Ian's Bits & Bobs: The Blog

Youre-invited16Oct18v2

The 5 Numbers Winning Garden Centers Use (and still have a life!)

Traveling the country working with independent garden retailers, I know that owners and managers constantly wonder how their year compares with that of their peers 300 or even 3000 miles away. The fear of falling behind industry standards is understandable when you are working hard in your own trenches! It’s easy to feel isolated. I get asked, “what are you hearing this year, how are others doing?” a LOT.

As I mentioned in my last post (9-2-18): the good are getting better and winning market share from the less successful. For many years we have focused our business on helping our clients use the numbers that really matter. While there’s a lot more to success than just a few data points, most of the winners do in fact use just a few data points to make the good decisions that keep them winning. That’s their “secret sauce”!

TMI!!

Now that almost everyone has POS, too much info can be the problem, not too little. Data is available on every aspect of the company, from buying strategies to performance reviews. Owners and managers simply don’t have the time to clarify what is crucial from what is just interesting! So they either don’t use the data although they have it, or they get buried in the wrong data. Unless you are going to invest in extra staff to track and analyze all the data, it just puts more work on the same few people.

So how do owners and managers decide which data points matter most?

It’s Just 5 Numbers

Simply, they let us help: we have narrowed the answers down to just 5 Numbers each month. These, together with a few simple but crucial “offspring” calculations, allow retailers to make the right decisions without more office time and endless reports. Some of our clients have been using this approach for over 10 years and are absolutely “beating the street” when compared against the industry in general.

We focus on what matters most in retail. With 60% – 80% of sales revenue being spent on just two costs, inventory and labor, we keep the “numbers” where they matter for time-crunched owners and managers.

From just 5 Numbers our clients can track sales and/or customer growth, margin management, customer spend, labor efficiency and retail profitability.

But unlike traditional industry reporting, which focuses on the topline of Sales Volume, we go down much deeper to see what’s left after inventory and labor costs, or “Gap Dollars” for those in the know.

Gap Dollars, (accountants might refer to it as ‘Margin after Labor’) is like an operating profit. By subtracting the costs that you have quick and relatively easy control over (like Costs of Goods and Labor) from sales, you can see what’s left to pay those expenses which are hard to reduce such as rent, admin, energy, debt repayment and so on.

If that particular number, Gap Dollars, is not increasing faster than the cost of being in business, you’re going backwards no matter what the topline sales numbers tell you!

Share and Compare – Finally!

You may be aware that Dr. Charlie Hall (Texas A&M) has recently launched a national key performance indicators sharing network for growers. We are using the same platform (yourmarketmetrics.com) to create “The 5 Numbers Project” (T5NP) for garden retailers: secure, online, anonymous business comparisons, available at your desktop 24-7.

What’s the goal here? We believe there is a strong desire to have credible national industry data to compare with to see how the industry is doing as a whole, and to track your OWN business’ performance in a visually compelling way that speaks to people beyond the beancounters. We want you to have a confident answer when your loan officer says, “How do you compare with the industry?” or when you are trying to value your company for sale or generational transition.

Best of all, the dashboarding format will give you an easy way to visually SHOW your team the metrics you want them to focus on … so they can help you move the needle where it matters most.

All are welcome!  

Importantly:  ALL independent garden retailers are welcome to join this new industry-wide benchmarking project, regardless of what peer group, buying group or networking group you already belong to. All are welcome … as long as you’re a retailer. (We love our vendors, but unless you have your own garden retail numbers to share (ANONYMOUSLY, of course), then this isn’t the project for you.

The first round of subscriptions will be open only from November 1 – December 23, so you can be onboarded and up to speed before Spring 2019 hits. Every Tuesday for the next 6 weeks here on Bits & Bobs, we will feature one of the 5 Numbers and what it can do for you, and share more about how the platform will work:  stay tuned!

Oct 15, 2018 2 Comments
Sun River pic

More than a Photo Stop

If you are in garden retail, summer is the time to take a break after the spring zing and maybe join one of the many garden center tours and meetings offered in various states. It’s a great opportunity to spend time with like minds, share stories and ideas with one’s peers across the country. Having seen plenty of garden centers myself this summer from Seattle to Boston and knowing there is another tour this coming week, I wanted to share some of my stories from 30+ years of doing just that:

If you’ve heard me speak recently, you already know we are seeing a serious polarization in the independent or “local” garden retail channel. It’s similar to what happened in the local hardware channel in the 1990s, when around 50,000 retailers shrunk to around 18,000 now. But those survivors are now thrivers!

The Good Are Getting Better

It’s very clear from the last few years that in the family-owned, privately-held garden retail channel, the good are getting better. They are winning market share (often in the same town) from the less good and this year’s data from our two network groups and clients validates that observation. The better-managed companies are making more margin dollars and, for those in the know, more “Gap” dollars, even if the sales “topline” looks similar.

So as you tour these stores, look beyond the photo-shoot displays and clean bathrooms. Ask the questions that really matter: Where did they get their inspiration and ideas? How did they know it would pay off? Who do they seek counsel from and make critical decisions?

Early Adopters

I am guessing you’ll find that your hosts were early adopters and networkers. Although ANLA’s Management Clinic sadly ended six years ago now, I’ll bet your hosts were regulars there, networking and learning from 7am to 1am. I suspect they were early adopters of capital improvements such as state of the art greenhouses, benching and signage. They were probably early adopters of network groups, training programs and, dare I say, they might even be among the 730 people who went on one of our 16 England Garden Center tours.

I have spent many hours wondering what makes a winner in this channel. It starts with a clear vison based on months or years of collecting the data/evidence of others’ successes and failures. It continues with a clear feasibility plan which is pre-loaded with strategies for expected (and unexpected) challenges. They have a strong Plan B, an ability to measure and monitor, and an openness and a preparation for change mid-dream if necessary. They are also ready to make some unpopular personnel and/or family decisions (try firing your sister or putting your Mom on a 90 day write up…).

Leverage and Risk

These winners invest more than most others are comfortable spending. They accept risk that stops others sleeping at night and they hire people who know more than they do. Two of our clients borrowed loans equal to their annual sales in the previous year (those were the days when banks were partners!) – while in their twenties…. Another bought out their parents but only if they agreed to move 100 miles away – think about that one!

I know owners who invested early in POS while others shunned it because of their own dislike of computers. We have a client who 12 years ago spent over $16,000 on a sign machine while other more established and larger nurseries scribbled on the back of an old J&P sign. We have clients who travel thousands of miles to see stores not in the garden business, just to keep up with general retail. They all have a passion to learn and keep moving forward, to constantly challenge and “change it up”. They simply don’t say (or tolerate their team saying), “That’s good enough”.

After so many years in the trenches I could go on (yes, I know, I DO go on…) but the key takeaway from working with some of the best in the business is that there are clear, consistent reasons for their success: vision, focus, risk and the humility to constantly learn and change.

The lesson? You can’t take a picture of that. If you’re heading out on a tour, we encourage you to ask the same questions that your hosts asked … and still do. Because another probability of these winners is that they will openly share their successes and failures with you (well, as long as you are not three miles away – they’re not dummies!)

PS: On that timely tour topic, some of you readers may be touring one of our favorite clients this week in Utah – Sun River Gardens (https://sunrivergardens.com/, pictured in header). Take a close look and ask those deeper questions to Scott and Tanya: they are rightfully proud of all that they have accomplished, but it didn’t happen overnight … and it wasn’t easy!  Kudos to them, and to ALL of you – the garden centers who take the time and expense to tour whoever is moving the needle, so you can move it yourselves. That’s how an industry moves forward.

 

 

 

 

 

Sep 2, 2018 10 Comments
Instagram Eric HP Haul

The Rise and Rise of the Under 35s

Right now most owners and managers in the retail garden business are in “can we catch up with budget?” mode after a late, cold spring season and are probably not worrying too much about demographic trends. So mark this as a “should look at this again after Memorial Day” doc and circle back when you can raise your head above the trench.

The Cavalry is Coming

Talking of military analogies the cavalry, in the form of the under 35 year old householder, is coming over the hill to save the garden industry – just in time, as female Boomers continue to disengage.

As an Analyst and Commentator for the 2018 National Gardening Survey (NGS) (www.gardenresearch.com) I have the opportunity to look at the data regarding the American consumer’s participation in and spending on “gardening”.

First let me say that we (i.e. the NGS team) do not fixate on a single year’s data, even though both gardening spend and retail sales hit all-time highs in 2017 – which would be very tempting headlines. But we do look very closely at consumer spending trends over 6 year periods and even more crucially at the participation data. People remember what they did last year more accurately than what they spent last year.

In fact the 77% of all USA households who report doing something in the garden IS the highest ever in 35 years of the NGS. (Which other industries selling non-essentials can claim a 77% participation? But I digress.)

While participation in gardening stayed flat among households of those over 55 years of age, it continued to rise in the households of under 35s. They are not yet spending the same amount of money as their older siblings and parents but they are now seriously engaged in more than just houseplants and veggies. Under 35s have caught up with older groups on participation rates in what were until recently bastions of “settling down” such as DIY Landscaping, Container Gardening (no hole-digging for them) and purchasing tools or equipment. I think we can now say that the under 35s are “all in”.

Load, Read, Fire!

Nestled in the 250+ pages of NGS data, something caught my eye. Twenty years ago, the NGS showed that the biggest consumers of “Gardening Information” were females over 55 years old. The 2018 NGS shows that same data point to be the under 35s and male…. Hmmm. Furthermore, they are buying information online the way people bought magazines 20 years ago. Although we are always cautious about one year’s results, millions of households say they acquired a gardening app last year alone!

Failure is Not an Option

Not only does this fact confirm the switch to digital media, it also suggests that this age group is serious about getting it done right the first time, AND that they are comfortable using silent information at least in the first stage of how-to learning. As if to confirm the confirmation, I also found another little factoid: The under 35s have shown steady growth in using the Do It For Me services of landscapers. It seems that the more affluent under 35s are much more prepared to employ others to do some of the garden chores than the previous generations were at the same stage in life. That’s another – BIG – hmmm…

So, what are you doing to meet, welcome, educate and assure younger householders’ success in their digital space, so they get it right the first time? That would seem the best way to win their loyalty. To them, first-time success is an essential part of the ‘shopping experience’ about which we are now hearing so many clichés.

Please join in the comments, let us know how you are tackling this huge opportunity – when you can raise your head above the parapet!!

Happy selling!

photo credit: Portland Nursery’s Instagram Account

May 21, 2018 2 Comments
2016-02-24 10.58.38 2016-02-24 10.58.38 TreeHouse_Jammin

Laboring with the Future

Notwithstanding the surplus of Nor’Easters on the east coast and a “River of Rain” on the west, the calendar says it’s spring and consumers are absolutely dying to do something in their gardens.

So, what are your exciting anticipation points this spring?

  •   A stronger economy increasing the average spend?
  •  Droves of excited new consumers as Millennials finally get gardening?
  •  The continued surge in sales of houseplants, succulents and other millennial “stuff”?
  •  A shortage of some plants as landscapers vacuum up supplies?
  •  On-line sales and advice challenging your status quo?

Nope. If I ask that question to owners of garden retail stores the immediate response is one, ever-present word or subject – Labor. “How are other companies you know finding people? What are they paying or promising? How are they keeping them?”

This year’s garden retail business story is all about Labor, or the lack of it.

The short term answers for this year include paying more than you think the job is worth, offering several part-time positions for each full time position, end-of-season bonuses, raising prices to cover increased labor, reducing some categories that just soak up labor hours and quite frankly, doing without.

Time to Change the Model

I think this is the kick in the seat the industry needed.  For years the garden business has depended on finding thousands of educated dedicated people to work long and hard for average earnings because they loved the product and the process. The “secret sauce” of the business model was that our work force held the essential information for consumers who loved the end result of gardening, but were fearful of failure.  Householders had to come to our stores if they wanted assurance and success.

Well, no more. Now that consumers can source, research and buy so much on-line, retail employees are no longer the first-providers of crucial how-to information. That powerful position is gone forever (and it was powerful).

The role of retail teams has changed to one of validation or correction of what consumers have already learned. Employees are now in effect the curators (I hate this word, sorry) of all that on-line information, the selectors of all those products and mentors of all those on-line promises. They are now there to advise which particular soil exists in this area, what the best hanging basket plant is in their location, how many pounds of potatoes you realistically can expect from those cute fingerling things.

Of the three bedrock principles of garden retailing (Quality, Selection and Service), Quality is now a given while Selection is now universal. Only Service can be a unique differentiator, but it can’t be hand-holding service any more.

Silent Running

This role still takes education, professionalism and passion too, but much of it can be delivered by “silent selling” on-site with re-thought merchandising and signage and You-Tube type videos. All of which means a very different use of those valuable employees but in the longer term requires less on-site educated year-round help.

This might seem like sacrilege to the traditionalists but consumers are so used to (and some even truly PREFER) self-service on-line from Amazon to car insurance that even a partial hand-holding garden retailer has the competitive advantage. The retailer still holds the cards with credible, knowledgeable employees helping where necessary, still local, still passionate.

So I think we are finally moving to a model where shoppers can browse, read, learn, view and buy “silently” or be helped by a few very credible and helpful people on patrol – a bit like one of my favorite stores, REI.

This eventually means we will have less employees by design… but they will be making more money (and that must be nothing but “a good thing” as someone once said).

But for this year, what are your short-term tactics to get you over the labor challenge? Let us know in the comments: sharing is caring!

Photo Credit: taken by Ian at TreeHouse Store in Austin TX

 

Mar 28, 2018 15 Comments
IB_SucculentMules_Sunnyside

So, How Was It For You?

It’s been a busy summer of travel, conferences and clients making me remiss in the blogosphere, which makes now the perfect time to say: “So how was the garden retail business for you in 2017?”

I was guilty-as-charged in being distinctly bullish about prospects for a banner year this year. The economy is firing better for most (though not all) people than it has done for years. We see a soaring stock market, rising household income and talk of a $1000 cell phone. Landscapers and housing contractors are sold out for months (years in Utah, so I am told), while there is just enough inflation around to encourage some much-needed price raises. It should have been a banner year, just like 2016 should have been too. But neither year reached the expectations of retailers that I know. I see reports that one of the home centers is up 6% in sales across the board, but much of that was contractor-driven. Meanwhile plant and hard goods suppliers I know say it was “just so-so.”

Two steps up, two or more back

Most independent garden retailers saw a modest, 2-5%, rise in sales, but a smaller or flat traffic count with a compensating rise in Average Sale, just like the last 15 years. But rises in sales were largely due to the price rises that I (and others) urged retailers to adopt. Given the ever-rising costs of business some might even say they went backwards despite an increase in the top line sales. Yes it was a poor weather year for many, but there has always been weather – this is something else.

So I am officially declaring that for the first time in my lifetime, the DIY garden business hasn’t surged after a recession – and it’s not going to under the current model. There has been such a fundamental change in the consumer’s lifestyle and demographics since 1983, 1990 or 1999 that history is not a good guide here. What worked for the last 45 years isn’t working.

Let’s analyze before we strategize

But before we “de-construct,” as they say in trendy circles, let’s hear what happened from the trenches: your trenches. I have good data that shows the DIY sales leaders this year were such categories as indoor plants, (green and/or blooming), succulents, edibles, pottery, personal (think purses, jewelry, apparel etc) and self-indulgences (everything from big blousy hydrangeas to YETI). Meanwhile normal-sized “color” was flat and “woodies” were down significantly in DIY business (unless you have lots of new homes locally).

In other words, consumers decorated a lot… but didn’t dig much.

So, how was it for you? What were your category winners and losers? Did you see “decorating” as a major revenue stream and invest in it, or were your buyers still buying like it’s 1997?

I look forward to hearing from you as we “re-construct” the garden retail business together!

Sep 21, 2017 30 Comments