State Of The Industry: A Search For Quality
Marketing consultant Jerry Montgomery visited hundreds of garden centers last year and shared his findings on plant size, color and more with us.
December 17, 2008
In ornamental floriculture, we have learned how to manipulate plant growth through scientific research and have the ability to produce great plants at reasonable costs. We use short days, long days, supplement lighting, soil testing, water testing, tissue culture, biotechnology and plant growth regulators (PGRs), just to mention a few of the tools available to produce superior plants.
The purpose of all the available tools for plant production is to provide products that will ensure the consumer can purchase plants they can be successful with and the plant manufacturers can control their cost of production. It seems as though in some cases, these tools are only used for the benefit of the manufacturer with little concern for the results the consumer might achieve.
As an avid gardener, I have purchased plants that looked good on the retail shelf, planted them and then found out they would not grow. They didn't die; they just sat there in a sort of dormant stage for months, obviously from an overdose of PGRs. After this occurs, you become skeptical about buying plants from that retailer, and in my case, by identifying the manufacturer staying away from any plants they offer in the future.
For some reason, many businesses in the industry feel exempt from normal expectations placed on other consumer product industries, believing manufacturing plants gave them special dispensation from normal business rules. We are not endowed by a higher power because we produce some of the most beautiful and compelling products.
Over nine months, visiting 900 retail garden centers in 20 markets, it is obvious we are not always stocking the retail shelves with really good plant products. In some cases, we have seen products that are embarrassingly poor. We have also observed plants that looked great in the greenhouse but have degraded somewhere along the distribution channel.
The stores that we consistently rated as top performers did many of the same things well:
In most cases, top-rated stores always exhibited plants that were the right size for the container they were produced in. Obviously, the grower allocated enough production space and programmed enough crop time. They may have fooled Mother Nature but were not trying to fool the consumer. These manufacturers were trying to entice the consumer to buy more plants and create the opportunity for successful gardening. Not a bad idea.
For many years, the industry has always embraced the "Color Sells" concept, but it seems in the past several years, the amount of color we see at retail has waned. We have lost a lot of the product's visual impact that has minimized the potential for high levels of impulse buying.
Packaging and Labeling
Packaging adds perceived value both to the retailer and the consumer. If you compare the price point of a 10-inch plastic hanging basket versus an 11-inch fiber basket using basic seed annuals, the retail price point is usually $3 to $5 higher for the fiber basket. The grower gets $2 to $3.50 more, and the retailer increases their sales revenue and has a happy consumer.
In watching the two most significant branded programs, Proven Winners and Wave, it is clear that those who use their branded packaging have higher sell-through rates than those who opt for generic packaging.
We often see consumers reading labels while shopping. Unfortunately, some labels are shoved so far down into the growing media they are not visible, and some labels are simply so small there is not much information provided. Good examples of labels that are visible and provide information are Proven Winners and Lowe's Garden Club Select. Both have large labels with a lot of information and a website designation.
It has become increasingly apparent that retailers who are better merchandisers sell more plants per store and have a steady increase in same-store sales. Merchandising is a process of having clean stores with organized displays, watering, plant grooming, signage and consistent plan-a-grams. Those who are the best merchandisers have quality people who are well trained and managed. They listen to their merchandisers to gain critical insight into the activities and issues at each store. Good merchandisers help the customer make the right selection and sell them complementary items so their shopping experience is pleasant and motivates them to return. Well-managed merchandising is a sustainable competitive advantage, or it can be a disadvantage if not well designed, managed and executed.
Why does a 10-inch basic seed grown basket retail for $6.43 in one market and $10.99 in another at the same retailer? Likewise, why does a 10-inch premium basket retail for $9.98 in one market versus $17.97 in another?
From my view, the low-priced markets were vibrant growing areas not economically depressed. Could it be those who are providing better merchandising and better quality plants that drive increased same-store sales are getting paid better prices?
It seems as though the higher performing manufacturers are able to establish a different price because they don't fear discussing prices with the national retailers. If a manufacturer invests in product quality and merchandising - consequently driving up sales for the retailer - then the opportunity to garner better prices is available.
New products present the greatest opportunity for improved pricing and higher margins, and these new products don't necessarily have to be something radical. Sometimes, all you have to do is repackage into a different format, put a current SKU into a recyclable or biodegradable container or package vegetative items into a multiple unit of sale. Not having new products allows the buyers to commoditize your offer.
For spring of 2009, we see a huge opportunity in the vegetables category as consumers face huge price increases for food and stagnant or declining incomes. The cost of energy is taking a larger portion of their disposable income so we believe more consumers will be motivated to grow vegetables and herbs.
As an industry, we are struggling to grow our consumer sales, some of our largest customers have declining same-store sales, and the consumer is under more economic pressure than at anytime in recent history. Now is the time to do everything we can to provide products that ensure consumer success. Provide retailers with products that say "wow," making it hard for the consumer to pass up.
Currently, there are growers supplying the national retailers who are experiencing significant increases in same-store sales by addressing and executing on the above-mentioned issues. If we put products in front of the consumers that are the right size, have enough color to attract their attention and do whatever we can to ensure a pleasant shopping experience, the demand for floriculture products will grow at an increasing rate.
Jerry Montgomery is a veteran of the floriculture industry who has worked for distributor companies, breeders and large growers with a focus on sales and marketing. As an industry consultant, Montgomery works for large growers, distributors and breeder/producers. His focus is to understand the market dynamics from breeder to consumer through intense retail travel, visiting about 2,700 stores since 2008. You can eMail him at email@example.com.