Responding Positively when Big Boxes Arrive

Don’t worry about them, but definitely don’t ignore them either. When the big boxes come to your backyard it”s a battlefield. Treat it as such.
A new Dartmouth study confirms what we knew about Walmart, and as Inc. Magazine reports, what can be done to counter their effect: Walmart does kill: Click the cover for the story.

Recently I was traveling through an area north of Asheville, NC where a new Lowe’s and Walmart were preparing to open across the highway from each other. I stopped in a nearby independent garden center and just mentioned to the owner that I had noticed the new competition preparing to open. He curtly remarked that they wouldn’t be his competition and that they would help his business. Believe me I wish this would be true, however I don’t believe it is. It is not healthy to take competition for granted. Instead we should have a healthy fear (respect) for competition. In fact, there are specific counter-competitive measures that should be taken against new, or long-existing competitors. Most of the measures should be about fortifying your own position in the marketplace and ‘bulletproofing’ your customer base, which is the specific intent of our Client Advantage program.

So be truthful. Has the movement of competition to your immediate trading area had an impact on your transaction count? How have you responded with specific intent to counter the effect of big boxes,? Do you think you might have had better results if you had been more proactive?

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Don’t Miss The Phases of THIS Spring

There Has to be a Fire to Put Out Somewhere in Here!

I can tell that spring is coming quickly upon the readers of this blog. For the next several weeks we will focus on the here and just-ahead with brief postings of timely thoughts.

In my years enduring the spring surge of the horticulture business I’ve noticed the Phases of Spring that occur as we approach, endure, and emerge from this annual crisis. Regional differences put some of you deeper into spring than others, so adjust for your location.

There is a naturally occurring progression of events and associated emotions during the early spring to summer seasons. In the next few days I will briefly describe each of these in hopes that recognizing what you will be going through will help you counter some of the effects.

The three phases are:

1. Survival
2. Success
3. Significance

Phase I – Survival

Spring begins with the confident feeling you are ready, or the extreme fear that you are not. If you are still feeling confident just wait a few more days or maybe a couple of weeks for your dose of reality.

Hoping for a Rising Average?

Boiling The Frog,
originally uploaded by purpleslog.

Still Comfortable?

Like frogs in a pan of water with the temperature rising, our comfort with increasing sales revenue from an increase in average transaction dollars is not feeling so comfortable in recent years. Here’s why:

Why This Business Gets In Our Blood

My colleague, Judy Stapler is an accomplished market researcher, a consumer advocate, and a great addition to our team. Judy recently commented to me that she has observed how exceptionally passionate she has found the people in the horticulture industry to be about what we do (as compared to people working in other industries) . We do not need to get into a deep theological discussion, or raise an argument on the reason why people in horticulture become obsessed with horticulture. Can we just agree that we are?

Should you be a Publicity Hound?

© Milosluz | Dreamstime.com

Yes, it is uncomfortable tooting our own horn. Mom said not to brag and we are all maybe a little too good at not promoting ourselves. However, the art of shameless self-promotion doesn’t have to be shameful. Remember, mom also said to “stand up for yourself if you’ve got something to say.”

The passion in our industry is based on the real benefit of plants to people. There is a physiological need, as well as a financial benefit from what we do. Promoting what we do is not only important, it is essential. One of the saddest things I have witnessed in the past 30 years is the fact that our industry has silently allowed an entire generation of American people to grow up and become adults without much of the required knowledge or the desire and interest to garden.

Major Flaws Uncovered in Study Claiming Wal-Mart Has Not Harmed Small Business

The Hometown Advantage

The jounal titled Economic Inquiry reported August 30, 2007 published a paper titled HAS WAL-MART BURIED MOM AND POP?: The impact of Wal-Mart on self-employment and small establishments in the United States by Russell S. Sobel and Anderea M. Dean of West Virginia University..

Stories were printed about the research including a Q&A with Russell S. Sobel in US News & World Report.

Even more convincingly, the CATO Institute’s publication titled Regulation ran a cover story in its Spring 2008 edition, which subsequently gave Wal-Mart fodder to create a so-called “fact sheet” that was reportedly distributed in communities where it planned to open new stores.

Prevailing Wisdom?

Please pardon this rather long posting on the Christmas Economy of 2008 today. I think it is worth the time and space.

The majority of the news reports, ads, and word of mouth about shopping these days is all about the shopping deals and discounts. While this would qualify as “prevailing wisdom” in the greater retail world is it really so wise? And who is it wise for?

The need to feed shareholders and Wall Street is so great for public companies that they are often compelled to drive the business at all costs in order to bring in the quarter as expected, otherwise, sell orders and sell-off ensue. Their executives receive performance bonuses that reward them for very narrow and short-sighted outcomes. Many of them will come out on the other side in better shape than they deserve because they have superior retail locations and traffic. But the reactions of these retail giants saturate the news and get too much attention from the local-owned independent retailer who is looking for answers and direction.

Smaller privately held companies often fall victim to the aggressive price and discount schemes in the marketplace in two ways. First, there is an adjustment to inventory demand in response to the aggressive discounts of competitors. Second, lacking any different marketing disciplines the easy thing to do is to do what seemingly everyone else does and popular opinion around the water cooler and dining table demand. In other words, it takes a bold and disciplined approach to get through all this with some sense of accomplishment.

One thing for sure is that it will be foolish to approach Christmas ’09 as if things would be normal again. I’ve put together a list of five things to be thinking about Christmas now and in the future. But first, click here to read what the experts on Retail Wire are saying on both sides of the equation.

Here’s my list of five things to consider about retailing Christmas:

1. Commoditized trim-a-tree is d_ _ d. It’s ubiquitous and deeply discounted everywhere it is sold, and it is sold in too many places. The growth trend of these items may have peaked last year, although inventories peaked this year. The profit of handling these goods even at inflated regular prices that are aggressively discounted but still yield good margins is gone. You have to really pick through the non-plant lines to find any “keepers” to sell next year.

2. Consider storing traditional permanent Christmas products that you know you can sell during Christmas ’09 rather than selling out below cost. However, if your projected cash flow demands the money you may have to sell it out at any cost. Traditionally, we’d like to see zero inventory of all Christmas categories, but this is one year where it may make sense to hold onto some of it rather than sell below cost. You can be assured you’ll be paying more to replace it with new inventory for next year, unless you stock up at your competitors below your cost 80% off after Christmas sales.

3. Resist the urge to discount all the way to Christmas on items where your inventory is close to the amount you’ve sold in the past. Protect the value of your core product lines. You will normally put more margin dollars in the bank if you sell what you can at full retail, even if that means throwing the rest in the dumpster.

4. Get creative so you don’t run out of your “never outs” and erode your core customer base in the process instead of getting excited that you’re out and turning your hard earned regular and loyal customers away at a time when they need you most.

5. Review each week of the Christmas season now to determine what went well, what has not gone well, and what you might do to improve results week by week next year.

Click here to read an article about a Seattle retailer in another industry who took a different approach to Christmas. Be sure to give some thought to how you might use some of her thinking in your approach to Spring business in case the “prevailing wisdom” and faulty thinking that you’ll only have sales if you do the discounting is still around.

So with that let’s wrap up this Christmas season and settle in for a long-winter’s nap. What’s that you ask?

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.

Just another day on the way to Christmas

The Day Before Black Friday

You probably had to think a second to figure out when that was. I hope yours was ful-“filling” and not too stuffing. Many thanks to my friend – the Blogging Nurseryman, Trey Pitzenberger for coining this new phrase. We all have a lot to be thankful for in America, but it has gone too far when Thanksgiving has become just another shopping day on the way to Black Friday and then Christmas. You’d think the other eleven months of retailing didn’t count the way the chain retailers on the national scene play it up. Yes, Black Friday reportedly brought in 3% more revenue this year, but don’t you think possibly that more shoppers may have believed all the hype about the economy and spent more of what they are going to that day on deeply discounted goods rather than meter it out all season? Time will tell, and there are now only 25 shopping days left for us to find out.