Two retailers. One offers crop protection, fertilizer and seed products as well as crop scouting and custom application services. The other sells crop protection and seed products and would not be called a “full-service” retailer. Both retailers, however, are committed to servicing products before and after the sale, and on this point both agree: Customer service, and not just services, will help ensure the long-term survival of both full-service retailers and product-only sellers.

There are, and will continue to be, opportunities for businesses that just sell products, including generic brands, according to Harlan Asmus, vice president of sales at Asmus Farm Supply, with locations in Rake and Bancroft, IA, and Willow Lake, SD. What frustrates him, however, is that some product-only sellers know nothing about the products they sell. Although some farmers do not need a knowledgeable seller, others do, especially because today's new technology is introduced at such a fast pace.

Asmus Farm Supply's philosophy is to be knowledgeable about every product it sells. “Product knowledge is number one followed by service after the sale,” Asmus says. He bristles at the term “cash-and-carry.” Even though his company sells at cash-and-carry prices, it encourages growers to call if they need help. “We enjoy interaction with growers,” Asmus says, noting that the company has personnel, including two agronomists, to provide follow-up services.

“We've seen too many places think selling at reduced prices means providing no service. We don't take service away even though we're selling at lower prices. We're trying to reduce the farmer's chances of failure [the need to respray]. When you sell product, you must provide service after the sale,” Asmus says.

Established in 1960, the family-owned Asmus Farm Supply carries a full line of crop protection products. “We carry all manufacturers. This allows buyers to choose what they want; they don't have to be ramrodded into a certain program,” Asmus says.

Asmus thinks there will be opportunities in the future for both product retailers (who back their sales with service) and full-service retailers. One reason Asmus has chosen not to offer custom application services is that he does not believe retailers can charge enough for such services to make owning application equipment cost effective. But he believes farmers can make application equipment cost effective for themselves.

By not owning application equipment or needing to pay for extra labor and liability insurance, Asmus Farm Supply's overhead is lower than that of full-service retailers. However, like his full-service contemporaries, Asmus says maintaining profit margins remains a challenge. Therefore, he keeps a keen eye on the cost of goods sold. “If the margin isn't acceptable, we must raise the retail price,” he says.

Felty Crop Service/Miles Enterprises of Beaver Dam, KY, offers custom spraying and spreading services and crop scouting in addition to crop inputs to farmers within a 25-mile radius. Eldred Black, the company's manager, says offering such services helps fulfill a need because farmers, like many ag retailers, are finding it increasingly difficult to get good employees to do this kind of work. Farming larger acreages, farmers also have less time to apply and scout themselves. Most of Felty Crop Service's customers use its custom application services.

To get maximum mileage out of its equipment, the Kentucky retailer does as much of its own maintenance and repair work as possible. It also rewards custom applicators with per-acre incentives. This encourages the operators to provide application services efficiently and properly, Black says.

His company strives to stay with the full-service concept. “We want to stay out of price cutting,” Black says. At the same time, his company must address the issue of farmers with a large number of acres who want to buy product at wholesale prices because of the volumes they use. “It's difficult to juggle,” Black admits.

To compete with chains that are selling “cheap,” Felty Crop Service chooses manufacturers and products that work best for its customers and that allow for the best profitability. It also chooses manufacturers based on the level of customer support they provide.

Asked if he thinks there will be opportunities in the future for both full-service retailers and those who sell products only, Black says he hopes so, but feels that the number of product-only retailers will probably dwindle. He does not think product-only retailers will be able to keep pace if weeds develop resistance to Roundup. There already have been some reports of tolerance to glyphosate, he says, adding that the chemical may run its course soon because of the sheer number of farmers using it. “If you're not offering alternatives, you could be in trouble,” Black says. He thinks that retailers must keep a mix of products and that scouting will become more important with resistance issues.

Asmus would not call the issue “resistance,” but rather “tolerance” to glyphosate. He agrees, however, that companies that “stake their future mainly on that chemical” could be in trouble. It is taking more ounces of the product this year to control weeds than a few years ago, he says.

Although Black's company provides custom application and scouting services and Asmus's company does not, they do not differ significantly in their approach to retailing. Both agree that they must be available to handle customer questions and complaints.

Farmers are looking for answers on proper application — timing, rates, additives, mixing order and so on, Asmus says. His staff works to help farmers make applications go as smoothly as possible to stave off complaints.

Asmus Farm Supply screens the complaints that do come in. “We generally handle half the complaints ourselves,” Asmus says. The company will call a manufacturer's sales representative only if it cannot solve the problem in house.

The most common questions Felty Crop Service hears are “How do these products perform?” and “What are you going to do if they don't?”

Black's philosophy on handling customer complaints is to do it quickly; a company representative visits the farmer the same day if the problem cannot be handled over the phone. His company tries to troubleshoot the problem first, then calls upon the manufacturer if it does not know the answer.

Black believes that service is the key to successfully managing his business. “Anyone can sell product but can't always offer accompanying service such as timely delivery, better application and quick response to questions and complaints.” He adds that being “well versed” in products, particularly seed with all the new events, is essential.

Asmus agrees that staying knowledgeable about products as well as business management issues, such as employee management, financial management and communications, is one of the keys to success in his business. He believes that by staying ahead on these issues, he can effectively compete with what he considers his greatest competition — other low-cost suppliers with management expertise. Another key to success is maintaining a positive attitude toward change and a generally positive outlook on life, Asmus says.

That kind of attitude is also valuable in employees — another issue on which the two retailers agree. Finding and keeping qualified, satisfied employees is a challenge. “Our work is not like a factory,” Black states. “We need to find people who really like this kind of work and are willing to work some crazy hours.” Asmus adds that it would be helpful to get connected with a good employment service.

Both retailers intend to remain players in the ag retail business for the foreseeable future. Black does not expect Felty Crop Service's management decisions to change significantly, although he does think that, to survive, retailers will need to be more innovative in the future. This will likely include better handling and marketing of identity-preserved crops. The Kentucky retailer will have a leg up in this area since it has been segregating crops for a few years now, including non-genetically modified corn and beans, waxy corn and high-starch corn. It also has helped customers find markets for these products.

Similarly, Asmus does not expect his company's future management decisions to dramatically change. “We're open-ended enough to allow for change to happen naturally and live and grow with it,” he says.

Although these retailers differ in their offerings to customers, their philosophies are similar. Customer service, whether it supports both products and custom application services or products alone, will be a key to survival. They also share a philosophy that perhaps Black puts best: the intention “to keep on keeping on.”

Lynn Grooms is an agricultural writer living in Mt. Horeb, WI.

Ask 10 people to describe a “cash-and-carry” retailer and you will probably get 10 different answers, says Jim Thrift, vice president of regulatory policy and corporate relations at Agricultural Retailers Association (ARA). Thrift suggests there may be no such thing as cash-and-carry because many retailers today have developed multiple pricing structures to suit each grower's buying habits.

“This will only get more confusing,” Thrift says. A retailer may have one price for a grower wanting both product and custom application service and another for a grower who buys product from someone else over the Internet but still wants the retailer to apply it or scout the fields. He may have yet another price for a grower who buys product at a discount but wants recommendations, and another price for a customer who wants only the product. And there are multiple scenarios in between. Savvy retailers don't want to segment themselves into a corner if there's a customer for any of these scenarios, Thrift says, adding that retailers have been learning more about multiple pricing structures over the last few years.

The future will belong to those retailers who keep learning and who remain flexible, according to Thrift. He adds that ARA sees a bright future for retailers because of their role as decision-makers and advisors in the distribution chain. By 2006, he says, about 80% of all active ingredients will be off patent, and many suppliers will sell generic products. Retailers will have the opportunity for product substitution and will decide which of these products they will sell — and which ones will give the retailer and his or her customers the greatest benefits.

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