Ian's Bits & Bobs: The Blog

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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
TieInsCropped

Tales from the Trenches: Go Figure!

Every year I spend some serious observation time in the trenches by the registers and out into the parking lot. It’s amazing what you see. Only last week I watched a lady struggle out to her car against a strong wind with a heavily laden shopping cart. She had just donated over $100 to the store’s cash flow that morning and no one helped her – but I digress. This blog is about an oldie but goodie: tie-in sales, AKA, add-ons, attachments, adjacency items, link sales (hello Brits! “Think Link”!)…. the list goes on.

The sad truth

For years I have done a non-scientific survey of tie-ins counting the number of units of ‘helper’ products that were in the cart with the “main” purchase – usually plants. Sad to say but nothing much has changed in 20 years of doing this in independent garden centers, though I suspect the Home Centers have really improved their “attachment” rate. In the early 1990s it was about 1 cart in 5 with any such items – even one little bottle – in the cart and in 2013 it is about the same.

I understand that some of those shoppers bought new gloves recently, own a perfectly good trowel or still have half a bag of plant food at home from last month’s visit. I also know that some of these customers were about to drive to the loading zone for their bags of mulch; but one tie-in for every five carts brimming with gorgeous plants? Come on, retailers, that’s just depressing. It’s not setting the customer up for success, but more importantly it’s not setting you up for profitability.

I am not advocating “loading up” every customer with things they don’t need, nor asking every shopper if they “want fries with that” like a fast food place. But we can do better than one in five!

This is not another nagging rant about cross merchandising, employee training or a finger-wagging to Think Like Customers (ooh I like that phrase) and give shoppers what they will need to succeed. It’s about cold hard business. It’s a numbers game.

And it goes like this

A garden center doing $2 Million in sales a year at $50 average sale has about 40,000 shops (Ka-Chings) a year.

At least half of those Ka-Chings (20,000 shoppers) will buy at least one unit of annual/perennial color, veg or herbs

  • If just 20% more of those 20,000 shoppers buy ONE plant food, that is 4000 extra units (333 cases): got your attention?
  • If 20% more buy just 3 bags of soil in a year, that’s 12,000 more bags of soil or mulch (or both!): truck-loads of the stuff – any takers?

At least 25% of the Ka-Chings (10,000 shoppers) will buy a tree or a shrub

  • If 20% more of them buy 1 plant food that’s 2000 more units of plant food
  • If 20% more buy just 3 bags of mulch, that’s 6000 extra bags

That’s not to mention repellents, gloves, kneelers, pruners, watering cans, soaker hose, stakes, support frames… need I go on! The shoppers will need this stuff anyway and will just go and spend that money in a competitor’s store when they discover they don’t have everything they need for the project. I am not advocating filling every cart with all the hard goods they will truly need to succeed, even I don’t buy that. But these are very conservative incrementals, just one bag/bottle or thingy for a few more shoppers.

Money is left on the table, bed or shelf every day by retailers and there are a hundred reasons why I’ve heard that “tie-ins” can’t be done. Maybe these numbers will finally appeal to someone to drive a tie-in culture down from the top?

Garden retailers spend millions of dollars and hours of work trying drive more people in the door but seem to roll over when it comes to driving extra sales from those already there. Go figure – literally.

Someone cheer me up and give me a tie-in success story, please!!

 

Jul 30, 2013 9 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
SpringStaffCropped

Tales from the Trenches: “Look at Me!”

(This is the first in the Tales from the Trenches series, a new semi-regular blog feature sharing specific insights & observations from site visits to retailers around North America)

In this first installment of Tales from the Trenches, I’m pleased to report that Spring is finally here! (or almost over, depending where you are in the country.) A time of excitement and promise, and in the retail garden business, a time for new employees hoping that no one asks them a question. You will see this in all retail channels, from the oldest exclusive nursery to the newest “pop-up” facility. I was that person myself once, long ago and far away: pushing a cart of plants to re-stock a bench or washing celery on a farmer’s market stall. I kept my head down, worked hard and tried to look invisible, silently willing customers to keep moving past me. Now that I am a little bit (!) older I can understand what they are going through, but that still doesn’t make it acceptable in today’s highly competitive lawn and garden market.

The Tale

During one garden center observation session, I watched a younger employee ringing up customers for at least three hours without a noticeable smile, without an audible “thank you”  – in fact, without an impromptu action of any sort. Robotic, almost: it might as well have been a self-checkout station for all the interaction there was. After watching a $170 sale with zero human reaction from the employee I wanted to say, “That lady just bought about 17 hours of your wages, it’s OK to smile…”

The Question 

Why are these people so unprepared for what awaits them?  Who interviewed, selected, hired, oriented, trained and placed them in such an unforgiving environment? All retail work can be demanding, but the spring season in lawn and garden must rank up there with the best of them. We have a short 8 weeks to make enough money to pay a year’s bills, selling to a consumer that might not have set foot in the place since last June. Customers now have less time and less tolerance for failure than ever before.

Retail staff are supposed to magically make all this right in 20 minutes and smile all the way through? Yep, garden retail can be intense and unforgiving.

But as they say, that’s not the customer’s problem. They are volunteering to come to our stores and spend their valuable spare time, gas and wages to pay our wages. Hmmm, now you put it that way….

The Answer 

It’s the fear. I am convinced that the main reason for this lack of confidence to look up, engage customers and see where the conversation leads, is the employee’s fear. Fear of being asked a question he cannot answer. Obviously, it is the job of management to train these employees, to orient them with answers to as many of the common, predictable questions as possible. It is our job to infuse confidence in them through product knowledge (“PK”).

But orientation and training must go way beyond that. New people will never know enough to face every inquiry, so they will still avoid eye contact. It is essential that managers equip their employees with a way to cope with any question – whether they know the answer or not. Just a few minutes on how to handle this potentially awkward situation might be the most productive training session of the year. Only then can managers expect employees to have the confidence to look up and engage customers.

The Fix 

Employees need to be assured it is OK to not know every answer, but they can be the first responders and find someone who can provide the information. Customers would welcome an employee who has the confidence to say “That’s a great question and I wish I knew all this stuff but I am still learning myself! Let me get Jenny on the radio so she can get the answer for both of us!”

So the mantra to your staff in the next few weeks might be: “It’s OK to not know the answer, but it’s NOT OK to ignore or avoid customers because you don’t know.”

Yes, it’s Spring. So  heads up everyone, here come your wages!

Photo Credit: An Armstrongs Garden Center (CA) team member engaging a customer with a respectful but non-invasive stance 

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Apr 29, 2013 10 Comments

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