Upwards & Onwards!

The importance of adjusting, adapting, assessing and learning from the past in the ever-changing garden center industry.

Originally ran in Garden Center on January 17, 2013

A retailer (not a client) who called me recently was not a happy camper. After four years of declining sales, a disappearing bottom line, rising costs of doing business and one promising season after another fizzling out, he was disconsolate to say the least. For every positive story about a retailer I mentioned, he had one that suggested the opposite. For every action that I suggested he might take, he had two reasons why it wouldn’t work. Although he called to “find out what you are hearing and what others are doing,” he didn’t really want to hear anything that meant change on his part. He hoped that the sunny skies of 1996 or 2003 were going to return in 2013. As I have said before on these pages, that’s not going to happen and hope is not a strategy. We are in a different industry with different customers needing different solutions.

What not to do – a litany

I asked him what he was going to do differently from 2011 or 2012. Was he going to re-introduce the sales training I know he had, some program called TLC? How about increasing product knowledge training so his team was the best prepared in the city? Was he running weekly staff meetings so each manager knew what was going on and what was expected of them? Had he tried five minute huddles every morning to fire people up? Will he hire a younger sales team for those younger consumers who don’t want to be served by someone their parents’ age?

He asked me if he should increase the 1.5 percent of sales he spends on advertising. I told him to double it and asked if he planned to increase advertising through social media and cut back the conventional media he complained about. Was he going to drive traffic by using selected price reductions on branded known value items? What about a coupon program that has been so successful for others lately?

How was he going to position his third-generation company, the oldest in town, as the place for gardening success? How about small capital spending like painting a few walls and benches, upgrading the dowdy front landscaping or patching and striping the parking lot? Paint has the best ROI for image and confidence.

Did he have a quick-response installation crew for retail customers, and did he promote it as a service? Knowing that they ran education classes years ago, I asked if they had a new, “Garden Success for Dummies” type of approach for all those young home owners in the city?

Then I related how many garden centers have decided that a few bad weekends might push them over the financial edge this year and are trying to spread the risk with new categories or lines to bring people in even when it was raining. Had he considered boosting their bird category or adding personal items, like jewelry, clothing, produce, ice cream, etc.? Was he going back to carrying nationally known brand names of hard goods that encourage quick, grab-and-go self service? How about a big pre-spring push on lawn care to get early cash and position the store as the place with expertise, not just pretty stuff? He told me “no” on that idea. He is still fighting his managers, who said the gross margin per cent was too low.

He was obviously feeling pretty down, so I said we should meet for coffee and catch up at the national meeting where I usually see him. But he wasn’t going to attend, saying he couldn’t spend that kind of money while laying employees off. At the end of the phone call, I was pretty depressed, too.

When “good enough” isn’t

The reality is that no one knows what 2013 will bring. We do know that this business is not as forgiving as it once was, and livelihoods are at stake, including the jobs of good workers due to poorly performing workers or owners. Owners who are slow to respond or change are at risk of disappearing, as some unfortunately did in 2012. We know that garden retail has changed rapidly, but operators with an open, self-confident approach will thrive, not just survive, in this uncertain world.

As a consultant it is easy to be a “know-all” (who me?), wag my finger and tell everyone what they should do. But I would rather report what has worked for others. Somebody somewhere has already faced the same challenge, so there’s no point in re-inventing the wheel.

All the questions and suggestions in that 30-minute call described above are existing practices that some successful operators do as a matter of routine; constantly questioning the status quo. The preparation for spring 2013 starts with the mantra; “What should we do when ‘good enough’ isn’t good enough anymore?”

This has to start at the top. I strongly believe in the motivational value of asking employees to share the mental workload as well as the physical workload. The more minds applied to a task, the better the results should be. But the buck stops at the top. That’s where leadership starts; businesses are not a democracy.

New times, new attitude

You don’t need a back-up plan for the unexpected – just assume it will happen. There is increasing talk of the garden center business being “vulnerable.” Like any outdoor-based business, we were inherently vulnerable for the past 50 years, but determined throngs of baby boomers shopped, planted and nurtured through all weathers, determined as hobbyists are, to achieve something. But as they fade away, the retail garden industry becomes more and more vulnerable to weather, the economy or the whimsy of consumers. One year Hydrangeas; the next, Dammit Dolls!

So exactly what are the thriving garden centers doing to expand and prosper?

Performance: The thriving garden center owners have a “dashboard” of key numbers or Key Performance Indicators (KPIs) they live by daily. They are not counting paper clips, but focusing their time on the few things that really matter, sometimes by reports from the POS to their cell phones – how things have changed. Managers and buyers live to a set of KPIs and are held accountable. I am often surprised by the number of people who still aren’t sure whether an “up” day in sales was due to more customers shopping than last year or more dollars per customer.

People: For a start, they produce and work to a budget, developed by departments but driven down from the top and used in reviews, accountability and rigorous coaching/training. In a store dependent on eight week good weekends, assuming one will be a total bust, thus reducing labor and inventory by one eighth is a good policy. Then if business drops below the plan, labor hours are adjusted accordingly, even on an hourly basis in some companies I know. The whole team knows the company goal and their role in advance of the season at all levels. Communications are led from the top, weekly meetings, daily huddles, one-on-one coaching, you name it, the winners are doing it as the new normal. Flexibility is key in challenging times, so I see a lot more seasonal and part-time hires with a few well paid people as the core crew. Some places even post the employees’ hours on a weekly calendar like Google and expect the team to log in daily to find when they are needed. That’s the tough reality of 2013. There is much less tolerance of poor performance or discipline; staff conflicts now are resolved quickly as smart managers know the hidden cost. There is also a quicker parting of the ways. One owner told me that in an 8-week season, he has three days, preferably a busy weekend, to choose the “keepers.”

Product: Using their POS, (essential in this day and age) thrivers constantly run the numbers on what sold, how long it sat there, how much money it made per turn and so on. Typically, less than 10 percent of SKU’s make 70 plus percent of the sales volume, so the sooner you know if a product is worthwhile, the better (Costco claims 30 minutes). The garden center business is a numbers game, not a hobby. Smart managers invest in what sells and drop what doesn’t, often against the wishes of the buyer, who should really be thought of as “merchandise managers.” They select it, invest the company’s money in it, market and merchandise it, sell it or live with the consequences.

Thriving IGCs are adding categories to increase the traffic and reducing choice in each category. The thrivers are always looking for one-more-visit-per-household-year to pay the overheads and spread the risk.

Promotion: Short, focused and fun! Be it a postcard, an email blast or an event, good garden centers have a list to choose from, keeping things flexible, and they all give out a come-back incentive. I see more realism in terms of pricing; making margin where they can, giving it back where they have to in order to send the image that they are not overpriced on everything. Smart phones and QR codes have changed the dynamic, so thrivers are overtly more competitive on known value or branded products, but cleverly differentiate on as many other things as possible. The shopping experience now plays big in the differentiation message, too. Differentiation and customer success are key in 2013 to still being in business in 2014.

Public: The shopping behavior between the different demographics in 2013 will widen further, but they can all be successful customers of a good garden center. Nobody wants a concrete landscape or plastic flowers, while the cooking boom is a boon for us. The United States has 116 million households, 80 percent of which attempt “some” gardening every year, and “food growing” is hot.

In sum, the IGC channel winners offer an interesting, different and rewarding experience to get customers in the gate, help them spend however they want, give clear value for their time or money and ensure success when they get home.

The best plan for 2013 might be to throw this last sentence at everyone in the company and make them set their goals to match this!

After 21 years of writing for this magazine and its predecessors, I am signing off (see you on www.ianbaldwin.com). I owe a huge thank you to our readers, without which this column would not have survived 21 weeks. Thanks to the several editors and publishers for allowing me the privilege. Upwards and onwards!