Titan drops "strong store' concept
WEST FARGO, N.D. — A cut of 12 stores by March 31 and a shift away from a "strong store" concept for Titan Machinery is not about a troubled ag economy, but rather delivering product support in a changing future, the company head says.
Dave Meyer, chief executive officer of Titan Machinery, Inc., of West Fargo, N.D., says closing 12 "rooftops" will benefit the customers in the long run.
"At the end of the day customers want a team that can get the job done — up quickly and correctly and efficiently as possible, and to do that it takes scale," Meyer says. "This wasn't a knee-jerk decision, but something we've thought about for a long time."
Meyer says the company's move to consolidate 15 locations into neighboring locations is about customer care. Titan operates 75 agricultural dealerships in North Dakota, South Dakota, Minnesota, Iowa and Nebraska. They're also in six additional states with construction equipment, including Montana, Wyoming, Wisconsin, Colorado, Arizona and New Mexico.
Prior to the pending closures, Case-IH store lists indicated Titan controlled about 25 percent of the Case-IH store locations in Minnesota and about 40 to 45 percent of locations each in South Dakota and North Dakota.
The store closings will cut annual expenses by $25 million and offer a $16 million improvement in profits, but that wasn't what drove the change in a publicly-traded company that recently has had more than $1 billion in gross sales.
It started with a management structure change, effective Feb. 1. Affected staff members on Feb. 9 were informed of the closings to give time to inform customers and to help employees find a fit for jobs in neighboring stores.
"We invest in the stores to run and serve the market, but what happens when markets change is we need to change with the market," Meyer says.
Each store that has been dropped could have another life for another purpose.
"We've been a part of these communities, have worked side-by-side with these employees and families and have known them for a long time," Meyer says. "Any type of change is difficult but to close stores, to exit a community, those become very difficult decisions."
Meyer says the company is doubling down on precision farming and leveraging the company's experts across larger areas.
Significantly, on Feb. 22 the company announced a strategic alliance with Decisive Farming Corp., whose head office is near Calgary, Alberta. Decisive Farming was recommended to Titan by Rocky Mountain Equipment, also of Calgary. Rocky Mountain is another publicly-held equipment dealership network operating 30 store locations in three provinces. The dealer network partnered with Decisive about two years ago, Meyer says, helping clients with such things as prescriptions on seeding to fertilizer and chemical applications.
"Our job is to get the connectivity and transmission of that data, and leave it up to people like Decisive to help turn that into dollars and cents," Meyer says.
He says Decisive Farming offers a "complete and reliable solution" offering access "to a suite of over 10 farm management services, with more expected in the future."
One product is called the My Farm Manager platform, which provides data management and expertise on GIS agronomy and crop marketing and integrates directly with numerous major equipment telematics systems. Telematics on tractors and combines will increase, Meyer says.
"We think it's our job to get the information out of that equipment in a form they can use," he says.
Historically, Titan had favored the "strong store model" and now will shift to an area "expert team," involving three or four stores, locally.
Under the old system, a regional manager would oversee roughly 15 stores. Stores were headed by a fairly independent local store manager and a staff, including sales, parts and service technicians. Each store was responsible for its own financials, inventories and technicians.
Under the new system, Titan is divided into four regions, which encompass a total of 17 areas. An area sales manager and an area products support manager will work with each of the three to five stores.
Most customers will still be less than 30 minutes from a store, and Titan's goal is that no one has to drive more than an hour. Meyer notes that the distances are offset with improved parcel delivery, as well as parts drop-offs and mobile units. Distances will vary with the geography and type of farming.
Under the new system, the store manager position is eliminated.
Store managers were jacks of all trades. Now the area-wide people will be specialists.
Jerry Hacker was formerly the store manager for Titan Machinery's store in Aberdeen, but now is the northwest regional product support manager, overseeing parts and service in most of the stores in the Dakotas.
"I think we're going to serve the customer more," Hacker says, of the change. "We have more people who can go to the store levels and help the people out there. If we can help them out, there we will have better customer service."
Hacker acknowledges that smaller communities feel the loss of a dealership, but he emphasizes they will still receive quality service.
"We're not going to forget the communities either. We'll continue to support them just like that individual store did before. Or hopefully, sometimes it'll be better," he says.