The Future of Farm and Ranch retailing

According to the latest USDA Census of Agriculture, 62% of America’s farmers are 55 or older, and the number of farmers 75 or older is growing by 5.8%. You don’t need an actuary to tell you that a generational transformation is at work in the farm-and-ranch industry.

This newer generation of farm-and-ranch dealers will be serving a younger customer base as well, one that grew up with social media and views the world differently than its parents did.

How are farm-and-ranch dealers preparing for the next decade? HBSDealer asked several prominent leaders about the big changes ahead for their business and industry.

HBSDealer conducted a recent virtual roundtable examining the following key issues:

The evolution of farm-and-ranch retailing during the next decade
Attracting the next generation of farm-and-ranch customers
Best practices in online strategy

TORREY WINGERT
VP/CFO
Bomgaars Stores
Sioux City, Iowa

Keeping up with advancing technologies, Web sales, mobile applications, Amazon and direct-to-consumer options [are all increasingly important.> With farm and ranch, baby boomers are retiring and passing the torch to the younger generation — we need to understand and respond to that changing demographic.

While technology will be a main component for attracting the younger generation, continuing to focus on that farm-and-ranch lifestyle will be just as important. Our customers look to us to fill a need and fix their problems; supplying them with quality products at a fair price will attract customers no matter the age. Time is valuable for everyone, especially the younger generation. There may be a shift in the big-box mentality — customers want to get in and get what they need and move on with their busy day.

While most farm-and-ranch retailers are entering the online world and e-commerce sales, few are having the success that they want and need to provide a meaningful ROI. It is a space that you have to be in eventually, but I don’t think it will ever truly replace or significantly impact a good brick-and-mortar farm store.

KARL DUSIN
Merchandising Manager – Farm & Ranch, Pet
Do it Best
Fort Wayne, Indiana

Tremendous advances have occurred in the last 10 years in technology. These advances will not slow down; instead they will continue to become more important to the success of the farm-and-ranch operation. Laptops and computer technology are now part of the everyday operation in many farms as they determine how much fertilizer or chemicals to use and what section of the field to apply. Tractors are getting closer to being operated by a computer as they map the fields. Feeding cattle can also be based on the use of computers and how to provide optimum nutrition.

In many family farms, it is the children who have gone to college and are now coming back home to share their knowledge and help the family operation grow.

Naturally fed livestock and organic vegetables and crop demand almost doubled from 2007 to 2012, and that trend is continuing. This is just a very small part of overall production, but increased demand for these products has led to a push for more individuals and families to move to a rural lifestyle so they can produce their own products.Many retailers are supporting the local 4H and FFA chapters, as both have shown growth and an increase in female participation. Many Do it Best Corp. members support both, and also drive their own sales by having female-focused events to help increase their traffic. Many of these events are attractive to the younger generation because it often emphasizes a hands-on approach to operation of products and how to do things.

Because farm and ranch can be so seasonal, it is important to highlight products at the right time of the year, which continues to be successful both online and in the store. Pet products and apparel are no exception to this, as seasonal items are strong in all three categories. For Do it Best members, the ship-to-store feature of our e-commerce program means they can display a broader range of products than they actually may stock because the customer can order it online and have it shipped right there to the store. When there is no room for inventory in the store, members can use the warehouse as their own personal warehouse and sell to members online. Seasonal winter items have been especially effective for this approach.

DANIEL HENKE
General Manager
Farm & Home Supply
Quincy, Illinois

What’s going to be really important is staying relevant in your assortment, because farm and ranch is becoming more of a hobby farm lifestyle. As customers change, you need to have an assortment that is relevant to their needs, which means a refinement of assortments from baby boomers to millennials.

For years, we sold to full-time farmers products like hydraulic hoses and disc blades. The new generation will be into beekeeping or will have eight to 10 chickens to make farm-fresh eggs. The farmers we have served for 52 years tended to not be interested in things like beekeeping.

You will see brick-and-mortar stores getting smaller, and brick-and-mortar stores with kiosks that contain a social media aspect to them. Traditional paper flyers will be reduced, and there will be more reach through social media. Budgets will change to be appropriately placed toward millennial customers to be able to give them what they want, when they want it.

The best farm-and-ranch dealers are not just selling products online — they are providing content as well. Millennials want to go on your website and watch how-to videos related to their area of interest. When they come into your store, they are much more informed than baby boomers were. Their way of finding information will rely heavily on your online presence as opposed to a paper flyer you get in a store.

KIRK REAMS
General Manager
Hooten’s LLC
Emory, Texas

We live around a small community where there are mostly a lot of multi-generational businesses. When you think of small-time, we are it. But even here, it is changing. If you look at dairy barns 20 years ago compared with today, a lot of the dairy barns now run electronically. Change is everywhere. You can’t keep parts for something that is 40 years old. You have to make sure your inventory is up to date. We have one big store on 15 acres, 40,000 sq. ft. with many buildings around. We have an 8-bay welding shop. It can be challenging to keep everything up to date.

How many kids pick up a newspaper today? Not very many. Radio is still decent, but social media is a free service and everybody’s got it. You can advertise to a lot of people through social media. In addition, the inside of your store must be kept updated so that when the [younger customers> walk in, they don’t get the feel of being in an old, rundown, musty-smelling store. That means keeping endcaps moved around. Make it exciting for them. You have to keep them entertained these days.

We actually have four websites (Hootensteel.com, Hootensteel.net, Hootenshardware.net and Hootensfarmsupplies.com), and all point in different directions to attract business. One does only ag parts for farm and ranch. We started that one four months ago. We’re getting orders from all over the country — just ag parts, nothing else. What that tells you is you have to have that presence online. Twenty years ago, people went to the store and looked at parts. Dealers have to keep in mind that times are changing and if you’re not keeping up with the times, you are going to lose money. A website presence is huge; you can order online and continue working while waiting on your parts.

TOM MAHlKE
President/CEO
Mid-States Distributing Co.
Mendota Heights, Minnesota

Technology is going to be the key driver. From a retail perspective, technology, the Internet, and having access to information that lets you find the products you’re looking for, is going to be very important.

We have to talk to the [new, younger> customers the way they like to be talked to and how they want to be reached. I was just at a conference where the speaker said there are 800 million people a day on Facebook; they aren’t old guys like me either, although I too am on Facebook.

We have to keep in mind that farm and ranch is a lifestyle. We see young people who will embrace it and be attracted to it because of the organic attributes and the self-sustainability of the farm; who like the green, environmental story.

One of our members has really embraced the need to attract younger customers. He’s installed electric chargers in his parking lots. He recognizes we’re living in a different time. We have to be concerned about the environment and best practices and appealing to all consumers of all generations.

Farm and ranch is not a lifestyle for everyone. In some cities there is a gentrification of urban areas going on. And then there are young people who are attracted to this lifestyle who appreciate the healthy, fresh concept that farm and ranch has to offer. There is a reason Whole Foods and Trader Joe’s has done so well.

We have 42 members, and they are all, at some level, moving at different speeds with regard to online. They are continuing to learn. We’re seeing the value of social media, and many of our members are placing a lot more emphasis there; some have dedicated people on social media. That will continue to grow. Our channel is building awareness of farm and ranch through the Internet.

STEVE PATTERSON
Senior VP Marketing/Communications
Southern States Cooperative
Richmond, Virginia

We believe more and more people will be seeking that rural lifestyle, and while this can and will create opportunities, these acres may come from current ag production acres. This is a critical issue because the expanding world population creates more demand for food, and with less arable land available, there may be disruption in land prices and competition for land.

It’s all about engagement with both the heart and the mind — or, as I say, engage the farmer within. Most of the people that deal with farm-and-ranch retailers have a passion for the land — working it and reaping the benefits that it brings. Additionally, most people — even more urban/suburban people — have a little bit of that ‘rural DNA’ in them that leads them to grow lawns, flowers and tomato plants. You do this by creating awareness about environmental and social issues, and show that as a farm-and-ranch retailer, you care about sustainability and related subjects. Use all the tools necessary — social media, Instagram, Facebook, Twitter.

The best farm-and-ranch retailers are listening to their customers on a regular basis, creating great customer experiences and earning a ‘position in the mind’ as a preferred retailer. These dealers are not taking their customer base for granted; there are more competitors now than ever before, and the key to success is differentiation and creating great customer experiences.

KEVIN REWERTS
Divisional VP Merchandising, Farm, Ranch, Auto and Pet
True Value Company
Chicago

Ruralpolitan, the blending of metropolitan and rural markets, will be the biggest geographical market change. A suburb like Huntley, Illinois (population 25,000), is an example, where you have [customers> with four to five acres — it’s not a professional farm — and you are on the fringe of urban and rural.

Another big change is the growth in the Internet around general purchasing, especially in rural markets. Why drive 40 to 50 miles to purchase two or three parts when you can order it on Amazon and have it delivered in two or three days? For the customer far out there it, will be huge to not have to get in a car and lose time.

Farm-and-ranch retailers will continue to rely on omnichannel messaging, such as Facebook, YouTube, Twitter and LinkedIn. The use of in-store technology with QR codes and the ability to inform customers that it is OK to use their cell-phones in stores will be other trends.

Social media is how the young kids live. I have two of them at home, and it’s amazing to watch them just sit and text. They don’t talk, but they communicate. Social media is how they get their information.

When I was younger, you had to call 50 people to get a message out; now you can do it in 30 seconds and live stream it for everyone to see. Another thing: Your product better work. If not, the omnichannel will eat you alive with all the reviews on Angie’s List and so forth.

The rural market is getting a lot more tech savvy. As a dealer, you have to be able to express the message that your stores can ship the product to your rural location within two days.

Updating your Web landing page will allow for easier understanding and instant gratification and will make it easier to shop and meet their needs, especially with free shipping for Web-placed orders. It will be important for making your Web pages an informational source, a place to go for local information.

DAVE MEYER
Senior VP/COO

KARL RODGERS
Retail Sales Division Manager
United Ag
El Campo, Texas

Rodgers: The new and ever-changing regulations for crops and cattle [will be the biggest change over the next 10 years>. The government keeps trying to limit what they can and can’t use on their crops and cattle. Consumers want all organic and hormone-free goods. What the consumers don’t realize is how much it increases the costs of producing that crop or animal. In turn, producers will have to find ways to become more efficient.

Meyer: Trainee programs and cultivating talent from the younger generations in our store [will help attract the younger generation of customers>. There is a huge trend for doing it yourself, getting your hands dirty, creating your own food — like canning, for example. This trend stretches all over, cities big and small. We certainly fit in and cater to this trend. The way we empower our managers, to be profit center leaders in each unit, embodies that idea as well.

Meyer: Inventory is your No. 1 asset. It’s so important to be in stock; you have to have it today. We’ve got to get there, but brick-and-mortar/hands-on retailing is still our thing. Ultimately, I need to really try and dig into TSC [Tractor Supply> and the way it does it online — not just how the site looks, but what systems they are on, how they rolled it out, and certainly how they drive sales on it. If I had to guess, I’d say TSC is very successful because it is converting in-store orders with out of stock/availability issues into online special-order sales