2008 progress check: Part 2

LAUGHLIN, Nev.-- In the first part of this article (February Garden Center Magazine), I created a checklist to test how prepared garden center owners and teams are for the next 10 years, which according to many observers will not be like the last 10 years. This questionnaire (click here for the PDF) was not meant to detail the difference between life and death in the next decade of garden retailing; however, the questions do reflect what we see more successful centers doing as a matter of standard operating procedure now.

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Networking is core

Take Question 1 from the checklist: “We travel, tour retail stores, read and network constantly.” This weighs whether you are touring your peers’ stores and networking to learn secrets to success or failure from people who have already tried it. The whole principle of networking is that somebody somewhere has already faced your challenges and will have suggestions and guidance.

Question 6 (“We shop lifestyle stores like IKEA, Anthropologie and Pottery Barn at least four times a year.”) takes the networking issue wider to study other successful retailers outside the garden business.

There are now several active independent networks for a retail garden center to participate in; almost all the progressive, profitable centers I know are in at least one, often several.

It is ironic that of the 3,500 or so independent garden centers selling more than a million dollars a year, it seems to be the same 500 or so that participate actively in ANLA, GCA, Retail Road Shows, Holiday Tours, Management Clinic, Garden Center University, England Tours and so on.

If you look at the published lists of top stores, the Innovator Awards or at the panel speakers at national and state meetings, they are primarily drawn from those that network almost as a hobby. And they are almost all from what I call the progressives -- people who learn from others and are, in turn, just as enthusiastic to share with others. Meanwhile, we rarely see or hear from the other 3,000 owners or managers.

So that is what this questionnaire is about: what are the successful companies doing to keep ahead of the pack? It may not have the depth of “Good To Great,” but these questions identify winning actions and cultures of the “good getting better.”

Leaders, discipline thyself!

One of the immediate distinguishing factors of the progressive garden centers is that they have discipline, both as a company and as a group of individuals. They have discipline not to buy too much and the self-discipline to admit it and change course if they did overbuy. They have the discipline to set standards at the top and stick to the agreed agenda, even if that means upsetting a well-liked or loyal, trustworthy employee. They have discipline to make and stick to a budget (Question 3: “We have a yearly budget and a three- to five-year master plan with clear benchmarks for successful change.”).

In my travels I can see that the progressives identify clear opportunities but are careful to blend what makes them different with what makes winners in other retail industries successful. For instance, the super-league garden centers try very hard to keep the ambiance and personal feel of an independent store while at the same time adopting the management techniques of big business, such as written job descriptions, clearly defined and agreed expectations (Question 15: “We separate and track average sale and customer count weekly and show all retail employees the next week’s target.”) and formal reviews (Question 18: “We have written job expectations and secret-shop and review each full-time employee twice a year.”).

This simple but very effective management tool is not just for the big guys. In any size of company, employees are happier, more productive and stay longer in a job where they are trained to achieve what is expected of them (Question 17: “We spend at east 0.5 percent of sales on training and team development.”) and where performing up to and beyond that expectation is recognized by the company (Question 22: “We use our Web site for both sales and customer outreach.”).

Partnering for profit

Most progressive companies were early or mid-term adopters of technology (even when the owners themselves didn’t really understand or like it) to increase accountability and find opportunities. Take Question 5 (“We are happy to share point-of-sale data with vendors if they ask.”). Isn’t this sleeping with the enemy? Not to most large corporate retailers in this country. Most of the supermarkets and many national retail chains open their register data in real time to suppliers. That’s how both parties in the chain can quickly find and make money from new opportunities. We are seeing a move toward partnering between retailers and suppliers, which can bring a win-win for both parties, hence Question 25 (“We expect vendors to use our space to build and test displays.”).

It also seems that the more profitable centers have used POS data (Question 11: “We use our POS data for margin and buying decisions.”) to reduce the number of SKUs they carry (Question 10: “We are reducing the number of vendors we use and are decreasing our SKU count by 20 percent in the next three years.”), a strategy know as “shallow and wide.” However, I also see some progressives having great success at being a destination store for one large category such as patio furniture, pottery, perennials or organics (Question 4: “We are a destination store for at least one major department.”). This narrow-and-deep strategy in a few departments means that, while keeping duplication in check across the whole retail offer, they are acting as a 50-mile-radius category killer in one or two departments where their history, talents or location make this a major opportunity.

Know thy gap

The top garden centers understand that their gap (Question 13: “We know and understand how to use our gap between labor costs and GPM (gross profit margin).”) should be at least 26 percent of the sales dollar and that inventory/margin management (several questions), together with budgets (Question 3: “We have a yearly budget and a three- to five5-year master plan with clear benchmarks for successful change.”) and efficiency of labor (Question 19: “We have clearly separated our work force into the sales and maintenance teams.”) are crucial for a healthy bottom line.

Marketing is not just for the big guys

Many of these questions hint at business management techniques used by the big guys and are relatively easy to emulate. But how can small garden center companies adapt the big-dollar tactics of marketing to their small resources? Questions 22 and 23 give some idea of how the progressives are doing this. I know one owner who uses an e-mail list of her 500 customers as a sounding board for new products being considered, others to drop, even colors to paint the store floor! This personal, but non-selling, outreach from the owner of a local business can be a powerful tool in the days of marketing insincerity by so many large corporations.

Questions 2, 7, 8 and 9 hint at how progressive garden centers are finding future trends, then having the faith in their own methodology and convictions. Those operators who wait for their regular suppliers to inform them of new trends are not very proactive. Networking, either with peers in a buying group or with a consultant, has become the most likely source of information on trends and market success among progressives.

Question 24 has serious market implications as it looks to the future with the do-it-for-me customer. Surely a small business where the owner or CEO is onsite and involved on a day-to-day basis should always outpace corporate competitors with their multi-layered decisions. So how come most of America can get a microwave installed in their kitchen by Lowe’s quicker than they can get a tree planted by their local garden center?

This one hurts

Finally, and the most painful question for many owners and team members, is No. 21. This question goes right to the heart of the company culture with regards to customer service. Garden centers are rightfully proud of their heritage, their knowledge and the talents of their teams. After all, many employees (and owners!) could earn more money working with a product or service that they didn’t necessarily love as much they do their plants.

Surely the pride and care we lavish on our product is the differentiator between us and the big guys? Well, only partially, I am afraid. Increasingly the consumer is less of a partner in the hobby who would understand that the plant is about to die and will give you the 30 seconds necessary to water it. Today and tomorrow’s customer don’t understand, don’t really care and expect to be put first. So train and lead your staff to drop the elitist plants-before-people feeling, lift up their head and smile. Then tell them to put the hanging basket under the bench, write off the $11 cost and go help the woman who wants to spend a few hundred on containers!

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This is the acid test of the super-league culture.

- Ian Baldwin