Ian's Bits & Bobs: The Blog

FarmAtGreenVillageGreenhouseSpring2014

It’s Not Over Until the Fat Albert Sings!

Memorial Day and it’s only the 26th of May? We should thank the Calendar Gods for this unusual turn of events, a week of May left after this holiday. AND getting another Saturday (retail’s best day in our best month) is a real bonus. Thank you, thank you.

For those working in warmer climates who have been chasing their tails since February, it is tempting to breathe out slowly, look up to the skies and say “….ahhh, it’s over for this year.” But after a long and brutal winter, much of the garden industry team is hoping to keep the momentum going.

“Help Me Catch Up”!

On my recent coast to coast travels I have seen more consumer excitement this year than for several years, while the “sales numbers” are close to 2007 levels, even if overheads are now at 2014 levels! The season seems 2-3 weeks behind the recent normal, so in the colder climates many homeowners are just now making their first visit to a garden store. We missed the crabgrass control and the seed starting business there. Ah well. Maybe we help them catch up on the very late season by suggesting a 1 gal tomato or even a nice pre-caged 3 gal complete with green fruit rather than that little 4” pot they were considering. Maybe we should tell customers to jump the smaller perennials and packs of annuals for bigger instant-show sizes. It feels like April-May happened in a week and it could be 92 degrees tomorrow.

But in most of the country, Memorial Day kicks off summer entertaining and outdoor living: so consumers should now be decorating for next week, not next month. Those market packs and 4 inch sizes just won’t cut it but shoppers may not know that. Merchandising and one-on-one conversations should help customers with that reality. When temperatures climb in today’s garden world, the best laid plans for the bigger spring projects quickly get put aside in favor of decorating and for that they need volume and an instant show!

The truth is that some colder climate stores may have missed one of the (3-4?) yearly trips a consumer makes to a garden retailer. It might be awkward for the merchant or buyer who still has 5 weeks back-stock of small or earlier material but when consumers are playing catch-up, they need help to make that leap from early spring cheer to full summer in-your-face-decoration. That takes some preparation and training by owners and managers. It also takes some skills in silent selling (i.e. merchandising) and in sales conversations to skip those spring projects to go straight into full-sized, lush, restful summer landscapes, patios and veggies.

Summer Livin’

Meanwhile in the warmer southern areas, garden retail is now well into the summer decoration and outdoor living mode. This means a team focus on entertaining, decorating decks, hiding those ugly areas and having succulent fresh herbs even if there are still lots of unsold April-May material being watered every day. Yard Sale!

In the dry west, it will be harder to raise a cheer from staff who see freeway signs about drought every day and are themselves ready for a few slower weeks. But if consumers can’t get honest, experienced help in successful hot dry gardening, the industry needs to take a long hard look at itself. We should be the go-to resource center for all the concerns that homeowners have. What will the drought do to my mature shrubs and lawn? How do I keep my veggies going just as they are starting to produce crops? What can I replace easily next year or when it rains again?

Just like the farmers faced with less water, homeowners may have to choose between keeping alive short or long term plants. This will need help and support, for instance suggesting investments in long term items like mature trees that by now may be worth hundreds if not thousands of dollars. Employees should ask the homeowner’s priorities, “must-save” plants, how long they plan to stay in that property and so on. Help to reduce drought losses will build loyalty in the future.

Fat Albert Isn’t Singing Yet

So, it’s not over is it?! Now comes the third season of the year: in fact this year’s early Memorial Day might signal a BIG double season; helping catch-up in must-plant Food Gardening products AND a strong confident start to summer living. So plant that 5 gal tomato and fire up the barbeque!

May 27, 2014 12 Comments
PensivePolarBear_Cropped Pensive Polar Bear

The Polarization Continues

In the week of a “Polar Vortex” it’s appropriate to report that the polarization of the USA retail Lawn and Garden business continued in 2013; a better year for some and one to forget for many others.

Ups and Downs

In garden retail it was an early, strong spring in the west, average in the south, a late to no-spring elsewhere, a decent to good summer, a stronger fall than 2012 (which didn’t mean much) and a lackluster Nov-Dec for most.

One easy to spot trend from 2013 was a national culture of looking for a discount on everything – a legacy of 5 years recession and not going away any time soon.

General bricks and mortar retailers had a big Christmas set-back according to Shoppertrack which reported a sales gain of 2.7% but a stunning drop in traffic (i.e customer count decline of 14.6% compared with Nov/Dec 2012.) That number takes some processing: one in seven shoppers from 2012 didn’t show up a year later?  Wow. Was 2013 the year that on-line shopping noticeably hurt traditional retailers?

Talking of market changes, 2013 was also a year with a big uptick in the number of garden retailers getting serious with Social Media marketing presence, though few as yet have started mobile commerce.

In the garden center channel, two large, long established local icons closed their doors, Waterloo in PA and Linders in MN, (at least one of which confirmed another 2013 reality; big banks no longer want this business … hmmm!)

In the lawn and garden industry before the recession, we would have rationalized 2013 by talking of a “good year to catch our breath”, but now we have to rationalize five years of flat L&G sales set against ever-rising costs.

So, the first question should be; did fewer people show up or did they just spend less per visit? With 115 million households generalizing is tricky, but our local garden center (LGC) reports show flat to small (1-3%) decline in customer or transaction count (again) with a good increase (3-5%) in average spend that in some cases compensated (but in some it didn’t.)

Many LGCs we know had decent overall sales increases of 2% to 8%. A couple of stand-outs reported increases in the high teens, while others’ sales finally climbed back to 2007 levels, through a combination of selective price increases, selective price-slashing to drive traffic and a better offer in personal, gift, accents, décor and food. As in previous years, the more dependent a garden retailer was on foundation and woody plants the more difficult it was to find sales growth. Decorating and food gardening continue to be the trends that drive retail lawn and garden.

Consumables

It’s been clear for a while that bird, pet, personal and food categories can ensure regular traffic from loyal customers but in 2013 these non-garden categories really helped business as conventional gardening stalled (again) and other bigger retailers (including Amazon) got more competitive in both price AND quality with core L&G items. I also know more than one male owner who discovered to his delight that jewelry is a consumable to many of his customers; “Amazing, they just keep buying more of that stuff?” (Absolutely!)

In 2013 success was by department (and mostly those that were non-garden) rather than store-wide.

Polar Winds

Polarization is being driven by operators who recognize that gardening is still stalled but bills keep mounting up. Why have so many garden centers not invested in other product and activities to help keep the lights burning? Many of them have thousands of cars passing every day, a heated, dry indoor space, bathrooms, paved parking, year round retail teams and a great local “name”, so why not?  Maybe they never needed to before 2009, but the stakes are just too high now to risk everything on a few perfect weekends. So the more innovative LGCs are finding ways to win more business out of their community and spread the risk.  At least two cold climate LGCs I know adapted their greenhouses for weekly Farmers Markets  –  why not?

Poles Apart

Can we finally stop judging a year’s results by trends in sales volume? What about margin dollar trends, “Gap” dollar trends, bottom line trends? Because that’s what the “good-getting-better” operators talk about more and more – another 2013 trend.

Which leads to my final observation from 2013: another polarization continues quietly, and this might be the most significant. I think 2013 was the year that the range of profitability (from negative cashflow to stellar performers) widened even further. The good are getting better quicker than the less good, who are still wondering what’s going on. Some independents have excellent bottom lines while others hang on waiting for things to turn around. Survival of the smartest is at work in the independent channel!

But the watering can is still half full. Millions of households have a life outside of their own work. The DOW is in record territory, planes, concerts and theme parks are full. People are spending where they see the benefits. No one wants a concrete lawn and plastic flowers: business is there, 2014 is the year to figure out how to get more of it!

(photo credit: SDR and Co. via Morguefile)
Jan 14, 2014 18 Comments
20130927_090153

Fall is for … Jingle Bells?

It was sunny, 85 degrees and Christmas was in the September air!

Those who know me will be the first to note that I am not exactly “Mr. Gift” (or Santa’s best helper,) so please know that this is NOT a strategic advisory to get into a big Christmas gift and décor category if you don’t already do that.  *(I also grew up in a culture that called the coming season “Christmas” and had a “holiday” in summer so forgive the odd dash of political incorrectness here.)

In the last few years several clients and local garden center (LGC) leaders have started selling Christmas merchandise in September, with “open house” kick-offs being brought forward into October.

This brings Christmas up against what the traditionalists would say was a classic gardening season as in the “fall is for planting” slogan of yester-year. Why, I asked, were they doing this? Didn’t they jeopardize a busy late Sept/October garden selling season? Did they lose significant fall and Halloween sales in the rush to get the glitter out? And what about alienating those loyal customers who shopped there precisely because they were NOT a corporate chain starting Christmas a few days after Labor Day? What about the “bah humbug” crowd who wanted nothing to do with that kind of creeping commercialism?

Well it turns out that some LGC owners, way smarter than me, had rationalized these very questions and decided to go ahead putting out their ‘holiday’ offer earlier than they used to, earlier than many of their own staff would have wanted. The results (this year anyway) have varied from a nice margin uptick to spectacular.  Hmmm!

The Reasoning

“Our fall planting used to be more than just replacing summer color with Mums and Kale. People bought lots of big ticket landscape products like trees and shrubs and we all know what happened to those lately. Fall is now about cheap decorating at best.”

“Halloween has lost its appeal to many of our customers, meanwhile it’s become a loss-leader  for every grocery store and gas station, so we had less and less customers looking  for it.” (Another nail in the fall coffin so to speak!)

“We already HAD the inventory, paid for and in storage, in some cases since July.  It was just a matter of rescheduling the set up and sales labor.”

“I am looking at the cost of doing business, making payroll, paying bills that are rising and a traffic count that was falling. But every day thousands of local consumers drive by, or Facebook each other; why not give them something to talk about?”

“The later we leave our open house the more we compete with our customers’ own busy lives. By Thanksgiving they all have their holiday décor picked out and we want them to buy it from us, so the earlier the better here”.  

“In this part of the country our fall is put away by November so some of our holiday customers never did see our beautiful outdoor plant material; now we get to show what we have”

“We have five chain retailers down the street discounting Christmas from the get-go; why not beat them to the punch and grab a few weeks of great margins?”

“As a third generation nurseryman I wasn’t thrilled, but this is a business and for now I love having the holiday money in the bank. If fall comes back for gardening, we can always change back again.” 

The Results (as of Nov 14)

One warm-climate local garden center I know had an early October open house (with no competition) and has been selling full-margin Christmas product for almost 6 weeks. Meanwhile, their gardening business continues as is and the place offers a dual-purpose visit for the consumer.

It could just be the year that consumers finally started spending again, but we know of several LGCs that have beaten all-time records for open house or first Christmas weekend sales volumes. Three more recorded new customer count records …  and no bah-humbugging!

Gross margins are also at levels not seen since before the recession. In a perverse way, the gloom in Washington DC seems to inspire some shoppers to treat themselves; for instance, buying a fully decorated tree as shown in the store.

A spike in Facebook and Pinterest mentions together with increased website traffic.

Early excitement from most staff (you know your bah-humbugger) happy to know they are working for a company that changes with the times.

The Final Word

As I said at the outset, this is NOT a recommendation to get into Christmas if you are not already in it (that is a subject for another day, another blog.) But if you ARE already invested and fall gardening has been flat for years, why not? This is a business decision about use of assets and paying bills. Just be prepared that you’ll be ready to kill the Christmas carol “musak” by early December…!

 

PHOTO CREDIT:  Roger’s Gardens, all lit up and selling … in October!

Nov 15, 2013 6 Comments
KnockOut_Petitti

Tales from The Trenches: “Price First, Then We’ll Talk About Everything Else” – Consumer 2013

Recently I was walking a garden center, looking at selection, pricing, silent selling, etc. to get a feel for their market position when a price stopped me in my tracks. I had an earlier “uh oh” feeling on seeing a basic 2 gallon ‘Knock Out’ Rose at $29.99 … and then a smallish 1 gallon Juniper ‘Blue Rug’ at $14.99 gave me the “oh dear” reflex. This was NOT a one-off, more I’d say the continuing default setting of most Local Garden Centers (LGCs).

Exposed!

After 5 years of recession, with every national retailer in the country using prices to drive traffic; with mobile smartphones able to access comparison websites on all manner of goods and services, why do so many owners still not get the message about selective mark-ups and pricing? The 1990’s position of “we need to make 50+% on every item” is being painfully exposed by this grinding recession.

Why do buyers persist in thinking that their store is a “special case” to the consumer, who will continue to pay more (often a lot more) for a known product because they are local and offer superior service?

When are owners (this has to be driven down from the top) going to connect the 12 years of declining customer count in the LGC channel with the public’s perceived image of “beautiful, knowledgeable but EXPENSIVE”?

When the economic tide was coming in from 1995 to 2007 and all boats were rising, few noticed the steady decline in customer count. Most companies more than made up for it with a rise in consumer average spend, and some owners were actually relieved that price-driven shoppers stayed away.

That was then and this is now

Price-driven shopping has become the norm. People at all levels of affluence boast about going to Costco. Social networks buzz with deals and offers. We have consumers of all earnings levels looking for bargains and, critically, judging an entire company’s image on the prices of the relatively few “Known Value” (KV) lines – like a ‘Knock Out’ rose.

The known value (KV) effect has been around for years, yet LGC owners and teams still apply department or category-wide mark ups to achieve the high Gross Margin they think they must get on everything. That makes a few things (the KV lines) way over-priced to the shopper while leaving dollars on the table with other less known or unique lines. Selective, volume-based, seasonally sensitive mark-ups have been the norm for years in grocery stores; when did you ever see all apples the same price, or a year-round price on Coke?

LGC owners’ peers in the family-owned local hardware store business have long since figured out how to compete on price-perception with the big box home centers.  Think about it: everything the hardware stores carry such as paint, electrical and plumbing – not just lawn and garden – is in a home center!

These hardware stores use competitively priced national brands to drive traffic, unlike many LGCs who shun them. Hardware stores might lower Gross Margin to 20% on a few carefully selected KV lines and get 60% on specialty, unique and local lines. Some hardware stores use 72 hour prices to further promote their competitiveness; others choose just one size of a certain product to get down and dirty with. Some use their marketing budget to “subsidize” the lost margin dollars on a deep price offer for a weekend special. And guess what? The hardware channel has (comparatively) had a very good recession – if there is such a thing!

Time for Action

So, as we hear about another large multi-generation LGC closing down, I think it is time for leaders in the LGC industry to wake up and smell the POS reports. Identify 20-40 Known Value SKUs (out of 5,000 to 45,000!) that create a price-perception to the consumer, reduce prices, budget for it and shout about it – loud! After 50 years of being seen as “pricey” this change in strategy might take several years to pay off, but now is the time to start showing your market that you are sensitive to their budget struggles.

My mantra is “get it where you can and give it back where you have to.”

I firmly believe that local garden centers have a great future as a resource for a consumer that is garden-success challenged. However, as the number of LGCs falls monthly, consumers are frightened away by a few KV prices before the company even gets a chance to show their relevance. So it’s time to copy our cousins in the hardware industry: get customers in the door with prices and retain them with service and success!

Americans are very generous to local causes and charities, but pretty unsupportive to the plight of a  local retailer. Unless you can achieve cult status (like Apple), it’s time to embrace and promote a KV strategy – or register as a non-profit!

Photo Credit:  a smart Known Value pricing strategy as seen at Petitti Garden Centers (OH)
Oct 16, 2013 21 Comments
HBinGreenhouseCrop

Tales from the Trenches: The Invisible Ladies

Picture the scene: two smart well-dressed ladies in their fifties, who love to shop together for their garden, home, grandkids or sometimes just themselves, drove into the parking lot of a large, family-owned grower-retailer “somewhere in Amurrica”. It was a bright sunny mid-week morning, spring was in the air and shopping was on their minds as they each grabbed a flat-bed 4 wheeled cart. These girls were here to spend!

Imagine the pressure for the store: it was a late, cold, wet spring in this particular part of the country, especially after 2012’s early, gorgeous, record beating weather.  So owners and managers were already on-edge awaiting sunshine, warmth and impulsive customers.  Already, their “numbers” were way behind last year – that expected 12 weeks-to-pay-for-the-whole-year was already down to 9 weeks.

The Tale

The ladies had lived through the cold, wet, spring too: they were excited to finally be shopping. In the following hour and ten minutes they spent wandering through a gorgeous, full greenhouse with that magic smell of spring, no one, not one employee spoke to or even made eye-contact with them. All the picking up and putting down, the ooh-ing and aah-ing, all the high energy comments and “likes” drew absolutely zero interest or action from what seemed a busy but ample group of employees all around them.

The hanging baskets were a particular challenge for the two ladies as they craned their necks up trying to decide what they were, how much and how the heck they got them down. “I think those are still growing, where are the ones for sale?” one lady thought out loud. Then the other one spotted a basket lifter on a long pole, so they eventually chose several 10 inch beauties but no staff ran to help, or even seemed to notice them struggling.

An hour after arriving our shoppers were ready for home so they pushed the two overflowing carts, to the waiting cashiers. In that time, well over $250 had been invested on the baskets, tropicals, perennials, veggies and herbs and the ladies were visibly excited to get planting.

But they still had no eye contact from staff, no offer of help pushing the loaded carts, no suggested tie-ins or companion plants, no comments on their loads, no shared joy – nada.

It gets worse 

Adding to the story, one of the ladies had worked there while in school and was reminiscing to her friend. In her excitement she asked the female cashier if they were having a good year.  “OK” was the bored reply. To which our lady said, “I used to work here and it’s great to bring my friend, – just wondered how you were doing with the wet weather”.

The final “you’re kidding me” moment was the cashier’s response: “Oh”.

“Oh”?! Is that all?

They just spent $250 dollars to help pay your wages in a wet cold spring.  Two friends are obviously excited to spend their time and money where one of them had worked just like you today and all you can say is; “Oh”.

After that it just got worse, no carry-out to help load those heavy plants, not one staff person recognized the ladies’ existence. Not even a synthetic “Have a nice day.”

Hmmm…

It’s important to note that this place is not a ramshackle, failing business (well not yet). Both the reputation and drive-by image are impressive. These shoppers could have just caught the company on a bad day with several absentee or sick employees. The cashier may have dreaded being stuck on the register or had a raging headache. She may have had no training or expectations set.

But what about all those other busy head-down employees….?

What about the leadership? What about the culture?

The Fix

Company culture is a hot topic right now. It’s clear to me that if a company doesn’t set the desired culture from the top down, there is a serious risk of the wrong culture developing from the bottom-up.  And company culture isn’t something you can “set & forget” – it’s a constant process, one that you must remain vigilant about. This company has 42 weeks to get it right for next year.

Thanks for reading and “Have a nice day.”

Photo Credit:  anonymous greenhouse taken by Ian in Washington State, 2007.

(NOT the location where the invisible ladies were shopping, in case anyone recognizes it)

 

Jun 18, 2013 22 Comments

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