Ian's Bits & Bobs: The Blog

Heirloom_PriceOppty

Aim High This Spring!

Recently I stayed at a (moderate!) hotel for three nights each of which was priced separately at $129, $161 and, wait for it, $234! When I asked the front desk why, they immediately reduced the third night back to $161. They just dropped it over 30% without protest. Clearly they were pricing to make some money off those who were unaware or just didn’t care.

That’s not my suggested strategy for garden retail this spring! But the incident once again underscores just how much “padding” other consumer product pricing has built into it: does yours?

Since my last blog post, I have met over 30 independent retail owners and walked many stores to continue the discussion about price raises this year. Most answers were too timid and non-strategic. Yet at the same time, I hear every job-applicant asking for a higher starting wage than last year.

A client told me that unless he raises sales by $200,000 (on a total of $3 million) he will be “going backwards” this year, due to his state’s rise in minimum wage.

One owner circulated my last blog to his team but his managers and buyers came up with NO suggested products to raise prices on, even though they had asked for wage increases. Employees can find it hard to connect those dots, often judging retail pricing in the context of their own household income. Unfortunately many retail employees don’t think they can afford to shop where they work! Pricing is strategic and has to be driven down from the top, sorry.

This is the year to (finally) make some money!

The 2017 reality is that household credit card debt is approaching 2008 levels, car sales are at record highs while planes, restaurants and cruise ships are full again. It may not be equal in all demographics or regions but many American households, especially those who shop at independent retail garden and hardware stores, are spending again.

In many independents, 70% of sales revenue is spent on Inventory and Labor.  Conservative price raises on these major costs are 3-5% on cost-of-goods and 4-8% on labor rates in the first half of this year. So if your sales don’t increase by 5-6% you are indeed, going backwards. The choice is clear: raise your prices 5-8% or sell a lot more units.

But most supplier prices are set in summer, so today’s prices were set last year. Rumors in the green goods side of the industry suggest 10-15% increases for 2017-18, so retailers had better make some money this year!

Be aspirational, not apologetic!

Twenty years ago garden retailers became used to sales increases of 10% per year – aaaaah, those were the days. Today, we have let ourselves become over-cautious, influenced by the last few years of recession and we need to snap out of it, now!

Pricing increases should be big enough to be aspirational for the team, something managers can get behind as a rallying cry for the year’s business.  “Shoot for 15% and settle for 12%” as an associate of mine with years of senior leadership in manufacturing and retailing behind him would say. You won’t hear corporate America politely asking for 3-5%. I’d like to bet that numbers of 10-12% are being baked into binding, job-preserving goals all across the country. What are yours?

Next topic, coming soon:  quick-fix sales increase ideas before it’s too late this spring!

 

Photo credit: taken by Ian

Mar 27, 2017 16 Comments
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Reading The 2017 Tea Leaves

I took a few months off the blogging trail, so we didn’t distract our massive readership from the 2016 election! Then I waited a few more weeks to see what the election had done to the retail garden business and voilà, here we are now well into 2017.

Happy New Year

I do believe it will be a happy 2017 for the retail garden business and the supply chain that supports it. The business signs are quite positive, always allowing for the usual weather challenges and a (mild) cyclical recession predicted for 2018. The fourth quarter of 2016 ended very well once the consumer’s attention was re-focused after the election. Garden center teams or independent garden retailers I spoke to after Christmas said the last two months had been very strong in sales and the consumer’s attitude to spending. Average sale per customer was well up over the last few years and all operators I spoke to focused on the same observations (albeit anecdotal).

Simply put, the biggest, most expensive end of the range of almost everything, sold out first. It didn’t matter whether it was wreaths for the front door, “everlasting” Christmas trees or swag for the mantle, the most expensive selection sold out first. The $2000 everlasting tree sold before the $800 one, the new clever lighting set sold before the cheaper one designed five years ago and the biggest table-runners went first. Even the sadly “footballed” Poinsettias were elevated for a few weeks with the bigger pots and higher priced specimens selling out early.

It is at least 8 years since garden retailers told me that they sold out of cut trees by Dec 18th and no consumer seemed to want a plain, decorate-it-yourself wreath. They wanted them fully decorated and ready to shine. So the end of a dominant election, a record-high stock market and finally, rising household income, do seem to have combined to loosen the purse strings.

Spending Can Be Fun!

From the “Do It For Me” side of the aisle we saw a strong and increased ticket demand for “Christmas Porch Pots,” outdoor lighting, tree installation and interior decoration. All signs of a more relaxed consumer.

So, does this mean a fabulous year ahead as consumers spend like fools? I am not sure about that, remember that the media giveth and the media taketh away, but the signs are very good. Garden retailers can bet on a consumer who is much more open to persuasion than even two or three years ago.

“Your wage rise is my price rise”

Another factor in the mix is the national conversation about the increase in minimum wage either by legislation or just through simple market forces. What this means is that most customers know someone in their circle of family or friends who is getting a raise, so they should not be shocked to see prices increase as a consequence. As one garden center owner said, “For the first time in years, my customers are expecting me to raise my prices, so I am not going to disappoint them!”

What’s your price rise strategy?

So in the spirit of “Sharing is Caring”, who among you has added 4%, 8%, 10% or more to some lines (which lines?) you will be carrying? Most of our blog readers are not in competition with each other, so let’s hear what you are looking for in your price increases this year. Who’s going to start the bidding? Do I hear 5% to start please….?

Photo Credit: Ian Baldwin, taken inside the classy new expansion at Lowe’s Greenhouse and Florist (Chagrin Falls OH),

showing the owners’ confidence in the next few years!

Feb 15, 2017 10 Comments
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National Gardening Survey: What’s Not to Like?

As regular readers of the blog probably know, this is my fifth year of analyzing and commenting on the National Gardening Survey’s annual 250+ page market research report of the what, who, where and how-much of the nation’s gardening industry. I wrote an article published this month in Green Profit magazine on what we found … you can click here: GreenProfit_July2016_NGSOverview – to download the full article. (Sneak peek: “a bold, exciting future for garden retail!”

Once you’ve read it, let’s chat:  leave a comment letting me know what you see on the horizon from your store’s viewpoint!

Aug 12, 2016 10 Comments
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Helping Customers Succeed – The First Time

I know most people are up to their neck in spring and don’t have time to read my ramblings, let alone hold meetings to implement new ideas. But I wanted to record what I am seeing out there just in case some readers were able to use it to help their customers succeed – the first time. The industry is changing because the customer is changing, as my analysis of this year’s National Garden Survey data shows.

Walk any type of garden store (I’ve seen 12 in the last few days) and watch shoppers, especially the younger novices. You can see confusion bordering on panic on some customers’ faces as they read every bottle or plant label, asking each other “what’s the difference between these two?” They have bought into the concept of outdoor fun with the kids or healthy home-grown food but matching the dream with reality is another matter.  “Fear of failure” is the main drawback to increased garden spending at times like this.

So, keeping it brief for Mother’s Day weekend, here are some questions/queries to use for your training or critiques in the next few days:

  • Do displays/signs assure first-timers (e.g., ‘Easiest succulent we carry!’)
  • Is wording simple and encouraging, or botanical and fear-inducing?
  • Are there simple bundles such as “Perennial Success Kit” or “Fresh Potatoes Without Digging”?
  • Are the top 15-20 selling plants accompanied by their essential tie-in products and how-to info?
  • Are guarantee signs positive and pro-customer, or defensive and pro-company?
  • Is there an information desk? Is it always staffed by happy, competent people?
  • Are customer success stories and reviews shared online or on site?
  • Are online how-to videos promoted at the point of purchase for customers to access as they shop?
  • Is there help line/website reference or at home consultancy available for after purchase questions?

How much money from the customer’s “Fear of Failure” is being left on your table for another year?

Let us all know how this questionnaire played out!

Photo by Ian, taken at Family Tree (KS)

May 5, 2016 5 Comments
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Let’s Sell Emotional Values!

The phrase “The Value Proposition” is marketing-speak for “In return for your money (or effort or time etc.), you get this” and is worth more than an academic glance. Just look how the “Mad Men” in advertising have used that simple premise to help us all to part with our money for decades:

–          Concerned about that daunting list of side effects in a medication ad? (Sure, but just the idea of not sneezing every five minutes in spring makes it that a deal you can accept.)

–          Excited to turn over all your home TV and internet to one giant cable company? (No but you DO like the idea of watching whatever you want, when you want.)

These types of ads carefully craft a message of emotional benefits (the outcomes of the purchase), while the garden industry mostly still features the technical details. From propagator/manufacturer to retailer we see garden product ads, signs, labels or training manuals that are heavy on product functions (“Spreader-sticker” anyone?).

We see “Takes partial shade” instead of “Fill that bare spot under a tree” or “soaker hose” rather than “Waters gently like Mother Nature”. Maybe THAT’S why Americans spend more per household on Pizza than on gardening!

Marketers realized years ago that consumers spend more easily on emotional benefits than on functional ones. That’s why people drive miles to save gas money, so they can spend it at their favorite restaurant!

With competition from the smartest marketers on the planet, the lawn & garden business should spice-up the (sometimes necessary) technical language with words that suggest the product benefit (outcomes!) in simple emotional terms. We have highly marketable products with infinite emotions from excitement and joy, through pride and accomplishment, to solace and peace. We have things that taste great, clean the air, increase property values, reduce utility bills, create privacy, enrich lives and save the planet. But we still talk or merchandise to the public in technical or hobbyists terms. Just look at what “Mad Men” do with soap, drugs or insurance and think of what you could do with gardening!

So instead of “quick grower, 6ft by 5ft, $99” how about “Hide the neighbors for under $100”? Or for “3 months continuous feeding” substitute “Feed and forget” (with a 90 day reminder to buy more).

Train to Think Like the Customer

Team training should focus on the end result, not the process, as employees make the emotional value proposition: emphasizing the cool style of succulents or the fun of a child measuring a sunflower.

In training meetings I have found employees so anxious to tell the customer every single fact, they miss the essential motivator – the emotions of the end result. Stressing “things they need to know” means that emotional values like the fragrance of lilac or tasting that first tomato are missed. I even heard one experienced manager telling a customer “I think you’ll find it worth the effort” when she balked at digging a big hole for a shrub!

So let’s see more emotional values from the entire supply chain:

  • Let’s read about “A green lawn for 90% less than a lawn-care service” (money-saving is a MAJOR emotional benefit!)
  • Let’s see plant labels spelling out nostalgia like “Grandma’s Lilac” or the fragrance of Old Roses
  • Let’s suggest the environmental satisfaction of creating a Monarch haven
  • Let’s see POP with “Basil on your balcony” for apartment dwellers and “Hops made easy” for home-brewers.
  • Let’s hear employees talking of “Relaxing sounds of wind chimes” or a fountain that “Hides the sound of the dog next door”!
  • Let’s see displays that call out “Best herb for grilling steak” in the myriad of herb choices.
  • Let’s focus on those emotions that entice consumers to save on gas and spend it in this industry!

… and finally, let me know what you come up with: happy propositioning!

Photo by Ian, on the road somewhere

Apr 27, 2016 6 Comments