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Use and Enjoy, or Own and Enjoy?

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Guest Blogger

Judy Stapler, Qualitative Insights

“Times have changed. Today people are more interested in what they will use and enjoy than they are in what they will own and enjoy.” Judy Stapler 11/08

You don’t need me to tell you how stressful it has become to live in this great country. While we serve a broad range of consumers, disposable income is becoming a thing of the past and every purchase can now be a major decision for some of them. Gas up the car? Buy food? Keep the home at a comfortable 70°– 72° or a more efficient 65°? Buy the art object or new car we’ve admired for months (now at a greatly reduced price) or decide to spend for something you can actually use. The net effect of this is that consumers at all income levels make decisions more purposefully. It is my opinion that come spring, we will see more people choose to buy those items they perceive that they actually need and can use and enjoy immediately rather than those they simply look at and enjoy owning over time.

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Losing the Chase – My Point Exactly

If we’re going to make much money in this business, we’d better figure out how to make money from people who have the disposable income to buy more. A chart showing income distribution in America in 2007 compared to 1968 shows clearly that the distribution of wealth has changed, and that has changed everything. Follow this link to see Pew Research reported in the Columbus Dispatch showing the median household income of both years.

After paying housing costs, living expenses, fuel, and taxes there just isn’t a lot left from a household income of $75,000 or less. Like frogs in pots of water with the temperature rising we’ve become accustomed to marketing and selling to people who like buying from us without regard to their ability to continue to pay as their disposable income shrinks over time. Maybe what really changed was the value placed on our products as compared to the way our customers value luxury label cars, SUV’s and suburban four bedroom McMansions with spa baths and gourmet kitchens. There’s nothing wrong with selling to middle income folks at all, however we may have been short-sighted. Today, only those who earn truly luxury-level incomes are in a position that they don’t have to choose between a tank of gas, a runaway adjustable rate mortgage, rising food costs, and our wonderful life-enhancing horticultural goods and services. In my view our industry has not been very competitive at marketing our luxury attributes.

Chasing the middle of America these days is like Wiley Coyote chasing the elusive ’69 Roadrunner. You’re about as likely to get a load of coal dumped on you as you are to ever catch them. It’s going to take a different mindset, a different understanding of the local market, and a different approach to retailing and providing services to pursue the much larger pool of available discretionary disposable dollars only available from people with high incomes. And of course, if the number of high-income households in your trading area is limited you may have to live within those means, whatever that will mean in your situation. There has been and always will be a limit to how much disposable income is available in any market. If you over-built or have under-invested to reach the people with high income that you need to reach the time to adjust the financial demands of your business accordingly is here. Going forward, there is in my opinion no way locally owned garden centers can effectively compete with the big-boxes on their terms and with the expectations of their core customers earning less than a LOT of money.

Having been around a while I know that some folks are thinking that if they can grow the product themselves they can compete with the chains on price and still be profitable. There are two basic problems with this theory. One is that the high-income customers will pay less than they would have, and the other is that there is no return on the extra effort or investment from doing so. Retail-growers who are willing to sweat, worry, risk, and invest capital for no return will have to just get real and say so.

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