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Open Letter to Independent Garden Centers

Read Time: Approximately 5 minutes text, 15 minutes with links and video.

Friends,

Independent garden centers are my future. I am a fortunate person to love what I do and do what I love. I sincerely want that to continue, and I realize it is entirely dependent on the success of my clients.

Today I feel compelled to share with you some information you would probably rather not hear or would rather not consider. Sticking your head in the sand is a possible reaction to this.

Consider carefully how you choose to respond. This could be a decision that changes the course of your business and your life completely within a very few short months.

Is the sky falling? No, it definitely is not, however, just because the sky is staying where it is does not excuse us from examining other things that may be falling.I am not buying into the signs of economic recovery that are being broadcast recently. Yes, there may be some improvement in some economic indicators, but when the improvement is only “less bad” and you consider what else is going on the “jolly ole feeling of recovery” will only give you a chance to delay acting on your best opportunity to “Prosper in a Downturn”.

For many years I have loosely followed the forecasts of Harry Dent (CLICK HERE to check him out). Looking back, it would have been wise to have followed more closely.

Harry Dent’s firm does not make predictions, they make PROJECTIONS based on birth rate and population trends that are repeated based on the activities. Dent’s first and bestselling book titled “The Great Boom Ahead”, published in 1992 accurately forecast the unprecedented growth of our economy that ended on target last year. It was followed by “The Great Bubble Boom”, where he projected the over-heating of the economy, inflated housing prices, and the over-retailing of America. This year, The Great Depression Ahead was released, and projects the results of the economic downturn, the reaction of our government, consumer spending vs. saving, and the real estate bust. Yes, there are very strong indicators that there may be a very severe economic depression ahead. I have recently listened to the recorded guide “How to Prosper in a Downturn”. The message is very strong. There is a lot of repetition in the recording, which may be intentional in order that it sticks with us.

I don’t expect you to go along with what I am saying. But I ask that you consider very carefully the H.S. Dent information for yourself to understand their background, and the difference between what they say and what the mainstream economists are saying about what is going on in the economy and where it is possibly headed. There are a lot of news reports lately touting economic improvement. Read them, but also think critically about them.

There was a link in the H.S. Dent blog this morning to a video of an interview of Howard Davidowitz on Yahoo Finance TechTicker. This will probably be very unsettling to you. Take some quiet time to watch it and carefully consider why Davidowitz is saying what he is saying. If it doesn’t make sense to you then you may want to dismiss this entire letter and move on. However, if it does make sense let’s talk further about what it means to you, and what you should consider doing about it.

Before you watch the video I would like you to be prepared a little by taking a look at three recent articles concerning retail store openings and closings.

Click here to read an article titled 10,000 Store Closures Expected by Year End

Click here to read an article and List of 2009 Store Closings in US (Keep in mind that the pace of closing under-performing stores is increasing, while in many cases the same companies continue to invest in new locations they feel offer better opportunities.)

Click here to read an About.com:Retail Industry report on major retailer CEO’s and executives  positive spin on news that is not so rosy when you pull back the covers.

Now, take a break and click to watch the video of the Davidowitz interview, then PLEASE come back to read the rest of my letter. Let me warn you it is a bit of an unsettling rant, but one you should hear. I promise that when you return I will help you see the Silver Lining I see in creating your own Prosperity in a Downturn.

Consumer, Retail and U.S. in a "Death Spiral," Davidowitz Says @ Yahoo! Video

Click to Watch - Consumer, Retail and U.S. in a "Death Spiral

Direct link to video: http://bit.ly/19xCxV

Thank you for coming back and continuing to read.

So where is the Silver Lining?

  • If your store is under-performing your own expectations, or those of your bank, and we assume you can’t just close it and open in a new and better location we might be making an incorrect assumption. Unfortunately there is not enough time to take that kind of action. It is time for aggressive treatment of what ails your company. This is time for a turnaround. Read on.
  • If your store is performing well, we should realistically assume that if the economy continues to falter your store will not continue to perform so well as it is today.

Either way, there is work to be done. Are you up to it?

This is a time to gather your troops and rally them to make sure your store survives, even Prospers in a Downturn. You will find that some of your folks won’t want to go along with you, and that is a good thing because this is a good time to part ways with them. The rest of you will have renewed energy, and you can find wonderfully talented people that have been displace from the closed stores who would love to help you prosper, in order that they might find an opportunity for themselves. (Be careful about who you hire for certain making sure you hire only the very best performers who couldn’t save their store because of poor strategy and execution that was beyond their influence.)

Is your store too different?

If you’ve been getting by with inadequate covered shopping, uneven pavement, unfriendly associates (including family members), mean pets (yes they are out there), ugly curb appeal, crappy advertising, and I could go on. Get real. You have survived longer than you might deserve to.

Is your store different enough?

What makes your store so special anyway? If it isn’t merchandise that is presented consistently very well throughout the store and throughout the seasons, personal relationship with your customers, outstanding citizenship in your community, inspiring and shopable facilities, and an effective marketing strategy then you have more work to do.

Is your cost structure right?

If you cannot reduce your operating expenses as a percent of sales by at least 1%, reduce your operating expenses by at least 2%, and increase your gross margin by at least 3% it may be time for some serious re-structuring, or a “turnaround” of your business.

Yes, I’m talking about the kind of restructuring you hear of corporate America going through.

This may mean making significant changes in your financial, operations, merchandise assortment and facility infrastructures. You don’t have to be a huge company to restructure. Actually, it is more important for small companies to restructure to ensure their survival because they have fewer options that large companies have such as the opportunity to be merged or acquired and the people then go to work for the new company.

EVERY company should be seriously considering whether they should …

  • Restructure debt, rent, salaries, and entitlements.
  • Let go of under-performing staff members
  • Get closer to associates and customers
  • Invest carefully to add value so you can get higher prices or at least reduce discounts to get better margins
  • Market like they have never marketed before, not just more than they have before.

The sky is still  up there when there are clouds in it. Find your Silver Lining. I believe consumer interest in green industry products and services will remain at an all-time high in response to the uncertainty in consumers lives. I also believe we will continue to see the fittest among garden centers survive, while others will meet their demise. It all has to do with the cost structure, ability to be flexible and respond to opportunities, and especially the relevancy we can establish and build with the consumers who can still afford the indulgence. Remember that independents aren’t the only kind of garden centers who want the business.

If you are not absolutely confident in your ability to not just survive, but to also Prosper During a Downturn maybe it is time to consider some outside help? Can you afford NOT to?

Chances are that you know a few other folks who should probably read this, see the video, and consider getting some help. Please use the SHARE button below right now.

Thanks for your time to read this. While this is a letter, it is on a blog, which means you are welcome to comment or leave a reply.
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Respectfully yours,
sid@horticulturaladvantage.com
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29 Responses

  1. This link goes in my next Rant to my customers, Sid. They won’t like it, but it is EXACTLY what I’ve been saying. I yammer at them, my employees, myself constantly that “Good enough never is.” It has to be better, great, stupendous, and seen as a fair value, NOT A DISCOUNT.
    Thanks for the insight every day.

  2. I am sure I am like a lot of you I am involved with many organizations and many busines friends. I do not know what you are hearing but the contractor across the road who digs basements has told me this is the worst it has ever been in his 50 years of business. He sees no signs of improvement.

    Other busisness folks are telling me we shoulld have seen tremendous marketing for the back to school time and it just has not happened. In discussions today, Scott said I should be seeing business being booked and scheduled for Christmas from other businesses and I have none at present.

    Listen to what Sid is saying.

  3. I got my business back 10 months ago after the sale went horribly. In under 21 months the purchaser had run it into the ground. If I hadn’t worked my entire life, my Dad worked his entire life, and my Grandmother the last 45 years of her life, it would have been tempting to just let it go. There was no way I could do that.

    This experience has been the most excruciating and exhilarating time of my life. Learning to be resourceful and “make-do” with whatever was at my disposal has been the new mantra. We have become decidedly more creative.

    Our sales are down 30% from last year’s numbers and we are profitable. Our inventory is paid for. We are current on all obligations. I took my first day off since mid-February on Monday.

    I am now willing to make whatever changes that are required. We still have much work to do. There are many challenges ahead. The road ahead of us all is filled with pitfalls. We have rapid adaptability on our side, but we must utilize it.

    Thanks, Sid; great perspective

  4. Way to go David. I admire your persistence and determination, and especially that you didn’t let a bad deal stop you from coming back. You’re proving it isn’t what you take in but what you do with it that matters. Soon you’ll get your life back.

  5. I love the way you say it Lloyd. Stupendous is Uber-Differention! Keep it up.

  6. Good stuff, Its just hard to make it when the buyers are not there

  7. Sid,
    I am not a garden center, but the words from your pen hit home. Really appreciate you courageously standing tall on the front line on behalf of the troops.
    Sincerely,
    Steve

  8. I don’t know all about that Steve, but most of us in this business are hopeful optimists. I am too, but we have to recognize that when the glass is half full it is also half empty. A balanced view is essential. We have to deal with reality in order to feel the pressure and push ourselves. As Churchill said, “It is not enough to do our best. Sometimes we must do what is required.” Thanks for your comment.

  9. It is hard Bryan. We work hard anyway. We have to work in scale with the business we can get in the door. These are going to be hyper-competitive times. We must stand apart from the crowd, and be here when the crowd thins.

  10. A Silver Lining – John Dromgoole, owner of The Natural Gardener quoted in NY Times article – http://bit.ly/1cWOg

  11. I certainly hope the situation doesn’t turn out to be as dire as the projections suggest for the longer term. But regardless, the points you’re making should be well-taken by everyone who reads this. Everything is changing around us. We have to be willing to change too.
    Thanks Sid.

  12. Thanks for commenting Richard. You’re right. This applies to every business, not just garden centers. We’d all be willing to make BIG changes in our life if we were handed a winning POWERBALL $100 million lottery ticket. We should look forward to the changes we “get to make” that will put us back in the new ballgame the future holds.

    The important thing in any difficult situation is how we respond to the hand we’re dealt. One of the most satisfying situations to me and clients is when they suffer through road construction, bad springs, etc. and in spite of lower sales levels actually make a profit when they often have not had one for years.

    While there will be some folks fortunate enough to grow their sales even during difficult times, nearly everyone can grow their profits if they’re just willing to commit themselves to the prospect, make sometimes difficult but necessary decisions, and rally a team to implement them to transform their company.

  13. […] Open Letter to Independent Garden Centers « Strategies Blog from Horticultural Advantage hortadvantage.wordpress.com/2009/08/28/open-letter-to-independent-garden-centers – view page – cached #Strategies Blog from Horticultural Advantage RSS Feed Strategies Blog from Horticultural Advantage » Open Letter to Independent Garden Centers Comments Feed Strategies Blog from Horticultural Advantage Just another day on the way to Christmas Is THIS a Fair Test? — From the page […]

  14. Really enjoyed the video by Howard Davidowitz! I know nothing, absolutely nothing about the economy on a macro scale but have a sneaking suspicion that we are really trying to avoid the pain of a recession (with government bailouts, cash for clunkers etc) when in reality the cure IS a recession. (Recession is a resetting?) One note about David’s talk: It is hard to talk about the consumer in a macro scale (“consumer is taking a trillion dollar pay cut”) and use examples on a micro scale. (Dilliards, JC Penny, Costco). There are consumers in every economy that do have money and are willing to spend it. As retailers, do we offer great value for it?

  15. Your thought on our government trying to avoid a recession sounds right to me Jonn. When it comes to retailers the signs are different, but there just the same.

    A lot of things will be done in either reaction or response to the economy that should have been taken care of long ago. Delaying the inevitable will make it more difficult to recover as a country, and as a company. If the economy is nothing more than a convenient excuse, or as some politicians were known to have said – “never let a crisis go unexploited” then so be it. This may not be a problem for some companies, but if it is for yours act decisively and act now because delaying may mean it is too late.

    I don’t think any business owner is going to have an easier time finding a job these days than all those who are already unemployed. (Keep in mind the unemployment rate keeps climbing and more people are not counted each month.) In other words there are no lifeboats so fight hard to win.

  16. Great job Sid, Howard Davidowitz reminds us we need to provide an exceptional value.

  17. Thanks for about the best sum up I can imagine Dan.

  18. I watched the video and sadly, I believe Howard’s message.

    Being a realist, I feel compelled to throw another thought into the pot…. Sometimes, providing exceptional value may not even be enough. In those cases, the sooner reality is recognized (and accepted), the lessor the ultimate pain.

    Today, I am resigning from the Board of a fairly large (500 employee) engineering firm. This firm provides geotechnical testing services that are strongly related to commercial construction. I was invited to join the board perhaps a year ago because they realized they were heading into tough times with a balance sheet that had been weakened by internal stock transactions.

    In the past year, we have slashed costs, improved service, closed non-performing branches, yada yada yada… and it still isn’t enough. Despite these improvements, I continue to watch their balance sheet deteriorate with each passing month. There are simply no costs left to cut or services left to improve (in time).

    They can liquidate the company now… and walk away with a little money in their pocket… Or, they can continue ahead and “go down with the ship” in “February.” I’ve seen what “going down with the ship” does to people… and I want no part of it (or the lawsuits that can get very personal).

    I am not a quitter… but, hopefully, my resigning will get their attention.

    Pulling the shut-down trigger is very scary and very hard… but not pulling it and “hoping” will be much worse if the “hope” doesn’t pan out.

    I am NOT saying that anyone should shut down their garden center… but, I am saying that you’d better take a very hard, a very realistic, and perhaps very courageous look at both your resources and your market.

    Good Luck!
    Darrell

  19. Very well said Darrell. I couldn’t agree more.

    Anyone who has been seeing the signals and ignoring them, or ignoring the signals altogether should get someone to help them look at their situation.

    Darrell met with a garden center / landscape company that was going down in a ball of fire about 5-6 years ago and referred them to me. We were able to get them “resurrected” and on a profitable track they had never seen. It won’t work for every company but why not take a close look at where you are, where you are headed, if you should continue or cut your losses, or if we can turn on a light at the end of your tunnel.

  20. Sage advice Sid. In almost every case I’ve seen where a company failed, the writing was on the wall well before the crash…. In EVERY case, the owners either couldn’t read that writing… or could not force themselves to believe the message it conveyed.

    Lee Katz, my mentor on all things “turnaround”, once told me one of his cardinal rules of turnaround management, “It is always worse than the owners think it is.”

    Another set of eyes… with a willingness to shatter the fog of denial is key. By the way, this isn’t an advertisement for consulting services – I don’t sell those any more!

  21. Thank you Sid, I am sure most everyone will find your thoughts and recommendations helpful.

  22. Thanks Mike. I’ve actually only had one “glass half full” person contact me offline to say they were worried I was raining on the proverbial parade while the (questionable) news of bright spots may give hope and inspiration. After I explained that I’m also a “glass half full” person, but that the real story is that the half full glass is also half empty in reality, and how it might effect their business (advertising for suppliers) they saw the urgency in a new light. There is a SILVER LINING, but we can’t stare at the half full glass and expect it to come to us.

  23. I’ve been following your blog for awhile now and so agree with the things you say. This is an excellent piece. Your intended audience is clearly independent garden centers but honestly, all in the nursery trade could benefit from your advice. I’m on the wholesale grower side but have a marketing background and your marketing-related advice is always spot on. Thank you Sid. Keep up the good work.

  24. Thanks for your comment Amy. A lot of us in the industry know what’s going on. See this as your forum to talk about it. And you’re right that it applies to ANY BUSINESS today in ANY INDUSTRY. I didn’t intend this when I wrote it but I hope readers will share it with other businesses in their area, or in your case with your customers who you would also like to see Prosper in a Downturn.

  25. Sid, I think you were very brave to write this article, yet you did the only thing you could do. We can’t sit around waiting for something to happen. Problem is, I don’t know what to do. After reading all of this, I have a better idea…start with my financial statement, then walk the store and make a list of low margin items. Thanks for stepping up to the plate.

  26. Alice YOU are the brave one. The important thing is that you are putting a stop to taking your business for granted, facing down the ugly monster and digging in.

  27. Nicely done article!

  28. Sid: I am always so inspired when I read the threads your blog generates. We come away with at least one incredible nugget of info. Often, it reinforces something we have been saying to each other about “What To Do.”
    We’re doing two of the things you always suggest. First, we are ruthlessly following Alice’s advice and eliminating low or no margin items without exception. Secondly, we are ADDING marketing personnel. Literally, we just made an offer to a wonderful young lady from Cornell this very afternoon. What is it they always say about getting through a recession or depression? The LAST place to cut is advertising or sales or good marketing people—it is critical to drive sales. We try do that with excellent quality, stupendous service, and value perception. Not by cutting prices—cut cost without cutting quality, and we have a good chance. BUT… it sure isn’t easy.

  29. You know Lloyd, as hard working as the people in our industry are – possibly to a fault, I think you’ve hit it right. Perhaps if we work just as hard at being more effective by cutting unproductive expenses, marketing more and smarter, communicating internally and with customers better, and creating even better products as we do at shoveling, sweeping, scooping, unloading, loading, watering, moving…… (you get the point), then we have our priorities where they should be. It’s different for sure, but the result will be much better.

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