4 Areas to Revamp Your Ag Retail Business

There’s a balance to knowing your business inside and out and then letting your history limit your future.

Industry consultant Brad Oelmann challenges ag retailers to not allow themselves to hit cruise control. 

“Everyone should ask themselves, ‘When will my preconceived notions of this industry affect the company,’” he says. 

From his perspective, forces bringing change to the ag retail business demand respect. He sees many retailers ripe for either not taking some of the industry changes seriously as they emerge or — for those who have been in the industry for decades — not realizing change is afoot. 

“It’s death by a thousand cuts,” he says. “In retail, you’ve grown up in and around agriculture. You know the job functions, but you don’t think about how the business evolves.” 

What is he most worried about? He points out four key areas ag retailers can reflect upon. 

Infrastructure Assets to Support Declining Volumes
“You’re going to be selling less product to the same people in five years than today. This is because of product use rate efficiency, regulations and a decline in farmed acres,” he says. 

As an example, the most profitable ag retailers Oelmann consults with dominate their dry fertilizer markets. On the flip side, dry fertilizer is more asset-heavy to store and sell than seed or crop protection. 

What ag retailers can do today is learn about the changing behaviors of large-scale growers. 

Machinery Efficiency
Driven by rising costs of equipment and availability of labor, retailers are assessing their fleet. Oelmann says a large opportunity is only having the rolling stock needed and making sure each machine is earning its keep.

Transparency and Build Trust
Two drivers for growing an ag retail business are rooted in transparency and trust. 

“In general, farmers don’t plan precisely for what they need,” Oelmann says. “Sometimes they make changes to their purchasing without realizing there are implications or unintended consequences.” 

For example, farmers may seek out better deals to get their products and are willing to take inventory earlier than others. But if the farmer is carrying inventory at higher interest rates, maybe they aren’t netting out how they thought at face value.

“As a retailer, you can help them see the value by being transparent in how product costs compare in the way they are procured,” he says. “You are building your relationship with the farmer by sharing information and instilling trust.” 

Building trust, however, does not always mean having to do things the exact way they have always been done. 

“For example, with biologicals, we’ve seen a hundred or more companies come to market. If retailers aren’t trying to gain experience with those products — even if it’s not for as long of a duration as traditionally programs have waited — the innovation will go around them,” Oelmann says. 

He advocates retailers demonstrate their willingness to try new products. 

“Even explaining the type of testing you did and what worked and what didn’t is better than saying you are waiting for someone else to do it,” he says. 

Service
Oelmann says often retailers have programs with farmers that are in place and not revisited often enough. 

“If you are approaching a grower with the same offer four years in a row, they are going to start wondering why you aren’t bringing new ideas,” Oelmann says. “If it's the same program, it’s viewed as a commodity. To add value to the conversation is part of how you tangibly show your own value to the farmer and their business.”