Retailers are, and should always be, the trusted builders of effective crop management solutions.

Tell us what you think in the comments section below and/or by voting in the poll above.

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Avatar for Dan Keep Dan Keep says:

What does he mean by no discovery? That statement means nothing to me.

Avatar for Cd Cd says:

Discovery is essentially R&D for new products. The off patent companies don’t come up with any new chemicals themselves so why bother investing in that relationship.

Avatar for Csp Csp says:

Discovery means new innovative patents and products.

Avatar for cevin johnson cevin johnson says:

this is a growing threat and concern in my marketing area. the manufacturers are targeting my large growers

Avatar for SalesRep SalesRep says:

When Ag-retailers are selling their own home brand products what do you expect the manufacturers to do? Ag-retailers are making a lot of money for lifting and shifting.

Avatar for Bigcity Bigcity says:

Loyalty hurts the independent retailer and it favors the Big national Distributor/Retailer. When the Basics put a multi National distributor in a price advantage it forces the independent to go generic to compete. The local retailer never quite has the same cost of goods. Yet the big box distributors all have a full line up of generic products that they sell. I wonder how they continue to hit loyalty numbers?

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