Conversation Series: Dave Zerfoss, Husqvarna

Frankly, the hand-held power equipment portion of the lawn and landscape industry may not include as many manufacturers as the mowing portion of the industry does, but the manufacturers producing this equipment are engaged in an intense battle for market share. Husqvarna Forest & Garden, Charlotte, N.C., has spent the last few years enacting a clearly visible plan for growth based on fostering relationships throughout the industry and learning about contractors’ businesses. In addition, this division of Sweden-based Electrolux sent a message to its equipment manufacturing brethren in the hand-held and mowing categories that it is very serious about raising the company’s position in the industry to another level with its October acquisition of mower manufacturer Yazoo/Kees.

Q. How did you get started in this industry?

A. Initially, I went to work for Exxon with the charge to identify strategic sites and repositioning of service stations. I was also involved in training as the training director for the Eastern region, which was the start to my career-long work with independent dealers and retailers to develop their business from a business standpoint and through technical expertise.

From there, I went to Leisure Time, a distributor of leisure products, and rose to vice president of sales and marketing, again working with independent retailers to grow their businesses.

I went to work for Stihl from 1981 to 1991 as general sales manager, and I came to Husqvarna in 1991 as president. Now, I’m quite proud of the fact that we’ve quintupled in size since the current management team has been here.

Q. What has contributed to this growth?

A. We have seen the development and introduction of some fantastic new products in our core lines of chainsaws and hand-held power equipment. These products have included an expansion to be a broader supplier of equipment and an expansion into lawn and garden and now into the commercial side of the business with the Yazoo/Kees acquisition. These product introductions have all been part of our goal to become a total source for the contractor and the dealer.

I think there has also been heavier emphasis placed on marketing and brand development than there was previously at Husqvarna.

Q. What triggered Husq-varna’s aggressive marketing to landscape contractors?

A. The lawn and landscape market represents a natural extension for us because we are heavily involved in forestry/arborist training and education with associations and con-tractors in those industries. This is not a new model for us, and we see our next major growth opportunities being in this industry through the servicing retailer or dealer. Our focus is on the retailer and that spins off to the consumer who is interested in buying the best products.

We are looking at this industry from two perspectives – marketing opportunity and what is the natural fit with our retailer. One thing we have realized is that our servicing retailer has had to broaden his line to represent a full complement of lawn and garden equipment, especially commercial mowing equipment, which then ties into professional trimmers and other commercial equipment.

We think there are true synergies to be achieved through this combination. There is real marketing potential to us because of our heavy involvement in training and development and association support. The lawn and landscape industry is a specialized business that is serviced through the retailer who requires training and support in order to best service an end-user who also requires training and support. We have spent the time building relationships in the industry and learning about our end-users’ businesses because we wanted to make sure we understood the business and their needs before we decided what product lines to develop.

Q. How do you justify the financial and time commitments necessary to build these relationships and learn about people’s businesses when such an investment may not result in immediate and obvious direct results?

A. Everyday we have to rationalize that from a business sense and strategically evaluate where we put our time and efforts. We try to make our investments up front in general, but, in this case, our efforts are natural extensions of our values of excellence, involvement, training and education. The only way to deliver these things is by getting involved.

So we believe in investing in the industry and supporting its associations in ways that represent more contributions than just getting our name on the roster. These are strategic decisions for us where we don’t have as much immediate return.

We want to be known within the professional side of the business, but another part of this approach is to be known through our retailers. We have to have the right products to achieve this because for retailers to be successful, they need more resources than ever and to provide them with these resources we have to have more volume. The retailer needs that, and we need to have the right attitude when serving them.

Q. What are the challenges facing the power equipment retailer today?

A. Retailers have had to better define their strategic focus. Some retailers have focused on being more aggressive on the consumer side so they’ve oriented their business in that manner by upgrading their locations with better sites, more advertising and more promotion. Other retailers focus on just the professional market, and then there’s also a group in between that does both.

We’ve watched this evolution take place and the importance of support from manufacturers has become even more important for retailers, which has them looking at who they partner with and who provides them with support. I think this is a positive evolution because retailers going to consumers are successful because they’ve adopted aggressive retail and marketing strategies and retailrs focusing on commercial users are working on being the best at providing those services their customers demand.

In addition, I think there are more demands on retailers today because they have to focus more on retail/marketing practices to be successful. Also, there is the perspective that today’s customer is much more demanding from a customer satisfaction perspective. There are also certainly more challenges dealing with issues like regulation, product liability and product application than ever before. As a result, the retailers have to be more knowledgeable about more areas than just stocking product and being the best technician, which they still have to do.

Q. Why did Husqvarna make the Yazoo/Kees acquisition?

A. Manufacturers have to constantly develop new products as they adapt to users’ needs for their markets. We consistently place a high focus on research and development, and this has to be an on-going challenge for a company to maintain a quality product line. This move strengthens our product line.

But I think it is also important to realize that the the retailer today has to do more in the training on the products because that is part of their offerings. And I think manufacturers have to increase their support in this area in the industry. I see a few manufacturers providing this training, but the rest are not making this commitment.

We’re working to provide these training efforts and mobile training in the field and we’re also working with the associations on training programs. We just feel this is a key responsibility of manufacturers and represents a significant difference between some manufacturers and others.

Ultimately, the manufacturers supplying innovative products along with the services end-users require will separate themselves from the rest of the market as contractors look for products that are easier to use while prices don’t increase. So we have to figure out how to spend less for more quality.

Q. Why is it important for a manufacturer to offer a full line of equipment?

A. I think having a full line is absolutely essential from several perspectives. First, the landscape contractor is time challenged and time is money for him. Whatever time he can spend on what his charter is – generally, to mow and maintain turf – benefits him. The contractor doesn’t want to spend that time going from retailer to retailer looking for his equipment needs. He needs one-stop support in sales and service for the equipment and doesn’t want to have to use multiple retailers. The contractor also likes to have consistency across his product lines to deal with one supplier and one manufacturer.

On the retailer side, as these products get broader and more sophisticated, the challenge to provide more service and education is extremely demanding. When the retailer has to defray attention across numerous manufacturers, that means having different parts systems, different computer systems, different educational programs, and this is all time consuming. At the same time, to be able to support any one manufacturer’s programs in these areas requires a significant volume of that manufacturer’s product pass through the retailer’s store, and having a full line helps accomplish that.

Q. What made now the right time for the Yazoo/Kees acquisition?

A. We’re extremely focused on our quest to be the total source for our retailers. That’s our strategic position with the retailer. The more we can be the total source answers the questions retailers have. To be a total supplier to the end-user of the products makes the contractor want one-stop shopping and retailer wants the resources to support that. This acquisition answers some of those questions regarding training, education and business development for us.

I also think the timing is right because over the last few years we’ve established a strong brand identity and grown our retailer base throughout the market. Timing in the market is such that this is a developing marketplace, and we’re riding that momentum.

Retailers are looking at consolidation in the industry and looking to position themselves with the manufacturer who will offer them opportunities and services. We’ve been working at this for the last two years. We had to take a critical view and identify where we want to be involved. Yazoo/Kees’ broad product line appealed to us along the company’s history of quality and long-term standing in the industry. Another major asset was the R&D going on within this group, some of which is evident today and some of which will be evident as more new products come to market in the next year to two years.

Q. How do you expect the presence of a line of mowers to help your sales of hand-held power equipment?

A. We’re expecting considerable synergies from being a one-stop shop. The products have to merit the selection and can’t just be branded to do this, but there is certainly a natural perspective for the end-user to one-stop shop for quality service and support. There are also more economic benefits for the retailer for strategic partnering to better manage inventory by carrying one or two manufacturers’ lines instead of five or six.

Q. How will the consolidation of mower manufacturers affect the contractors?

A. Consolidation will effect contractors and retailers beneficially. Our perspective is that consolidation will lead to fewer retailers handling larger product selection and doing a better job with those lines. There will ultimately be fewer representatives out there, but they will be providing a more holistic offering of services because the end-user is demanding more.

Having this broader line in their retailer allows the manufacturer to support them more heavily. I think we’re seeing some polarization in the market. As we mentioned before, I also think we’re seeing the definition of retailers changing. I don’t see the retailer going away like people say, but see him changing his perspective with less servicing homeowners and more expanding as commercial and servicing retailers.

Q. How has the consolidation of contractors changed manufacturers’ approach to the industry?

A. As larger end-users consolidate, they demand more services, training and more partnering in terms of providing input on the product and looking for manufacturers to adapt product to their needs. There certainly can be a lot of customization in terms of what services retailers provide so we need to standardize these services with the retailers and communicate them to the contractors. We also need to work in close partnership with the contractors them so they’re not going from retailer to retailer.

Q. In a 1998 interview with Lawn & Landscape, Ken Melrose, president of The Toro Co., said, "I think the leading manufacturer is going to move into offering more support services to the customer that are non-product oriented but that will help contractors become better business people." How deep into a contractor’s business should a manufacturer reach?

A. I think the perspective of what is enough will always be difficult to define because end-users’ needs are always changing. From a product basis, we certainly need to develop high-tech, high-quality products that are beneficial to end-users, and to do that the manufacturer has to spend a tremendous amount of time with the end-users to understand what they do, the dynamics of their businesses in terms of what offers the best return on equipment investment, how the equipment is used and can be made most environmentally and egronomically safe and sound for the operator. Manufacturers have to know if the uses for a product are changing as lawn sizes go up and down. What is the impact on the users of the equipment? Also, what is the largest profit return for the user from equipment? Manufacturers also have to supply servicing outlets so end-users can get the service that they need, and manufacturers have to have a perspective of the extent of end-users’ financial resources.

Manufacturers have a large responsibility to connect the end-user and the retailer and get the retailers involved in end-users’ businesses. When one of your basic core values is learning and education, then this is a rather simple extension of your philosophy. The end-user is looking for more support, services and more direct input into those products and services. They want to be involved in the manufacturing process giving input and getting answers to their individual questions. So this needs to be a natural two-way communication process.

Q. How do you personally stay in touch with the lawn and landscape industry?

A. I’m very involved with the associations doing roundtables and speaking engagements. I gather a tremendous amount of support and learning through those experiences. I also do a tremendous amount of travel to visit retailers and end-users of the product on location besides just visiting with them at shows. And currently serving as chairman of the Outdoor Power Equipment Institute puts me in front of manufacturers’ needs and concerns, and that puts me in touch with other associations.

Q. How would you describe your management philosophy?

A. I think the biggest management focal point is that we have to have a focused purpose and see our mission and purpose, which, for us, is to help people grow and prosper. Stay-ing focused makes it natural in terms of working with our associates, customers and stockholders as a living triangle. We are constantly staying focused on our purpose and where we’re going with that. Talking about our purpose regularly develops a healthy culture.

For example, we have periodic stakeholders’ meetings where we close the business for two hours and share information with the employees through open book management. I think it’s crucial that management constantly communicate its vision to anyone who will listen.

Q. What are your goals now for Husqvarna?

A. My goals for the company are focused around our purpose to help people grow and proper. Certainly, we want to increase our revenue and profit, but we have to grow people and have the best people in the industry and be a rewarding work environment for them in order to do so. Growing our dealers’ and end users’ businesses is also important for us. We want to see profitable landscape contractors out there, and we can help that happen through providing education and training and partnering with them in an on-going process.