A Brand New Strategy?

Sep 1, 2014 29 Comments

When I ask local garden genter (LGC) owners why there is no Scotts, Bayer or Weber on the shelves, a common response is that they want to differentiate themselves from the big, corporate “box” stores. Besides, they sell their “independent” version of similar products. Owners and managers tell me they’ll lose their independent identity, that their brand is reflected in the array of different products and names not seen in larger, corporate stores.

I would argue that the long term value of their brand is based on customer success with the product, any product. Brand value of anything is based on trust of the outcome. Increasingly in Home and Garden, customers want an outcome with a short time frame, little fuss or low risk.

Retailers who shun national brands are missing a big opportunity. National brand advertising campaigns get consumers off their couch and into the garden, so retailers should take the opportunity to ride on the back of these traffic building programs. The correlation between a declining traffic count in LGCs and the rise of national garden brands might not be coincidental.

Cover All the Bases

A two brand strategy answers both issues. It’s a win-win. It achieves the goal to be different from the big guys coupled with the desire to carry what customers know and seek out. When consumers are told the store doesn’t carry a product just seen on TV, it encourages thoughts of doubt and confusion. A customer who asks for a specific brand has already been sold before they leave home.

Consumers trust national brands in every facet of their daily lives and brand power is immense, especially with younger consumers. This group doesn’t have time or inclination to listen to a “try this unknown brand because we think it works better,” sales pitch. A national brand like Roundup carries credibility, assurance and familiarity, especially with newer, fearful homeowners – all for $5.99!

Driving traffic with national brands while differentiating by service, information, customer confidence and success, covers all the bases. This strategy actually strengthens the LGC’s market position.

Not “Either <–> Or”

But the brand strategy for LGCs is NOT mutually exclusive, i.e. to carry either big brands or small brands. By all means carry “differentiating” products, have more volume of them and feature them as much as possible. But give the national brands their place in the customers’ shopping experience. Two brands, one to differentiate, one to assure and sell at a glance.

Consumers will appreciate the choice, “Try our different/local/custom product or go with the option you have seen advertised.” Some situations (e.g. pest control on edibles) require a one on one conversation, where the salesperson has the chance to suggest their recommended line, be it national or unknown. But other needs, such as potting soil, lawn food or a grill are familiar and trusted, so it seems unproductive to deny customers the few products they will recognize.

“I Can’t Get the Margin I Need”

This is a familiar push back to which my response is “Good, don’t try to on national brands, that’s not where you make your money anyway.” Remember that not everything in the store has the same mark-up potential. My margin mantra is: You get it where you can and give it back where you have to.

An LGC owner told me he tried a national brand item once but it didn’t sell; then I saw the 60% Gross Margin they were asking! Here is the rub, national brands MUST be priced competitively, because they are nationally known, promoted and used by others to drive traffic. Don’t expect national brands to sell at LGC mark-ups! In reality they don’t need to. The loss in margin dollars is a very small price to pay for the benefits these brands can bring. I’d even suggest seeing the “loss” of margin dollars on known-value lines as a promotion cost subsidized by the marketing budget.

Who knows, you might even make more money in the long run as the familiarity of national brands have taken a lot of the fear out of buying – meaning a quicker sale, increased turns and better return on inventory.

We live in a brand-obsessed world. National home and garden brands such as John Deere, Rain Bird or Osmocote, are everywhere in many retail channels. They bring familiarity and trust to the name long before the customer enters a store or opens a retailer’s web page. It’s hard to ignore that reality, so why fight it?

Put another way: Let’s assume you sell your garden center and follow your life’s dream to open a liquor store. Would you really not carry Bud Light?

Cheers!

Greg Burghardt
Sep 2, 2014 at 2:20 pm
“food” for thought. Thanks Ian..
1. Ian Baldwin
  Sep 2, 2014 at 3:07 pm
  Greg, many thanks and best to you in sunny Florida!
Jim Sullivan
Sep 2, 2014 at 3:56 pm
Ian…Great Job Here ! This is exactly what our Path to Purchase Study is telling us. Collectively as Manufacturers, Distributors and Retailers…we gotta get together and figure this out. Not for our own selfish interests…but for the Industry we all love. Keep it coming !!!
1. Ian Baldwin
  Sep 2, 2014 at 5:06 pm
  Thanks Jim, I love figuring things out! Glad to hear that your research validates our thoughts, we are all in this together.
Jeff
Sep 2, 2014 at 4:05 pm
Ian,
Great newsletter Ian! But real bad choice on the beer, The “Pub” folks back home might hang you by your toes!
Cheers,
Ian Baldwin
Sep 2, 2014 at 5:09 pm
Jeff, I only used Bud Light for the story, I am not endorsing it!
Bob Dolibois
Sep 3, 2014 at 7:57 am
Ian — Your point separates this issue from what we like to believe to what we must do. Keep these thoughts coming!
1. Ian Baldwin
  Sep 3, 2014 at 9:22 am
  Bob, how nice to hear from you, I can actually hear your voice as I read your kind words. Thanks for staying involved!
Chris Beytes
Sep 3, 2014 at 9:15 am
Agree, Ian! A small hardware store where I used to work used the big national brands like WD-40 to be price competitive – or even cheaper by a nickel. That gives the impression that ALL prices are low, even if they aren’t. It’s one advantage to name brands like Miracle Gro or Osmocote: often, customers have a rough idea of what they cost at a box store. If they see it at your store priced competitively, they assume you offer value for the money.
1. Ian Baldwin
  Sep 3, 2014 at 9:19 am
  Chris, great point thanks. A diligent LGC owner can see that those brand name items with a different formulation are not ALL at rock bottom prices in the box stores, allowing a little margin increase to take place at the LGC on that specific line. Not all Roundups are the same margin! Thanks again.
Martin Pratt
Sep 3, 2014 at 9:25 am
Great Article as usual Ian.

Weber and Scotts both bring other things to the table that the LGCs can use. Weber has MAP pricing to protect everyone. Both of them offer different sizes, features and sub-brands (Scotts) that allow each store to carry the main brand but avoid head to head with exactly the same products.
1. Ian Baldwin
  Sep 3, 2014 at 3:29 pm
  Martin, too kind again! Like you I just want our industry to succeed. 86 million households are TRYING to succeed in their gardens, they have all the barriers and disincentives they need, so we should be helping to remove them not maintaining more! It’s a new world out there. What worked in 1995, even 2005, won’t work nearly as well in 2015 and may not even survive until 2025!
Preston Oka
Sep 3, 2014 at 9:34 am
I totally agree with your comments. If a national brand brought them into my store, it is up to me to fulfill or satisfy their expectation(s). It also is an opportunity to expose them to the best possible service and to educate them on why they should be shopping in my store.

Hey Ian, who is the old guy you have pictured? 😉
1. Ian Baldwin
  Sep 3, 2014 at 3:32 pm
  Preston, Welcome back into our world, we both hope all is well with you and the family. Great input too, very true and timely, thanks.
  
  PS You never met my older brother Reg?
Frank Benzing
Sep 3, 2014 at 12:30 pm
Good “bloggin”

I feel that this topic taps into the very core of a company. e.g. What is your brand ?

Agreed, a Two Brand Strategy has its place for consumers — for specific SKUS/retails

Along the TBS, branded plants are a strong consideration as well.

A positive is that well-known brands can serve as a “comfort food” for the customer.

ps — BL…really ..lol
1. Ian Baldwin
  Sep 3, 2014 at 3:35 pm
  Frank, indeed, well-known brands of any item in our stores are really easy selling “comfort food” as you say, almost – dare I say this in the full-service channel – self service items!
Joe DiDominica
Sep 3, 2014 at 6:01 pm
Ian,

Great article, as usual!
Jere Stauffer
Sep 3, 2014 at 8:08 pm
Ian, great article and challenge to the trade. While we need to be discriminating in the products we sell, and some products are truly not worth the packaging, getting my ‘Snob on’ is a good way to alienate customers and lose good business. I/we need almost every customer we can attract to our stores. Change is inevitable and the list of GC businesses who have resisted change, ignored the need to change, denied the importance of being relevant to the marketplace, includes many who have closed their doors.

Your ‘comfort’ comment is right on point.We have all eaten at a national brand restaurant when in unfamiliar territory. The predictable is a safe option when there is a very overwhelming array of options or when deciding between only two and you’re ‘going it alone’ to make a buying decision.

Jere
1. Ian Baldwin
  Sep 4, 2014 at 8:48 am
  Jere, thanks for your excellent comments, with which I agree wholeheartedly.
  
  One reason why many LGCs are still avoiding this issue and sticking with local/independent-only brands is that same “comfort level” you mentioned, but this time at buyer level. Line-reviews, category reviews even whole department reviews, are a matter for the senior managers/owners. This topic is a top-down strategic one, not a buyer-level tactical one. In my experience buyers have a tough job having to please both the consumer and the owner(!) so they are tempted to play safe with both parties. Hence the reluctance to change, I don’t blame them, this is a leadership issue requiring research, objective analysis and decision making.
  
  BTW: I love you “snob on” comment – may I borrow that?
2. Randy Hunter
  Sep 15, 2014 at 8:01 pm
  Jere – well said and I’m with Ian – I love your “snob on” comment also. Possibly the best essay I’ve seen on the subject, compelling – thanks Ian
  
  Randy
Richard Kline
Sep 4, 2014 at 12:39 pm
Ian, great insite! I think the IGC does need to carry that national brand if nothing else, not to lose a sale. One piece of advice I use to give would be that there are things you STOCK, and there are things you SELL.

If a customer comes in and says “I want Round Up to kill weeds”, you should have it on hand to make the sale. BUT, if a customer comes and says “I need something to kill weeds”, then there is a distinct possibility that they really don’t know what Round Up is. This gives the IGC a chance to make a SALE on a product that will do the job and create a possible return customer.

Anyway, great ideas from everyone! BTW, one of my local places that I used to frequent for a frosty cold refreshment carried the national brand refreshment from Golden Colorado. They recently re-vamped the facility and now proudly claim that they JUST have “Craft beer”, and none of those “other brands”. I for one happen to like those “other brands, so sadly, I have not been in to visit them for quite awhile….. A friend of mine called the “Beer Snobs”!
1. Ian Baldwin
  Sep 5, 2014 at 9:34 am
  Richard, good to hear from you, I hope all is well with you. Your points are well taken; beer snobs might be like plant snobs!
trey
Sep 5, 2014 at 12:09 pm
While this strategy does work for many garden centers. One strategy does not work for everyone. I do carry national brands, but not Scotts/Miracle Gro or other “as seen on TV” types. A couple of national brands I carry might be Botanicare, or Foxfarm. Neither advertises on TV, but they do advertise heavily in specialty publications my customers read. They just are not the typical brandas us “old timers” are use to.

I don’t sell Round-up because we are an organic centric store. So our philosophy, as well as the customers is in play as well. If I am a specialty deli carrying brands of custom sausages, cheeses, and other items I am going to include some microbrews in my beer selection, but not Budweiser. Now I might carry some Sierra Nevada beer because it is a well known brand, but I also have a few more obscure but high quality microbrews. It sets the tone for the business.

Here in northern California it may well be different than other places. Some of the smaller operations around here, Peaceful Valley Farm Supply, Flora Grubb, The Cactus Jungle, etc. do not carry Scotts. Again, I am not saying this strategy will work for everyone, but I don’t think you have to carry Scotts, or Weber Grills to be successful. This is no longer a single industry, but a conglomeration of different industries. There is not a hydroponic store around here that I know of that caries Scotts. Many of these hydro stores are morphing into garden shops.

I am not so sure “predictable” is a safe option anymore. Many people don’t watch “TV” anymore. Some get all there info from The Internet, where friends and trusted advisors are listened to more than that most irritating of spokes people “Scott” of Scotts/Miracle Gro.

There is a strategy for everyone 🙂
1. Ian Baldwin
  Sep 5, 2014 at 12:45 pm
  Trey, good to hear from you up just the hill.
  
  Don’t like that fine Celtic spokesman eh? Well in three weeks they may no longer be British so I won’t defend him!
  
  You are correct, there is a winning strategy for everyone if they can find it and you have obviously designed your business to best suit the market you operate in – good stuff.
  
  I was just trying to start a conversation (looks like that strategy worked!) because I do meet retailers who haven’t given it much thought, even as the market changes. Like it or not we are seeing more and more brand obsession, even if the brand is a “I don’t shop based on TV ads” brand. I respect your organic position, something that we try to live by here in our garden (but when you find an organic eradicator of Nutsedge let me know please…), but if Scotts put big promo dollars into their Organic Choice line would you carry it?
  
  Your point about shopping without TV is also accurate, in fact I think many younger-timers now shop (ie locate and research) on line but look for in-store validation of their decision, especially in our particular industry with its living products that scare most people. So that brings a challenge if we don’t monitor what they are responding to.
  
  I never drink Bud Lite, an English friend calls it beer-less liquor, but I would not turn away customer who asks for it, I am with Jere Stauffer (above) on that.
  
  You are right, each to their own strategy, but I did get a conversation going! Thanks for taking the time, best wishes for Fall and rain!!
Don Shor
Sep 13, 2014 at 8:43 pm
I wonder how you propose we go about this. It isn’t easy to cherry-pick Scotts/MiracleGro products. I order from E.B.Stone and sometimes Central. They don’t carry them. It would require that I be ordering from another distributor (who?), meeting their minimum, trying to guess which of the product line might actually be demand items — given that barely anyone ever comes in and asks for Scotts products, that would be a challenge. If I wanted to carry HGTV plants, my choices in California appear to be Belmont Nurseries and Hines. I don’t do business with either of them (not many IGC’s buying from Hines any more), and if I wanted to carry HGTV plants I’d have to take business away from one of my loyal, quality wholesale growers, meet the minimum of one of those two vendors, and try to guess which HGTV-branded plant someone might actually ask for.

Ian, if you’re going to carry a product line, you need to commit to it. This seems like really unsound advice you’re giving — basically telling us to dilute our brands, take dollars away from our good vendors, just in order to satisfy a supposed demand that’s been created by national advertising. And I seriously don’t think you realize how hard some of these national brands make it for small independents to do business with them.
Ian Baldwin
Sep 15, 2014 at 2:34 pm
Don,

Good to hear from you just across the river, thanks. Your thoughts represent many other owners and buyers which is why I started this discussion.

L&L are the alternative distributor in CA and they carry Scotts. I see many LGCs “cherry picking” Scotts as you suggest, choosing just the items that drive traffic. They seem to be able to put together a minimum Drop Ship order for (I think) around $3,500 based on Miracle Gro potting soil together with other driver names like Osmocote, Roundup, and a few Ortho lines plus their grass seed.

In regard to brand names of plants that is a different story. No grower/breeder has the resources of Scotts or Bayer, so although we might be well aware of PW or HGTV plant brands I doubt the public is as familiar with them as they are with some hard goods names. It takes a lot of dollars to get America’s attention week after week. However this is changing with social media outreach, so I would keep a close eye on that situation, especially as plant names such as “Knock Out” and “Endless Summer” are themselves being used to market broader product families now.

I agree absolutely that you should commit to a product. There is nothing worse than a proliferation of competing lines because the buyer wanted to play safe or acted in a knee-jerk way to a few customer-requests.

My suggestion was not to put you in an “either-or” situation. My experience is that your peers who do run a two brand strategy increase total sales of the category, stay loyal to the suppliers they like but have an answer for those shoppers who come looking for a known brand.This doesn’t dilute your existing brands, it adds to the value of YOUR brand to those who are looking at your website for products they know and feel comfortable with. If over 50% of shoppers (higher still in under 40 year olds) are researching on-line before they buy, it might not be a bad thing to add national brands logos to your website – and maybe earn some coop money!

I have worked with LGCs big and small in the USA for 28 years and believe me I do know some of the difficulties you describe. But I see some who manage to make it work and I wanted to start a conversation with a broader audience.

Thanks for taking the time and sharing your concerns, call me if you want to discuss this further. Have a great Fall and pray for rain eh!
Jim Sullivan
Sep 15, 2014 at 5:29 pm
Don, I’d be happy to talk to you in person or have a local Scotts Sales Rep pay a visit to you.At Scotts, we have a first time drop ship chemical order program for $2500 and can even drop ship 5 pallets of soils in your market. As long as you are happy, thats all that matters. We have a great distributor in your area-L&L and many retailers like yourself have found a nice compromise between going all in with Scotts and nothing at all. A combined drop ship program in conjunction with a distributor DC program has worked out well for many. In the end, all that matters is you are happy and profitable. If I or Scotts can ever be of assistance, we are ready and willing to talk it through. Ian can put you in touch with me .
Have a Great 2015,
Jim Sullivan
Director of Sales for Scotts Independent Business
Curtis Jones
Sep 29, 2014 at 12:16 pm
There may be a very few instances where the independent should carry a national brand, but I emphasize VERY FEW. Independents exist because they are different. They must differeniate themselves from the discounters or they will cease to exist (unless they are in a far-away place where there are no discounters). I’m not saying anything the comments above haven’t said already but from personal experience, many of our stores have seen HUGE increases in our category when they switch from a national, discount store brand to an IGC brand. Why? Often, the IGC brand is of superior quality (small businesses put a lot of heart into their product) and over time, this loyalty catches on and generates repeat business the store wouldn’t have otherwise. Also, many of the national brands are sold at discounted prices – why would a consumer pay more $ for the same thing?
Curtis Jones, President, Botanical Interests Seed Company
1. Ian Baldwin
  Sep 29, 2014 at 1:26 pm
  Curtis, how nice to hear from you. Your Roma Beans are now harvested and in our freezer and we had one of your yellow zucchini for dinner last night, your brand is strong here! I generally agree with your thoughts; In your category I doubt many in the USA could name a packet seed brand, though the name Burpee might still come up from the over 55 gardener. I am not sure though that independents exist because they are different, that maybe why they have survived so far but as retailers get more sophisticated, product differences continue to shrink. I think Independents can differentiate much more strongly by their services and I don’t just mean more on-site knowledge on a Saturday morning. As gardening (or whatever we decide to call it) shifts to projects and decorating, “success” (and the speed of completion) will be key differentiators for any channel. Success breeds continued interest and loyalty to the company that helped the shopper succeed.
  
  All garden/home/ retailers are facing some game-changing strategies for what was once a simple model: “We have (the best) stuff, information and people, so come to our store, do what we tell you and you will be successful”. I think there is an increasing reluctance to visit garden retailers and a fear of failure.
  
  If a national brand like some of those mentioned above (but only if they truly are a known brand in the consumer’s mind) can make the shopping experience feel safer or less awkward, then a retailer would be missing out if they did not carry and market that advantage.
  
  I know that your company has differentiated what can be a commodity category and kudos to you for that, keep up the good work! Thanks for taking the time, best wishes.
  
  Ian