Deere Unveils its View of the Future

Admittedly, this future is just one manufacturer’s opinion, but when that manufacturer is the $14-billion Deere & Co., then the rest of the industry had best take notice.

Deere shared this vision with select industry media at its annual dealer convention, which carried the theme, "A New Reality."

The crux of Deere’s plans for the future is the somewhat controversial selling of product directly to lawn and landscape contractors via the Internet instead of through the traditional dealer/distributors network.

Pictured above is Rocky, a computerized, interactive dealer's assistant that contractors will be able to ask questions of and get answers from in the dealership of the future. (Image provided by: Deere & Co.).

Deere’s dealers learned of the company’s plans for the first time at this event, and key representatives of the company admitted they expected a mixed reaction from the dealers.

"We readily admit that we don’t have all of the answers, but we do know that the basic business model is going through a substantial transformation," remarked Mark Rostvold, senior vice president, worldwide commercial & consumer equipment division, to a room of 900 Deere dealers. "And, to survive, we must change our thinking and approach business differently in order to align our actions with the world as it is – not as we’d like it to be.

"We want dealers to fully understand that their roles will change," continued Rostvold. "And the change isn’t being driven by us, but by technology and the marketplace."

Rostvold said Deere expects the number of dealers serving the industry to be cut in half between now and 2010. In addition, the company predicted that the nature of dealers’ sales will change dramatically in that time.

"There will be half as many dealers, and the proportion of their revenue will shift from mostly whole goods sales to mostly parts sales and service work," Rostvold explained, adding that in order to make this shift dealers will likely have to service more manufacturers’ equipment. "One thing we’re asking our dealers to do is provide universal service. That means they’ll fix any brand of equipment. We want the John Deere dealerships to be the first choice for servicing all makes of equipment."

Rostvold said the unbelievable rate at which e-commerce is growing – experts report that Internet sales currently total about $300 billion and are doubling every nine months – means manufacturers have to start moving in this direction now.

"The first companies to pioneer e-commerce will gain a competitive edge that will determine their success or failure in the next 10 years and beyond," he asserted. "If you resist the changes taking place, you run the risk of being swept away."

Despite the challenges facing Deere and its vast dealer network, Rostvold said the company is confident it will be able to double the revenues of its consumer and commercial division from $3 billion annually to $6 billion by 2006.