Pricing And The Supply Chain
Pohmer, Miller and Hall discuss the hot-button issues of big boxes versus independents and competitive pricing.
July 14, 2010
Stan Pohmer of the Pohmer Consulting Group, Texas A&M's Charlie Hall and Ball's Marvin Miller held three sessions at Short Course on Soul Searching & Marketing In Today's Challenging Marketplace, getting into some of the big picture issues and industry philosophy going forward. Here are some of their thoughts:
Contract growing. The expansion boom of box stores and mass merchandisers of the late 1990s has slowed down considerably, says Pohmer. Sweet real estate spots are taken, so these stores are now focusing on organic growth -- making existing stores more successful and profitable. They don't need the number of suppliers they once did, but they need a robust product offering, leading to the rise of the contract grower.
Competitive pricing and marketing. The differences between big box and independent garden centers has changed over the last few years, and it's worth taking a look at the differences. Miller says that in the markets he's seen, the independent garden centers are underpricing the box stores, but not on purpose. In many cases, he says, the independent stores simply haven't watched the box stores to see how much they've increased their prices. Miller also referred to a big box grower who said that if while merchandising a store a customer asks for a plant they don't carry, his in-store employees will direct the customer to the independent garden center down the street.
And the mass merchandisers are using social media more then independents, driving up the average visit rate per month to box stores.
"They have full-time people doing Facebook and Twitter," Miller says. "People may go back to the store if they see that red impatiens are in."
Market share vs. market growth. Overall, Pohmer sees the retailers in the market competing with each other to steal market share from each other instead of reaching for new customers.
"The Home Depot is competing directly with Lowe's," he says. "They're not generating incremental business. It's a tradeoff. That approach is one of the reasons our market has slowed down. When you do that, the pie doesn't grow."
Sara Tambascio is senior online editor of Greenhouse Grower. You can eMail her at email@example.com or follower her on Twitter @Sara_GG_TGC.