We sat down with Bjoern Fisher, president of STIHL Inc., to get his take on current trends impacting the rural lifestyle and outdoor power equipment industries, including how supply chain issues are impacting their business and dealers. Fischer says a combination of factors — beyond just the increase in home projects due to COVID-19 — aligned for a strong year for business in 2020 and leading into the first half of 2021.
Rural Lifestyle Dealer: What are some of the key factors you see that are currently driving buying habits in this market?
Bjoern Fischer: Well, several things. Reflecting on last year, we really had a good weather year. Overall, it was very good across the nation.
We had the whole COVID impact, with people staying at home and rediscovering their yards and their homes. And, to a large extent, having to spend their vacations at home. So it's not just the stimulus money that was available, but it was also a lot of the money that would have been spent on vacations and maybe some of the other types of activities, going out, eating and things like that was redirected to spending it at home, so there was more money spent.
There was more time available than you would normally have also, due to the holidays and things like that. And then, lastly, I think certainly toward the latter half of the year, there were quite a few storm impacts across the country, which also obviously impact our business.
So, really, last year was a combination of factors that were very favorable for our industry. From great weather to a good economy with the stimulus money being put into it, and then just people focusing on their homes and their yards, both time-wise and money-wise, which obviously is beneficial to our industry.
RLD: OK, and what's your outlook for how this year will go? Whether that is the full year or maybe the first half of the year heading into summer.
Fischer: Well, I think at the moment, things look very positive. We expect the first half of the year to be very strong. Overall, if you look at the stock market and things like that, things are looking pretty optimistic.
We just spoke a little bit about the weather. We’ve seen the first trees to flower and the first signs of spring. So If the weather stays with us, we should really have a good strong first part of the half year. I think the piece that gives us all a little bit pause is overall supply chain constraints that we're seeing internationally and nationally, whether it’s logistics hiccups, or more and more we're starting to see raw material and component supply issues that are impacting us. So that is something, not just in our industry, but in the auto industry and in several other industries. Certainly, in any industry related with the outdoor is experiencing heavy demand and therefore is also starting to see some of these supply chain challenges. That's on the challenging side of the outlook as we look at the first half of the year.
We must be very flexible in adapting to that. I think one of the big advantages we have had, and it's certainly come to the forefront here again, is the fact that the majority of all the products that we sell in the U.S. are manufactured here in Virginia Beach. Not only do we assemble them here, but we also manufacture a lot of our components ourselves. So that has been very beneficial for us.
But, nonetheless, we are dependent on raw materials and components coming from all over the world. That has been a challenge, but we've responded to that here in the U.S. with big investments into capacity, into people. We've hired a lot of additional employees. So we've responded with that early on, I think, with first of all, staying open and keeping going, but also with continued and actually increased investments into capacity and into our employees.
RLD: That's great. And then what do you see as both the biggest challenges, but also biggest opportunities that the rural lifestyle or outdoor power equipment industry is facing right now?
Fischer: I think the biggest challenge, obviously, is that we're seeing a lot of new customers, and these customers are just based on COVID and the pivot they've had to make in their lives are, as we just discussed, rediscovering their homes, their yards, and finding new enjoyment and new pleasure in their own backyards. Also, just being outdoors, because that has been one of the big alternatives in this whole lockdown environment. And so, for the outdoor power equipment industry, I think we're seeing a big advantage that people are spending more time in the spaces that we can best serve them.
Interestingly, lately we're also seeing a trend where there seem to be more people moving out of the cities and out of some of the metropolitan areas into the suburban and into the more rural areas. That's obviously great for us because that's where our focus is and where we can serve them. So, for the outdoor power equipment industry, I think the trends that we have seen, the new customers that have joined the space that we serve, that's all the big opportunity for us.
Obviously, we're trying to respond to them with our servicing dealers that we have across the country. We have more than 10,000 dealers. So, we try and be close to our customers, and part of our answer to that is also buying online, pickup in stores. We're trying to offer convenience, in that people can shop online, make sure the product is available, but still have the big advantages of having a servicing dealer that is very knowledgeable and can make sure that they have exactly the tool that they need for the jobs that they're trying to accomplish.
RLD: Has there been anything that because there are these new customers that are coming into the fold, that dealers need to know or do differently working with them vs. their repeat customers that have been there for years?
Fischer: I think we have been growing very strong across the last few years, so we have been able to attract new customers who are very familiar with us. The advantage our dealers have is that we are focused on qualifying our customers, meaning we really try and understand what their needs are. And then we have the products necessary to be able to put together what our customers ultimately need. We have a lot of battery products, which is obviously a growing trend in the market. And so, we offer the full range from gasoline products to battery products, from consumer all the way through to varying professional groups.
I think the servicing dealers we have are very attuned to dealing with new customers and helping them find the right product for their application, show them how to start it, take some of that initial fear away from doing something that you haven't done before. I think our whole servicing dealer network is really built around making it easy for new customers to experience the products that we have available.
RLD: What are you guys hearing from your dealers right now about either what they need from you or what they're hearing from their customer base?
Fischer: Well, I just came back from a trip visiting a few dealers in the Florida area, and our dealers are extremely busy at the moment. Certainly in the south, where obviously they're in full swing. As the weather starts warming up, we'll see that move farther north. But they were saying they're very busy. Some of them are telling us they're actually tired because they've been working hard for months on end now just with unprecedented demand. So, there's been a strong demand, and really for us, they're looking to us to fill the gaps we may have here and there. And they're obviously feeling the effect of some of the supply chain challenges that we have.
And, in talking with them, they can see that. I think as private individuals, we've all seen that in the supermarkets from time to time with certain products being unavailable. And to some extent, we're seeing that happen now in the outdoor power equipment industry. But also in related industries, we're just seeing a tightness of supply with that increased demand that has been ongoing for quite a while now.
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