Ian's Bits & Bobs: The Blog

Sickles Outdoor Living

Raising Those Prices: The Follow Up!

If you are reading this, it must be raining or you just need some light relief, time is valuable for companies receiving 50% of the year’s sales in 10 weeks!  When I said the next blog would about quick-fix increases, little did I know that some of our blog readers would weigh in with such great examples. Thank you for sharing from the trenches:

1.       A Little Can Go A Long Way

For starters, think of easy small increases on big volumes. Adding 25 – 50 cents to something that sells thousands of units in a few weeks, like 3.5 inch vegetables or annuals yields significant extra margin dollars, without raising a flag to customers. Even though it requires extra labor hours to adjust the POS, the work is a good investment. Another advantage of this tactic is that most of these increases can be covered by simply changing the price on a shelf or bed-talker rather than individual item pricing. Just remember to keep those few Known Value items competitive!

2.       Affordable Luxury

Now, think of substantial increases on high ticket lines, which move slower but impact sales when they do. Identify specialty lines such as finished custom-planters, large individual specimen plants, “hot” or unique lines in your area. The things that consumers buy infrequently, such as patio furniture (hot after a recession lull), high-end-grills, upscale yard-art, statues (also hot this year), fountains (ditto), plus high-end or larger pottery: things that often have a value perception based on pride, ego, status or self-indulgence.

Larger increases of $25 to $100 on these less-frequent purchases in the $250 to $2500 range would certainly cover the cost of changing the price. Think of your “outdoor living” décor items that people have gone without for the last few years such as arbors, trellises, shade structures, lighting and benching. Specimen plants have higher value perception. Things like Japanese maples, multi-stemmed birch, flowering dogwoods, trellised fruit or larger trees for shade and privacy also fall into this category. Look at larger plant sizes in the more basic lines that tell a story such as “Hide the neighbors for $300” and sell the emotional benefit.

3.       Convenience Has a Value

A 3-gallon heirloom tomato showing fruit turning color is worth $40+ to many consumers. A pot of fresh, still-growing herbs is worth double those wilting bundles from who-knows-where in a grocery store. Pre-planted pots to “Grow Your Own Salsa” have a higher value-perception as do roses in gorgeous fragrant flower or ready-to-eat snap-peas on a mini-trellis – never mind what the landed price was!

Finally: D.I.N. – Do It Now

Although it might seem too late to change this year, read Ron Vanderhoff’s comment on my last blog (March 28th 2017). Do not wait until the next receiving cycle to enact these new strategies – that could be a whole year away and business costs are rising daily. As product is received, inventoried and put into retail, ask yourself, “what could I get for this item?” Then ask yourself if the total extra cost of changing the price is more than made up by the extra dollars gained. If the answer is “Yes,” Do It Now!

In closing, if you click through the link up there, you’ll see that the interaction “in the comments section” is as valuable and thought-provoking as the original post! So we’d love to hear from you:  what is one item or category you have changed the price on this season, or one surprise you found as you started to investigate pricing?

Ka-ching!

photo credit: by Ian, taken at Sickles Market

Apr 17, 2017 6 Comments
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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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Reading the Mid-Spring Tea Leaves

For garden retailers in the warmer climate zones, the week after Mother’s Day is slowing down, over the peak, saying “now we have to work harder for it.” In most colder climates, Mother’s Day sales were down (this year at least), in some places seriously so, as May swapped weather with March. But in both climates it’s no time to relax (May everywhere pays wages for weeks ahead). It IS time though to read some mid-spring tea leaves in case you are staring at that still-massive inventory number….

What’s selling?

Succulents, succulents, and oh did I mention succulents? Any shape, color, size and style are flying off the shelf this year, and if you were smart enough to invest in added-value versions in planters and arrangements – even better. Aligned with that, I see all things naturelle with wood, stone and moss in those added-value lines. Small, simple and intense – which may reflect the influence of TV and other media on the under 35’s, with their minimalist homes and no-clutter styles. Surprisingly then is the strong demand for garden art and deco, maybe that’s the Boomers getting their own back. Another significant tea-leaf, off-the-charts demand for “Do It For Me” tree and shrub planting suggests that despite TV news and politicians, a lot of Americans feel good about spending the money on things they no longer want to do.

What’s not?

The DIFM surge might also be causing the fall in tree and shrub sales after a great year last year, but poor weather is also a factor. The earthy stone/wood trend above might also be the cause of reports that finally, after 20 years, sales of high color, high gloss, large ceramic pottery, is flattening out. Garden décor is hot but in a matte-finished, earthy or rusty way it seems.

Unsurprisingly, independents are reporting a drop in “hard goods” or garden supplies especially in controls or “chemicals” (as us old lags still call them). I think householders are using less in total anyway and most independents have lost the battle with the home centers for various reasons, the biggest of which is the (incorrect) perception that every single product on every single shelf must have a 50%+ gross margin. In fact, the home centers have used that victory to now present themselves as the one-stop shop for hard goods AND green goods, but that’s another blog for another day.

Serious tea-leaf analysis needed!

I talked to an owner who was questioning the strategy of his “chemical” category after he pulled a POS report (yes in mid-May!) showing that the 202 items sold in the “Insecticide” sub-class took 68 Stock Keeping Units (SKUs). Think about that: after the busiest weekend of the year, each SKU had only averaged 2.9 sold (out of, presumably, a case of 12). As he said, he was amazed at the sheer volume of SKUs to generate moderate sales. Food for thought and a validation for a comment from Jim Sullivan on my last post.

So, sharing is caring … leave a comment letting us know:  what are your mid-May surprises?

Photo Credit: Upscale, “stone” succulent arrangements made in-house at The Greenery (Taken by Ian)

May 13, 2016 12 Comments