Interview with Peter Burton, Vice President of Sales and Marketing, Stihl Inc.

Stihl Inc. in Virginia Beach, Va., is the headquarters for U.S. operations for the worldwide Stihl Group. Founded in 1974, Stihl Inc. manufactures a wide range of gasoline-powered handheld outdoor power equipment, including grass trimmers, hedge trimmers and chain saws.

"Stihl products are sold only through independent servicing power equipment retailers. To reinforce our support of these dealers, we became the sponsor of Independent We Stand, a national movement of independent business owners who are educating their communities on the benefits of shopping at local stores.

"We have been able to grow our position among dealers in a comfortable way mainly due to the success of the servicing dealer — and the growing relevance of servicing dealers.

"Of course, there will always be attrition among the dealers for a variety of reasons, particularly in financially stressful times. At present, there are over 8,000 dealers carrying the Stihl line. We have been able to recruit more dealers than we've lost for a net gain over the past 3 years. We're thrilled with that growth, and with the quality of the dealers we've recruited."

Dealers of Interest

"One example of that recruitment is that since 2008, Stihl has been the preferred handheld product line for John Deere dealers, which helped us increase our overall dealer count, and we have also seen positive growth within the hardware store segment of the market.

"We see independently owned hardware stores becoming more relevant, particularly in the consumer market. A hardware store must still meet our criteria for a dealership, including offering service; and our branches and distributors work directly with the stores to set them up as dealers.

"Generally speaking, our dealers are sophisticated business managers who are financially sound and who employ good people with the right skill sets to augment their own.

"Many dealers also have outside sales people who are actively working with municipalities, government businesses and landscaping contractors. Their sales team isn't behind the counter waiting for business to come in.

Peter Burton, Vice President of Sales and Marketing, Stihl Inc.

"I don't want to over generalize here, though. There are also large single location dealerships that are run by first generation owners and doing very well."

An Evolving Customer Base

"As this market has continued to evolve, we've found the average consumer needs more handholding. Where 10 years ago the dealer didn't want to take the time, they are realizing there is a lot of money out there, and that they need to have a customer-centric philosophy. The ability to change with the market is what makes a dealer successful.

"The female customer is playing more of a role in our industry, too. She is buying and using the products, and she expects to receive good service. Our products themselves are lighter and easier to start, and when considering an advertising message, we're more conscious of the benefits that will appeal to the female purchaser."

Field Support

"Stihl is a two-step distribution organization. We have 12 distributors and branches in the field, and they're responsible for everything from inventory to sales to accounts receivable. We work with distributors and dealers on national marketing initiatives through the Marketing Advantage Program (MAP), creating a unified front for customers and helping us deliver a powerful advertising program.

"This extends to our merchandising, which has placed an attractive display system in dealerships from the East to the West Coast, north to south. Quality in-store merchandising has given Stihl a strong presence, and that's something that is particularly important with the consumer market.

"In supporting dealers in the field, we've worked to be focused and offer effective service delivery ability. In 98% of the cases, our distribution network provides next-day shipments to dealers, which is critical. So is in-field support, from adequate inventory to knowledgeable sales people. This is possible because our distributors only carry our products. We can be single-minded and dealer-centric."

Handheld OPE Market

"As it relates to the overall handheld market, I don't see this industry returning to the halcyon days of a few years ago for a while. New housing development is not happening, and there is still a lot of concern within the markets we touch.

"This year, the overall handheld business market was off by about 6% as of the end of July, and that's down from the past 2 years, though we have been fortunate to enjoy an increase in Stihl sales. In the near term, we expect the market to remain static, though there may be a slight bump up depending on housing and weather conditions. Either way, it's still a difficult marketplace in which to compete."

"The Stihl distribution model through the independent servicing dealer has proven successful for us year after year, so there is no reason to change something that is working exceptionally well. Stihl Inc. is on target for a record sales year in 2011."