Good Rainfall Overpowers Virus
The outdoor power equipment sector has been enjoying a bumper year – despite the commercial and humanitarian devastation caused by COVID-19. As John Power discovers, the nastiest pandemic in recent history has been no match for widespread rains and decent sunshine.
OPERATOR: Regional Australians
There was frequent reference to a ‘two-speed economy’ following the global financial crisis of 2008, meaning the (booming) mining sector was performing well while the rest of the economy faltered.
It might be argued that, in the wake of COVID-19, we are subject to a new two-speed economy, with mining once again proving buoyant while our tourism, hospitality and retail sectors suffer horrific downturns.
But where does the outdoor power equipment sector fit into this latest commercial duality? At first glance, it is not necessarily obvious how the outdoor power equipment sector might be affected by a major commercial lockdown: on the one hand, dealers are vulnerable to a lot of discretionary retail spending, much of it from small-to-medium landowners representing a massive cross-section of the community; on the other hand, merchants in agricultural heartlands, in particular, cater to longstanding primary producers who are one step removed from the international commercial pressures affecting tourism and hospitality.
The answer, it turns out, is overwhelmingly positive for our sector – dealers throughout much of Australia have been enjoying a fantastic year so far, with a diversity of customers shunning the gloom of COVID-19 to (literally) make hay while the sun shines.
“I have more sleepful nights than sleepless nights at the moment, I can tell you!” says Damien Hurst, who operates the STIHL dealership Morleys Mowers and Chainsaws in Traralgon, a regional centre in Gippsland, Victoria. “I’ve been here for 10 years – I bought the business in 2010 – and this has been my biggest financial year by far. I’m streets ahead of where I was at any other time.”
This success, Damien says, has been achieved without dramatic sales increases in big-ticket categories like all-terrain vehicles (ATVs), and, perhaps even more surprisingly, without frenzied buying from any particular client base (the region is well known for its mixed farming and dairy industries, and to a lesser extent logging). “I wouldn’t say that the farmers, specifically, have been in spending lots of money – they have simply bought what they need,” he says. “If they are having a good year then they’re paying the debts they’ve incurred in previous years, so I wouldn’t say they are going out splashing money.”
Rather, during the height of the COVID-19 lockdown, a wide cross-section of customers including small landholders, hobby farmers, residential homeowners, farmers, etc, all made equally strong purchases across the board amidst drought-breaking rains and mild, temperate conditions.
“We’ve certainly gone through a lot more chainsaws – we sold 57 chainsaws in just one month [April],” Damien says; NB: April represented the apex of COVID-19 restrictions in Australia.
Cynics might speculate that strong equipment sales during the height of the pandemic could have been attributable to social circumstances rather than mild weather and good rain; after all, dealers were amongst the few merchants to remain open while others sectors were closed, and elevated numbers of ‘work from home’ households might have stimulated above-average expenditure on home-based projects like landscaping and gardening. However, as Damien points out, the bumper sales season began before the onset of COVID-19 and persisted throughout it, reinforcing the observation that great weather was indeed the main reason for improved sales.
“All I can say is that our product level on the shelf at the moment is extremely low. STIHL told us they had actually spent more on airfreight in the first quarter of this year than the whole of last year – and that’s before the coronavirus came out! So, it’s just been a very big year for us.”
Other notable features of customers’ recent behaviour, Damien notes, include:
- Ongoing experimentation with battery-powered gear. “To be honest, I’m very surprised how the STIHL battery gear has taken off,” Damien says, adding that his own private collection of 27 chainsaws now includes a cordless STIHL MSA 140. Interest in battery-powered items, he suggests, might also have been stimulated by poor-quality fuel in the area.
- Upfront payment. Even though Damien’s business offers finance options to customers, he says he only writes about two such contracts per year.
“CLIMATE IS KING”
Some 2,000kms to the north, Mark Draganoff from Nowa Power Products in Bundaberg, Queensland, reports almost identical customer behaviour during the year to date.
“In a nutshell, in this industry climate is king… People seem to be cashed up right now.”
Present healthy sales, he adds, contrast with a dismal period in the third and fourth quarters of 2019, when business was “well under half” what is should have been.
Despite being in the middle of an agricultural heartland, Mark’s experiences with primary producers during the current bumper season are the same as Damien Hurst’s in Victoria: “We’re more reliant on the general community, so whether the Ag sector has a bumper year or a poor year doesn’t make a real big difference to our business.”
As far as long-term sales are concerned, Mark says favourable weather is always the dominant consideration: “If the grass isn’t growing then nobody loves you.”
While sales have been strong in all categories, particularly mowing and handheld, Mark says servicing activity has declined – owners service old equipment in tough times rather than purchase new items. Nearby, Bundaberg Outdoor Power Centre is also enjoying great business from its mixed clientele.
“We’ve been absolutely flat out, everyone is working non-stop and staying late,” a spokesperson says.
NEXT SIX MONTHS
Given customers’ purchasing habits so far this year, and mindful of the potential for more outbreaks of COVID-19, it is clear that anyone seeking an insight into future equipment sales should consult the weather bureau rather than the chief medical officer! Climate, indeed, is king.