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What it took for garden centers to survive (and thrive) in 2009

Ian Baldwin | August 13, 2009

Editor's Note: At the halfway point of a very strange year, garden center consultant Ian Baldwin looks at some (big) missed opportunities and some very smart operators.

So, how are you doing this year so far? At the start of 2009 many pundits, including yours truly, predicted the year would be “different.” Well, it certainly has been.

Across most of the country, garden center’s reported a rise in springtime customer count for the first time since 2002. And from coast to coast (with the possible exception of California) the story is the same: increased traffic, decreased average sale per customer; new faces in the stores and excited seminar attendees. Information and knowledge were in high demand.

The customer profile seemed to change, too, with a lot more younger-generation people shopping for the first time. This group, together with returning baby boomers who hadn’t done any hands-on garden work this century(!), more than made up in numbers for those who stayed home or went to a discounter this year—so far.

The winning categories were anything reputed to be edible. We all know that vegetable seeds and starts sold like crazy. Likewise, fruit plants of all sizes, especially those with alleged health benefits like blueberries. I heard of one enterprising retailer who unwrapped those bundled bare-root strawberry plants that feature a picture on the wrap, and then potted them up individually in one gallon pots. The selling price? Just $9.99. That’s adding value!

The National Gardening Association even had data confirming the trend, reminding us that 21 percent of those growing their own food this year were first-timers. Wow, what an opportunity!

When you consider all those new customers, knowing how little service they received at a big box store, it just makes sense to believe that that they would start the information search at a specialty store like a garden center or independent hardware store. So I did just that; instead of just looking at independent garden centers this year, I managed to squeeze in some visits to independent hardware stores, often in the same market as my garden center clients.

Is the watering can half empty? I have to admit I was shocked at the contrast. The hardware stores, such as Ace or True Value, were really on their game with tie-in products everywhere and lower margins on known-value lines that drive traffic or tempt these new shoppers to try unfamiliar items. Hardware stores had impulsive end caps focused on the one key product of the week. They dedicated high-traffic store space to the spring gardening craze —while featuring mountains of lawn food for those consumers who are caring for their own lawn for the first time in years.

Hardware stores had project suggestions for veggies, herbs, lawns and so on. Tomato cages? Right with the tomatoes. Earth Boxes? Planted up to show how luscious the plants would look—with 20 boxes and tie-ins right there to grab and go. Questions about raised veggie beds like at the White House? Hardware stores had the best (in some cases the only) how-to-build-‘em displays in town. And for those shoppers who clearly looked lost, there was a red or green golf shirt there in seconds, it seemed. These companies were playing seriously, hard and fast.

Their green goods, if they had any, were not very special, but everything else that could vaguely be called gardening was a core category to them, and it showed.

The contrast in independent garden centers was startling. Let’s remember that both channels are independent, with generations of family management, restrictive sites and often a lack of capital. So they have more in common than you might think. But whereas the hardware stores saw Gardening 2009 as a golden opportunity to gain market share and lock in some loyalty through success, I suspect too many garden centers saw it as, at best, a fad —and, at worst, just a pain.

Unfortunately I saw too many garden centers showing “business as usual”—apart from a few extra seed racks and more veggies crammed onto already over-full tables.

My un-statistical survey of shopping carts shows the tie-in count no different than in other years and still less than one cart in five containing anything other than plants. I saw little evidence of teams excited by the opportunity to win these new customers, persuading unsure shoppers to give things a try. All those new, innocent customers were in our stores, trusting our word and buying what we tell them—yet, the average sale declined this year. And it wasn’t just because furniture and nursery stock was down.

It seemed like tie-ins through merchandising actually declined this year!

When I suggested the garden center should emulate the hardware stores, I got the same old argument about tie-ins taking up space needed for plants and the cringe-inducing “Jenny doesn’t like them in her department.” Well, when Jenny personally writes the check for those tomato plants she can call the shots. Until then it is not her call, sorry.

So what happened? This failure to seize an opportunity can only start at the top, and owners either didn’t spell out the tie-in, “help customers succeed” message firmly enough, or they tolerated minimal commitment to the cause.
Owners simply chose not to fight this particular battle with employees who are otherwise great to have on the team.
I am always amazed at the territorial defensiveness of some employees and managers. While we all look for passion in the job, the task of a leader is not only to hire and develop that passion, but to channel it in the right direction—which, in this case, is customer success.

I saw table after table of herbs with no plant food, no pottery nor soil, no support frames, no how-to specimen manikins, no recipes, no suggested use, and so on. All they had was just more herbs this year than last.

If this industry is to win lasting shopper loyalty, the customer’s needs must come first. Owners and managers have to drive it—over personal tastes and agendas – spelling out merchandising expectations, then executing the plan. How long would an employee survive in a grocery store if he said, “I don’t like seeing olive oil bottles with my mozzarella; it spoils the look of my cheese cabinet”?

Meanwhile, garden centers that did drive the quest to meet customer needs for Mother’s Day reported extraordinary interest and shopping in everything from moisture meters to snail bait and tomato frames. To the new veggie gardener, what we call tie-ins (and what we have treated like an ugly cousin for the last 15 years) are essential components for the project. We don’t want, nor can this industry afford, a one-time, home-grown veggie bonanza.

In the next few months the garden center business will have to fight for every dollar. Tie-ins, those solutions and success packages that bring those tomatoes to the dining table, etc., will be a crucial part of this fight. This starts at the top, so let’s see store owners and managers crafting and marketing those “Success with XXXXX” kits designed to help customers harvest their tomatoes, chard, beans, and squash. Let’s show them how to preserve herbs and how to can or freeze fruit.

Homeowners understand that to decorate a bedroom you need more than a can of paint; strangely, those same shoppers don’t know about plant food, soil amendments, NPK, irrigation or rabbit repellent. In fact, they don’t have a clue.

If we make these projects fun and easy-to-use, we’ll spawn customers eager to return next year ready to try again. We probably have two to three years, at most, to win them over to a “grow-your-own food for life” mindset. After that, with a rising economy, it will be back to the mall and the chain restaurants.

Back to basics. Over the years, the garden center business has allowed chemicals, fertilizers, gloves, hand tools and many of the items that you and I use in our gardens to become second-class inventory citizens. Rather than develop a strategy to compete with the box stores and establish a name as the local place to get everything needed for gardening success, many retailers took the easier route, marked by candles, gifts and “lifestyle” items. Too many garden centers ceased to be “Gardening Centers,” and that decision came back to bite them this year—big time.

But some seed-scoops are half full!  In summer and fall, many centers buy products to to appear fresh and full (good idea)—utilizing all the space that was needed in May but won’t be shopped in earnest for another six months (bad idea). Here’s a really good idea: Inventory fills the space available, so the smart guys have already reduced the retail footprint after July 4th with a temporary fence, or with a “wall” of 6-foot conifers and so on.

One client of ours (see Garden Center B below) is on his second round of space reduction now as the dog days set in. Inside greenhouses, staff removed tables instead of filling them with more plants, using existing inventory to make a floor display for summer living that features pavers, bistro sets, container gardening and casual patio living. The store’s staff used the extra elbow room to accent pieces and specimen tropicals that were lost in the fullness of May.

Customers love the smaller shopping area. Who is as keen on exploring a big open sales yard in sunny August as they were in April?

This stuff works. Finally, to justify my earlier rant, I offer two examples of  stores that “get it” and have practiced sound, yet firm, management this year, with outstanding results to date.

Garden Center A
Yearly sales of $1.7 Million
USDA Zone 5
• 2009 YTD compared to 2008 YTD
• Sales: -7%
• Customer Count: Flat
• Gross margin dollars: +7.4%
• Labor costs: -12%
• Net profit or bottom line: +66.8%

Garden Center B
Yearly sales $2.4 Million
USDA Zone 6
• 2009 YTD compared to 2008 YTD
• Sales : -4.2%
• Customer count: +5.0%
• Gross margin dollars: +21.9%
• Labor costs: -25%
• Net profit or bottom line: +417% (yes, four hundred and seventeen)

Did I hear a collective gulp over Garden Center B? Even though its average sale per customer fell by $3, this company paid off its credit line earlier than ever before, has more money in the bank going into fall than ever before and, just as important, has a customer base that loves to shop there.

How did Store B do it? Management stuck to a tight buying budget, reduced SKUs as well as the retail footprint twice already, hired, trained and led the team rigorously, painted and cleaned everything—and set out to win!
Both these owners are not tyrants, far from it. However, both companies are disciplined and very focused on the end result: long term success through customer success. They both lead with a vision and a passion that shows on the faces of their team and their customers.

It can be done. Keep the faith!

2009 SNAPSHOT
Hillermann Nursery & Florist
Washington, Mo.
In 1775 Robert Burns noted that the “best laid plans of mice and men gang aft aglee” (translation: "often go awry"). In 2009, Sandi McDonald could easily add, “no kidding!”

McDonald’s Hillermann Nursery & Florist had a most interesting year: In late June, the storied business that has been a Washington, Mo., landmark for more than half a century was named Garden Center of the Year by Garden Centers of America. In her acceptance speech, where she noted that the company was down in sales by 9 percent for the year, she said she wondered if she should give back her plaque.

She has no cause to even consider that, not with a series of stellar decisions that has made her company one of the industry’s best. Still, the life of the Midwest garden center has been challenged this year, what with Ma Nature and the economy double-teaming business up and down the region. “We had a late start because of cold weather,” McDonald said. “Then we had rain, then it was in the 90s.”

Add local economic woes —the nearby automobile plants suffered shut downs and layoffs—and you wind up scurrying. To that end, McDonald said she grew less, was very careful with buying practices, cut payroll and marketed smaller plant packages just to keep people buying. “Our store traffic actually went up,” she said, noting a silver lining. “Hopefully, next year those people will be back and they’ll be better able to buy.”

 

2009 SNAPSHOT
Johnson Nursery & Garden Center
Cookeville, Tenn.

A board meeting at Johnson Nursery & Garden Center generally takes place at the dinner table, where the brothers Johnson – Charlie and David – join dad Chuck and mom Sarah to enjoy a home-cooked meal and to plot strategy.
The board meeting to discuss plans for 2009 might also have called for a round of Rolaids.

“We were a little bit nervous,” David said during the recent Garden Centers of America Tour of garden centers in the Portland, Ore., area. “We kinda talked about what to do [to address a shaky economy]. We saw it coming back in August. In our area, the Fair comes, and then mum sales kick in between the Fair and the start of school. Mum sales were down, so we thought the spring might be soft.”

Fortunately, the Johnsons and the entire Cookeville area were spared much bad weather, so their worst fears weren’t realized. Most of the store’s core customers from a nearby retirement community remained loyal, and the edibles craze that colored the national scene splashed the canvas in Tennessee as well.

“We’re about 5 percent down, and we’re thinking we’ll end up about 7 percent down before the year’s over,” Johnson said. “But it could have been a lot worse. You always want to sell more this year than you did last year, but compared to
some other businesses and some other areas, we’ve done OK.”

 

2009 SNAPSHOT
Beaver Bark Gift & Garden Center
Richland, Wash.
Renae Bobbett vividly remembers the tell-tale afternoon in 2003, when she received a letter from the Washington Department of Transportation. “After we got it, we went straight to the bar,” Bobbett recalled. “We put the letter on the table, and each of us took turns guessing what would be in it.” Mainly what was in it was official notice that a highway was targeted to run straight through her 3-acre facility—that, and a proposed sum far smaller than what she thought the land was worth. After a prolonged tug of war with the state, she wound up relocating down the soon-to-be road at a new 9-acre site in Richland, Wash.
Going through all that better prepared Bobbett and the Beaver Bark staff for all challenges—including a tough economy like that of this year. “Customers were cautious, no question,” she said. “Gift sales were flat. Plant sales were up. Bulk sales and landscape jobs were down some. All in all, though, it was a good year. We’re making money. Hey, after what happened in 2003, every year is a good year.” 

 

2009 SNAPSHOT
Buchanan’s Native Plants
Houston

Buchanan’s Native Plants, billed as “Houston’s largest garden center devoted to Texas native plants and organic gardening,” enjoyed a 15-percent net profit gain and a 19-percent increase in sales volume during the spring of ’09.

Yes, 2009.

Owner Donna Buchanan said a number of factors played into the center’s successful season, notably good weather. "Mother Nature was kind to us this spring," she said.

It didn't hurt, either, that the company sits in a location smack in the middle of one of the city’s more affluent neighborhoods, or that it has a reputation for quality plants and hard goods that dates to the company’s founding nearly two and a half decades ago.

“Also,” Buchanan said, “we’re not afraid to raise prices. Like everyone else, we took a cautious approach to the spring, but we decided to conduct business as usual. It turned out to be a very good year.”



Editor Yale Youngblood contributed the garden center snapshots.

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