Lawn Mowers

Lawn Mowers
Many dealers also offer items such as leaf blowers,
snow blowers, tillers, chainsaws, and golf course
maintenance equipment. Some even carry
“powersports” equipment like snowmobiles or jet skis.
Industry Overview
Lawn and garden equipment dealers compete among
themselves, of course, but lawn mower dealers also
face competitive challenges from other types of retailers.
Home improvement centers and mass merchants are
particularly strong in this market. Some manufacturers
even make equipment that’s sold exclusively at these
outlets. (Those same manufacturers may also produce
higher-priced and higher-quality equipment sold only at
lawn equipment dealers and service centers.)
The following chart illustrates the ways in which lawn
and garden power equipment were distributed in 2002
(the latest year for which statistics are available from
the Outdoor Power Equipment Institute, or OPEI, as of
January 2007).
Lawn and Garden Power Equipment
U.S. Sales by Retail Distribution Channel
Home improvement centers/
building supply retailers
17.8%
General
merchandisers/
hardware/auto chains
17.4%
Specialized lawn and
garden equipment
retailers
30.3%
Other - 11.8%
Discount retailers
(Target, Wal-Mart)
10.5%
Wholesalers/distributors*
12.2%
*This category includes direct sales to professional lawn and
landscape services, and farm supply stores.
Source: Outdoor Power Equipment Institute, "2002 Profile of the
Outdoor Power Equipment Industry."
Typically, lawn and garden equipment dealers carry a
complete range of mowers, blowers, and chain saws for
residential and commercial use. Their primary products
are walk-behind mowers; riding vehicles (mowers, lawn
tractors, and garden tractors); and hand-held items like
trimmers and brush cutters.
The commercial customers who buy lawn and garden
equipment from dealers are typically small and midsized accounts (such as lawn-maintenance operations,
property managers, and golf courses, among others).
Larger commercial users pay wholesale for equipment
from distributors or even buy direct from manufacturers.
Issues and Trends
Lawn and garden power tools and equipment sales
reached an estimated $9 billion in 2006. Industry
revenue is dependent on two major factors: housing
sales and new-construction starts, and the weather. With
the housing boom officially over and the weather always
unpredictable, many lawn mower and garden equipment
dealers ended 2006 with left-over inventory of Model
Year (MY) 2006 units. (Model Year in the industry is from
September to August.)
According to Appliance magazine (January 2007), two
words describe the outdoor power equipment industry:
cautious optimism. Revenue dipped in 2006 and is expected to stall in 2007, with a rebound forecast for 2008
(Appliance magazine, January 2007). These results follow two years of growth (2004 and 2005), driven by the
strength in the economy generally and the housing sector specifically. Additionally, new-product innovations like
zero-turn mower systems and strong market expansion
by home improvement retailers also helped drive growth
(Mintel International Group, Ltd., “Lawn and Garden
- U.S.,” September 1, 2005, “Lawn and Garden Power
Tools,” October 1, 2005).
Since consumers don’t often need to replace their
mowers and trimmers because of wear and tear,
industry growth is powered instead by innovation and
new design features that increase the performance
of these tools. Demographics play a part, too: aging
consumers will require lawn and garden power
equipment that is lighter and simpler to use. And some
equipment redesign will be necessary to accommodate
the growing number of women who operate these tools
(Mintel International Group, Ltd.)
© 2007 Profile America, Inc. All rights reserved. www.profileamericabiz
The hand-held product group (hand-held and backpack
leaf blowers, trimmers, and chainsaws) held its own
in 2006 but may exhibit some unsteadiness in 2007,
with recovery predicted in 2008. Record increases in
these units were realized in 2005, when shipments of
backpack leaf blowers increased by 23.9% and handheld leaf blowers increased 10%, so a softening is
understandable given that there are so many relatively
new models in customers’ hands.
Similarly, shipments of consumer lawn mowers fell in
2006. “Walk-behind” mowers fell by 6%, to around 6
million units, and shipments of consumer riding lawn
mowers fell by more than 8%, according to the Outdoor
Power Equipment Institute’s estimates (Appliance, January 2007). Though not expected to show quite as steep
a decline, 2007 is also expected to be a difficult year for
many lawn mower dealers, with industry-wide revenue
expected to slip by around 2% to 3%. Recovery is expected in 2008, when shipments will grow by around
4%.
Despite the forecast for a drop in industry revenue,
some dealers are expected to weather the forecast well.
Power equipment dealers who outperform the industry
will likely be those in still-hot housing markets, in regions
where the Spring and Summer growing seasons are
long, and in affluent areas where commercial customers
stay active most of the year servicing residential lawns
and gardens (Power Equipment Trade magazine, January/February 2007). Among dealers in all areas who will
ring up sales increases in 2007 are those who “go the
extra mile” in planning and executing advertising, marketing, and customer-satisfaction programs.
Lawn equipment industry leaders generally believe that
the industry will remain viable in most regions, despite
radical weather conditions (drought in some places,
extreme rain amounts in others) and slumping sales in
certain product categories. Among the opportunities for
growth, amid the competition from “big box” stores that
offer less expensive products, are the following:
Opportunities for Growth . . .
U.S. Shipments of Walk-Behind Mowers
8
7
6
•
A growing number of dealers are making their
operations more profitable by simplifying them.
They’re shedding product lines where the time
and resources spent on managing vendors
doesn’t justify the financial return.
•
Ongoing consolidation among product distributors
in the industry will create stronger competition
(among distributors) for dealers to carry their
lines. The end result will be that dealers will
have more and better product choices, and more
opportunities to take advantage of education and
training programs and customer-service initiatives.
•
The reward is greater than the risk for dealers
who actively seek partnerships with suppliers in
developing new-business opportunities. By so
doing, they can often persuade manufacturers to
send less business to their big-box competitors.
•
Focusing on the WOW! factor helps increase the
WOM factor (word-of-mouth). Creating large, welllit window displays attracts attention, and adding
bold, colorful, and even animated displays to the
showroom helps keep people “engaged” while
browsing in the store. The idea is to impress them
and encourage them to tell friends and neighbors.
•
Product demonstrations and seminars help
establish the dealership as a “go-to” source for
expertise in the operation, maintenance, and
repair of equipment -- which mass merchants
cannot offer.
•
Dealers who take full advantage of co-op
advertising dollars available from manufacturers
in essence double their advertising and marketing
budgets. While it takes a bit of time and attention
to organize and execute ads and campaigns using
co-op dollars, it is typically well worth the effort to
align with brand-name manufacturers.
2000 to 2006 (In Millions)
6.2
5.6
5.8
6.0
6.2
6.4
6.0
5
4
3
2
1
0
2000 2001 2002 2003 2004 2005 2006
Sources: Outdoor Power Equipment Institute (OPEI) Press Releases,
March 2006, January 2006, Septmber 2005; “2002 Profile of the
Outdoor Equipment Industry”; Appliance, January 2007.
U.S. Shipments of Riding Mowers
2000 to 2006 (In Millions)
1.8
2.0
1.5
1.5
1.5
1.3
1.3
1.5
1.4
1.0
0.5
0.0
2000 2001 2002 2003 2004 2005 2006
Source: Outdoor Power Equipment Institute (OPEI) Press Releases,
March 2006, January 2006, Septmber 2005, “2002 Profile of the Outdoor
Equipment Industry”; Appliance, January 2007.
Source: Power Equipment Trade magazine, December 2006.
© 2007 Profile America, Inc. All rights reserved. www.profileamerica.biz
Consumer Reports on Buying Mowers
•
Factor in the add-ons. All the tractors come
equipped to side-discharge clippings. While mulch
kits are often included or relatively inexpensive
(about $75), bagging often costs $300 to $400 extra.
•
Think twice about zero-turning. Zero-turn-radius
mowers offer the tightest turns, but are expensive,
and their front wheels can make steering a problem
on hills.
•
Don’t count horses. Some models now pack 20
hp or more. Higher horsepower doesn’t guarantee
more performance, however; models with as little
as 17 hp mowed as well as brawnier models.
•
Pick the right retailer. Most of the brands tested
are now at major retailers as well as specialty
dealers. Big-box stores tend to have the lowest
prices. But dealers typically offer more personalized
service, setup, and instruction.
•
Decide how much power is necessary. Gaspowered mowers usually handle heavier-duty
mowing better, like in tall or dense grass. Electric
mowers have push-button start and no exhaust
emissions, but come in push-only models. Selfpropelled mowers are best for hilly terrain and
lawns bigger than a half acre.
Sources: Consumer Reports, May 2006.
With retail prices rising on commercial equipment (from
$2,500 to $7,500 and more), demand for quality reconditioned equipment is growing. Many dealers realize
that used equipment is unique (e.g., nobody else has
the same make, model, amount of mileage, and service
history of a pre-owned mower). Online selling of used
mowers is an intriguing option, too. Ace Outdoor Hardware, of Bayville, New Jersey, is a pacesetter on the
Internet, as it sells almost all of its used equipment on
e-Bay and posts a real-time reference guide on e-Bay to
tell prospective customers the current value of its used
equipment (Outdoor Power Equipment, October 2005).
Value of Products and
Services in the Industry
Consumer Research’s website provided the latest research and ratings (primarily from Consumer Reports),
of the best products in certain lawn mower categories.
They’re presented below, with average retail prices:
Product
Price
Self-propelled gas Toro Super Recycler 20056
$580
Budget self-propelled motor: Toro Recycler 20070
$400
Gas-powered push motor: Craftsman 38894
$190
Electric Black & Decker 18 in. mower MM675
$210
Cordless lawn mower: Black & Decker CMM 1000
$430
Manual reel mower: Scotts Green Classic
$130
Average household spending of $80.35 for lawn and
garden equipment is calculated by dividing $9 billion in
spending by 112 million households. Average spending
is helpful in determining market potential and market
share. For example, in an area of 40,000 households,
it is safe to assume that $3.2 million is spent on lawn
mowers and other outdoor equipment. If a dealer
generated $600,000 in revenue, his or her market
share would be 18.7%, a baseline against which future
performance can be measured.
Critical Success Factors
Critical Success Factors
•
Sell products emphasizing not low prices, but the
value-added intangibles like product demonstrations;
explanations of the warranty coverage; after-the-sale
follow-up; on-site service and repair, and lock-boxes
for commercial customers to drop off and pick up
items before or after hours.
•
Develop partnership relationships only with
manufacturers that provide dealers with strong
support in merchandising, training, marketing and
promotions programs.
•
Build a website to satisfy the information needs of a
growing number of people who conduct their product
research online before visiting a store to purchase.
Confidence Factors Mentioned In Ads
“We Service What We Sell”
Brand Name Affiliations
Repairs Done on Premises
Complete Parts Inventory
Expert Lawn Advice
Expert Repairs - All Brands
Years at Same Location
Guarantees / Warranties
Winter Maintenance
Authorized Sales
Source: 2006 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Convenience Factors Mentioned In Ads
Website Address
Location Data / Maps
Pick-up and Delivery (Repairs)
Size of Inventory
Same-Day Service
Open 6/7 Days a Week
Winter Storage
Parking
Trade-Ins Accepted
Financing Available
Source: 2006 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Sources: Profile America, Inc., interviews; Power Equipment Trade magazine, December 2006, January 2007.
Industry Resources
Outdoor Power Equipment Institute; www.opei.com
Outdoor Power Equipment Magazine; www.greenmediaonline.com
Consumer Reports; www.consumerreports.com
Power Equipment Trade Magazine; www.poweret.com
© 2007 Profile America, Inc. All rights reserved. www.profileamerica.biz
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