Independents can compete successfully
with mass merchandisers
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The entire retail industry
is in a transition mode as the world experiences the ever-expanding
reign of mass merchandisers, often referred to as chain stores.
The independent lawn and garden retailer now must compete with Home
Depot, Kmart, Wal-Mart, and Lowe's, among others, for the home gardeners
demand for plants and related accessories. When the "big box"
stores first appeared on the retail scene in the 1980's many independents
felt that profits would be drastically reduced. However in retailing
studies there have been numerous surveys that show just the opposite.
In small towns where Wal-Mart first located, over-all general merchandise
sales increased strongly (1). Businesses that sold goods or services
other than what Wal-Mart sold had higher sales due to the "spillover"
effect of the additional traffic that Wal-Mart attracted. If a store
tried to sell exactly the same product as Wal-Mart, without lowering
the price, total sales at the independent were reduced.
Determining how to compete against mass merchandisers is probably
the most important challenge that independent garden center retailers
face. By examining how the prospering independents continue to do
well year after year, in spite of the tremendous competition, new
comers to the world of retail plants sales can design their future
operations to be successful as well.
Chain stores will always compete best on
price
The big box chains such as Lowe's and Home Depot were designed as
large hardware stores catering to the do-it-yourself shoppers. With
time they added garden departments and have since flourished to
serve customers who are looking for finished plants that they can
arrange in their yards in a simplistic fashion, without further
input other than basic watering. Bedding plants and a relatively
narrow selection of perennials, which have a proven national sales
record, are the most commonly stocked and sold items. Shoppers select
these types of plants based on price. Plants are displayed on Isles
on a grid structure, as is the case for food at a supermarket, to
speed the passage of shopping carts. Many of the shoppers at chain
stores don't consider themselves true gardeners. They buy on impulse,
and readily admit that they are comparing prices between other chain
stores. Unlike the shopper at a retail garden center they are not
looking to purchase finished "lifestyle statements", but
are rather are selecting plants so that they can make their own
design (1).
Due to the volume purchasing power that chain stores possess, independents
will simply not be able to compete on price alone, for the same
identical product. If an independent does carry a similar product
in order to show the consumer that the store has a full line of
plants, generally a price increase of no more than 10-20% has been
found the limit in terms of buyer's acceptance (2). Shoppers usually
know the prices of products they purchase frequently or ones they
have seen commonly advertised in newspapers and on the radio. However,
they don't know the price of "blind" items that are infrequently
purchased. Garden center retailers should consider displaying seasonal,
frequently purchased products, near the store front, while keeping
the more lucrative "blind" items at the back of the store.
Beware of discounters
The continual use of deep discounts that the chains use to lure
customers is generally not used but once a year by independents.
Even then, the best independents have found that they don't need
to use more a 10-20% discount. During the end of the summer an independent
may discount plants that won't be carried over until the following
year. It's simply too much work to repot many woody plants into
larger pot sizes, or divide perennials. In the same vein mass merchants
will often deeply discount their products that did not sell during
the holidays of December. However, it's hard to generate much interest
in sales after consumers have spent so much money during the late
fall through early winter time frame. The independent garden center
owner would be better off limiting the amount of product ordered
for the spring sale period, or increase his mark-up slightly to
compensate for leftover plants at the end of the season.
In the general consumer trade, deep discounts are often used to
move commonly purchased household and clothing purchases. But a
large discount often weakens the value of the product in the consumer's
mind (3). Any business that has to survive on continual sales is
generally competing against other marketers for impulse items, with
inherently lower perceived quality.
Selection strategies
Successful retail garden center operators have found that their
customers thrive on an excellent selection of plants and products,
all of which have colorful labels with prices clearly marked. Shoppers
who consider themselves true gardeners thrive on themed displays
of quality plants, in all sorts of different sizes and species.
Successful independents avoid carrying the same product as would
be stocked by a mass merchandiser. The full service retail garden
center will carry the complete line of a particular item, weather
it be plants of hard-goods. While a mass merchandiser would carry
green Japanese maples, the independent would carry 10 or more cultivars
of green foliage Japanese maples, all of them slightly different.
Each cultivar would be clearly tagged with not only the common name
but also the scientific name. Shoppers will spend more time looking
at a display that inspires them to explore all the different cultivars
of particular plant. The simple joy of discovering that there are
so many different choices of a type of plant sparks the imagination
level of a true gardener. Choices appeal to shoppers looking for
a product that unique. Choices appeal to a consumer's love of individuality.
It's similar to the transportation industry where a multiple of
different colors or options are offered for the same basic product.
Dedicated gardeners actually bring their plant identification books
along with themselves to the garden center to seek out all of the
different cultivar choices that they have seen in specialty catalogs
or books.
Larger plants
Most certainly consider stocking much larger plant sizes as would
be carried by a chain store. The more affluent buyer has the money
to spend on the more mature plants (4). By spending more on a larger
plant they won't have to wait as long for the plant to appear as
if it is well established. The return on investment on larger plants
is many times over that of traditional 1-5 gallon container plant
as sold by chain hardware stores. Most independents will readily
re-pot container stock into the next larger post size with understanding
that more mature plants bring increasing profit levels as they grow
larger. Be sure to offer home delivery for an appropriate charge
based on mileage for this larger plant material.
Niche marketing
Conversely, those retailers that are not interested in every different
plant category will greatly enjoy the narrowed niche that they can
create. It is not uncommon to find specialty independents that cater
to the likes of purveyors of roses, dwarf conifers, dahlias, Japanese
maples, drought tolerant plants, native plants, or indoor plants.
These types of operations are often highly intensive, featuring
in-store classes with notable speakers, maintain colorful web sites,
and are often highly featured in local media stories. Such an operation
does not require the extensive land holdings required for a full
service nursery. With an eclectic array of high quality plants specialty
independents can be some the most lucrative in the retail trade.
In the retailing trade niche marketing is a growing trend. There
are now stores catering to different age segments of the population.
Using the concept of "increasingly narrow" (5), specialty
independents are finding that selected presentations of limited
inventory are winning out over a broad category of water-down assortments.
When the merchandise assortment is too general the customer looses
the sense of direction the store is trying to portray. Retailers
who concentrate on distinctive merchandise and less on sale and
clearance items generally achieve the best results.
The Oregon Association of Nurseries (6) has developed "The
Guide to Oregon's Retail Nurseries" in a three-color foldable
map that shows the locations of all OAN-member specialty retail
nurseries in Oregon. A total of 139 retail locations are listed
in 70 communities throughout the state. Nursery name, address, phone
number and web site are listed.
Personal service at its best
Astute retailers know that true gardeners are looking for well trained
staff that have a good grasp of plant characteristics. In a detailed
survey of New England homeowners (7) 89% of respondents had at least
a moderate confidence in the information obtained from independent
garden centers and nurseries, as opposed to only a 24% confidence
level in information provided by a staff member of the garden department
of a large chain store. Customer confidence was rated especially
high for the purchase of longer lived trees and shrubs.
Store personnel at independents need to have pleasant dispositions
towards customers. A friendly caring attitude is considered one
of the best customer retention strategies for independent retailers.
If staff are classified as "associates" (8) they tend
to take a greater pride in their work, thus helping form a team
approach to store sales.
In-store service can be supplemented by having a having a web site
for the store so that shoppers can find answers to their questions
before they even visit the establishment.
United Kingdom retailers set a world example
Home gardeners on British Isles have a long history of being some
of the world's most devoted gardeners. Retailers are represented
by industry-lead group known as The Horticultural Trades Association
(9), which for over 100 years, has been a voice for the industry
in all phases of lawn, garden, and commercial nursery industry.
In order to recognize some of the best retailers in the industry,
the Trade Association established a Garden Centre Association (10)
in 1986 to recognize operators that met the following criteria:
- Willingness to share information on all aspects of their operation
with other members from senior management to the shop floor,
- Strives to achieve excellence in customer service, plant quality
and
reliability.
- All member garden centers are subject to annual inspections
by an independent auditor and must satisfy stringent standards
to remain in membership.
- Representatives of an independent monitoring company visit member
garden centers to assess the quality of facilities for the public
and customer greeting standards.
Add-on products
Besides their superlative customer service, U.K. retailers find
that carrying a full compliment of "add-on" items other
than plants can markedly improve their total return. English garden
center operators are known for their extensive holdings of patio
furniture, ceramic pottery, kitchen giftware, specialty clothing,
patio bricks and stones, bird feeders, and aquatic items including
Japanese koi to help shoppers meet their lifestyle approach to both
outdoor, as well as indoor living. Combined with a café which
offers light snacks and specialty drinks these independents have
taken the concept of a destination garden center to its fullest
extent. The Garden Centre Association has published book listing
all its members (9).
In summary
Smart retailers will generally find that having a mass merchandiser
in their neighborhood actually improves their bottom line. By combing
a healthy, fresh, and well-maintained group of distinctive plants,
clearly labeled and signed, serviced by knowledgeable and friendly
staff of associates, prospective garden center retailers should
be able to establish their niche as well.
References
1. The
impact of Wal-Mart stores on retail trade areas. Kenneth Stone,
Iowa State University, March 1992, VNA Newsletter.
2. Battling the big boys. July, 1992. Carole Turner. American
Nurseryman, p. 29-40.
3. Markup,
dollars per foot: Create benchmarks for these important measures.
2003. Bill Pearson, Garden Center magazine. Branch Smith Publishing.
4. Grow more and grow 'em big. Heather Stanley. Oregon
Association of Nurseries. The Digger magazine, November 2000.
5. Narrow
your niche. 2002. Bill Pearson, Garden Center magazine. Branch
Smith Publishing.
6. Guide to Oregon's Retail Nurseries. 2003. Oregon
Association of Nurseries, Wilsonville, OR.
7. Consumer product and service preferences related to landscape
retailing. 2001. Mark Brand and Robert Leonard. HortScience 36(6);
1111-1116.
8. The role of independent garden centers versus the mass merchandiser.
1996. John Stanley. The Digger, Oregon
Association of Nurseries, February, 1996, p. 31-32.
9. Horticultural Trades Association,
Theale, Reading. United Kingdom.
10. Garden Centre Association.
2003. Theale, Reading. United Kingdom.
11. Garden
Centers and Gardens of Great Britain. 1999. Barbara Vesey. Travel
Publishing Limited, 7a Apollo House, Calleva Park, Aldermaston,
Berks, RG7 8TN.
First posted:
December, 2004
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