What's to Come For Ag Retail: Put The Future Into Focus

The foundation of ag retail has been cemented in supplying farmers with solutions to their needs. But remaining stubbornly rooted in yesterday’s success poses a great risk to today’s infrastructure crumbling to serve the farmer of the future. 

In 2020, Farm Journal and Aimpoint Research partnered to look at the implications of Aimpoint’s Farmer of the Future psychographic segmentation and layer on what that means for the ag retail sector. A similar study was conducted in 2022 and presented at the most recent Agricultural Retailers Association Conference and Expo. Here are some of the key takeaways.

Big change is coming on the near horizon

“We are in the fourth agricultural revolution,” says Brett Sciotto, Aimpoint founder and CEO. “This is driving a great deal of change for our industry. And embracing change is critical to success.” Sciotto points to four examples of what to expect:

• Digitization of agriculture increases food traceability and transparency.
• AI, automation and robotics reduce the need for low-skill workers.The focus on regenerative ag and sustainability leads to breakthroughs in site-specific ag, controlled environment agriculture and biologicals use. 
• Gene editing becomes mainstream.

“We encourage ag retailers to know about the deep battles—the big trends and changes such as technology, environmental considerations, consumer needs,” he says. 

These deep battles will be realized in three to seven years, Sciotto adds, and the retail and distribution industries will have to evolve to serve the future state of agriculture. This is in conjunction with the close battles—what farmers are asking of you each and every day.

Learn more from a recent Farm Journal webinar: 

The makeup of farmers is changing

Focusing on psychographics, not just demographics, provides insights into how to align your business with the customer of the future. Aimpoint has developed its proprietary Farmer of the Future assessment. Psychographic segmentation gives insights into how farmers view challenges, embrace change and navigate the ups and downs of agriculture. 
Broken into five segments, here’s how the industry is represented today:

The independent elites and enterprising business builders have a promotion mindset, which means they aim to seek gains and wins while focusing on making progress and reaching goals. Those two groups also have an open mindset, so they are ready to explore alternatives and seek feedback. 

Independent elites and enterprising business builders are 41% of the market today, but they become 70% by 2040. Plus, Aimpoint projections have 105,000 farmers who do 75% of the ag output today condensing to only 60,000 farmers doing 75% of ag output by 2040.  

“This is when we see the changes from the fourth ag revolution coming to fruition,” Sciotto says. “The customer base will get smaller.”

Resource effort and allocation
        
Doubling down on differentiators—what makes your ag retail business stand out and stand apart with the value it provides—helps focus on your strengths. Where an ag retailer’s strengths cross paths with farmer needs is the sweet spot.

Note five escalating farmer needs:

• data management
• ecosystem services
• labor
• meeting supply chain demands
• risk management

In the 2022 study, Farm Journal and Aimpoint asked farmers what products and services they’d miss the most and the least and what’s important to start providing. Take note of the product (seed) and the service (field days) the research unveiled as the least appreciated. The findings also reinforce products and services to bring important value to farmers in the future: sustainability programs, data management and carbon market enrollment.

An omnichannel approach is gaining significance. What farmers want is changing alongside how farmers are interacting and buying. Farm Journal’s research shows 8% of farmers bought some crop inputs online in 2015, but 18% did in 2022.  

Align with the customer you want to serve

To provide further clarity from the 2022 study, Aimpoint and Farm Journal summarize that the ag retailer of the future will be defined by the farmer of the future. As such, a retail business’ ability act and provide these services is paramount: 

• Evolves from goods to services.
• Provides new inputs.
• Engages digital.
• Supports data and traceability.
• Serves as a gateway to technology.

The retailers who succeed at being entrepreneurial, agile and attuned to customers and their changing needs are the ag retailers of the future.