NZ taken for a spin

Photo / Supplied

German chainsaw manufacturer Stihl is using New Zealand as a test market for its concept of a nationwide chain of franchised power tool retailers.

This country is the first place in the world the company will try Stihl Shops - conversions of owner-operated dealerships into Stihl franchises selling a range of top-branded power tools.

If the concept works it will be rolled out elsewhere in the world, New Zealand managing director Jim Bibby says.

The "big box" hardware retailers such as Mitre 10 Mega had hit independent dealerships hard, with the number of dealers in New Zealand dwindling by about a quarter since 2003, he said.

New Zealand tended to follow other Western retail markets and in the United States specialist dealers had almost completely lost the lawnmower business to big chains.

"It was a case of 'you won't survive if you do not offer something that's appealing to your market'," Bibby said.

Based on research, the company came up with the Stihl Shop template, a franchise in which the expert dealer was still the owner but within a more consumer-friendly and modern retail setting.

Stihl has spent $5 million to set up the franchise model, including training staff, establishing merchandising systems and modernising the stores.

It now has 57 owner-operated stores around the country made up of 50 dealer conversions and seven new sites. It aims to grow that to 65 stores by next year.

The stores sell a range of branded power tools including lawnmowers, ride-ons, line trimmers and post hole borers.

Stihl Shops' family-owned German parent, with annual turnover of €2.2 billion ($4 billion), was prepared to let New Zealand run with the concept, Bibby said.

Jurgen Fitting, head of marketing at Stihl in Germany, said it was modernising its dealerships internationally and each country had unique requirements.

"I think it's fair to say we would like to see a coming together of the very best retail elements from around the world into a harmonised approach worldwide."

Auckland University franchising expert Gehan Gunasekara said New Zealand's small size and lightly regulated business environment meant it was often used as "a bit of a lab" for corporates wanting to try something out.

New Zealand had no franchise-specific legislation, unlike Australia and parts of the US.

In Australia, a franchisor had to provide a detailed disclosure document and comply with minimum standards set out in a mandatory franchise code. "All those things are governed quite closely."

We're Stihl number one

New Zealanders are one of the highest per capita chainsaw users in the world, Stihl Shop Botany owner Jason Vlaar says.

We've all seen that glint in our men's eyes - the wielding of a powerful machine, the pride in doing it yourself.

But there are now lightweight, easy-start chainsaws aimed at women and it's the females who typically make the purchase decision, says Albany shop co-owner Jude Beard.

"The guy does all the homework then he has to go home to get permission."

This kind of customer-centric focus is key, the store owners say.

And it's working, says Vlaar. He opened four years ago, just as the economy started to tank.

While there have been lean times "we've grown consistently year-on-year".