Don’t You Just Hate Those Big Boxes?

Don't You Just Hate Those Big Boxes?

It is clear to me that consumers are willing to open their wallets only when they feel we bring them good value and continually introduce new and interesting products that increase their chances of success. Whether consumers are shopping at big box stores or a local nursery with just one location, our goal should be to keep them buying more and make them more successful while bringing a new generation into the world of outdoor living.

Some members of the industry like to degrade the big boxes as less-than-legitimate purveyors of green goods. Some have not been able to see the evolution of the industry as a positive and would be happy if we returned to the days of limited distribution and little to no price competition. The big boxes admittedly have brought major changes to the industry that have changed the way we all do business. Let’s not forget they have also brought tremendous growth that would not have been conceivable or possible without them.

The three significant national retailers–Home Depot, Lowe’s and Walmart–have made unbelievable contributions to the growth of the industry through major store expansion that included new selling space for green goods. On the other hand, there has been little expansion among independent garden centers (IGC)–the bulk of which are single-location retailers.

Clearly, there are many opportunities for the IGC segment, some of whom are the greatest retailers in the country (i.e. Armstrong, Pike, Homestead, Lukas, Bordine’s), but the reality is the big boxes overwhelmingly outnumber and outsell the IGC group.

The Good & The Bad

In 2009, Home Depot, Lowe’s and Walmart had a combined 7,378 stores. Let’s say the average green goods selling space in those 7,378 stores averages 10,000 square feet per unit–a very conservative number that would equate to 73,780,000 square feet (1,696 acres) of selling space for this industry’s products. So why would we not love these guys?

The obvious answer is they brought significant change to the industry and created a much higher level of accountability that frankly did not exist prior to their entry. Now, let’s examine the changes that have occurred driven by the national retailers, divided into two categories: 1) changes the industry likes; and 2) changes the industry doesn’t like.

Among the changes the industry likes are that the big boxes increased the demand to unprecedented volumes along with increasing the vendor’s cash flow because they paid faster. Big boxes also made the industry have a better understanding of retail, created a closer consumer connection and caused a revolution in packaging.

Among the changes the industry doesn’t like: Big boxes demanded better prices, made their vendors accountable, made many decisions the grower used to make, demanded a more diverse product portfolio and insisted on accurate labeling, including UPC. Big boxes also instituted non-performance penalties, along with pay by scan, which changed the way greenhouses are managed.

Because of the changing requirements, cost of production became an industry concern. In the 1970s, Aart Van Wingerden understood the need for low-cost production and started selling greenhouses that could lead to lower costs. Many growers bought into his system and endorsed his philosophy. Van Wingerden is, in my mind, the greatest visionary the industry has ever seen. He understood how to satisfy the appetites of these national retailers while doing it profitably.

A Different Perspective

Today, these large retailers continue to provide us with a growth in retail space by adding new stores every year. We can almost be certain without looking at the numbers that 40 or 50 new garden centers will be built every year. So why should some industry members rant and rave about what they consider a negative impact? This industry would be at least 50 percent smaller without the impact of the national retailers, and the consumer would be paying twice as much for green goods.

We hear comments like “the plants at the big boxes are poor quality” or “the prices are too cheap, the grower can’t make money.” It is impossible to imagine a buyer telling a grower: “I don’t care what the plants look like, you just have to meet my price needs.”

The buyers aren’t judged on the buy; they are judged on the sell–gross margins same store sales and GMROI. If there are inferior plants in a big box garden center, it is the result of the vendor–not the retailer–and if the product quality causes a decrease in sales or an increase in discards, then that vendor will, in the long run, not be serving that retailer.

In the 2,000-plus stores I’ve visited, I have seen varying levels of product quality that is the result of vendor performance in production, distribution and merchandising. All retailers want to deliver value, and they don’t mean low prices coupled with bad merchandise. Understanding the role of the vendor is crucial to the success of any company choosing to do business with the large national retailers.

As we are clearly in the era of “retailer in charge,” some companies have figured it out and manage their business to satisfy their customers. And they do it very profitably. Although there are those who chide the national retailers, there is a sizable group that loves them because they are making a lot of money serving them.

Leave a Reply

4 comments on “Don’t You Just Hate Those Big Boxes?

  1. Jerry, you nailed it. Along with Don Blume’s interview and Alan Armatage’s insightful analysis on Carol Barton’s comments on brands I think this issue of GG was among the best ever on relating the state of the industry. I think it is a great thing that this industry gets together as often and as openly as they do to share what is going on. I am so pleased to have events like OFA and the Seeley conference and others where we can come together and share. Thank you all.

  2. Thank you for writing this article! As someone who works for a wholesale grower who sells mostly to big box stores, it’s nice to finally have someone talk positive about them instead of looking at them like they are some sort of plague. So much of the product sent into these stores straight from the grower is some of the best quality even compared to some of the independents. The difference is it is then the individual stores responsbility to care for the product. Thats why some stores look great and others trashy. Some management love their garden centers and others could care less they have one. That’s the difficulty for me, to see what I know is a good quality product not be watered in 100 degree water for days because someone just called in sick. It’s embarassing to us a grower as well to see our product look poorly in stores.

  3. Jerry, you nailed it. Along with Don Blume’s interview and Alan Armatage’s insightful analysis on Carol Barton’s comments on brands I think this issue of GG was among the best ever on relating the state of the industry. I think it is a great thing that this industry gets together as often and as openly as they do to share what is going on. I am so pleased to have events like OFA and the Seeley conference and others where we can come together and share. Thank you all.

  4. Thank you for writing this article! As someone who works for a wholesale grower who sells mostly to big box stores, it’s nice to finally have someone talk positive about them instead of looking at them like they are some sort of plague. So much of the product sent into these stores straight from the grower is some of the best quality even compared to some of the independents. The difference is it is then the individual stores responsbility to care for the product. Thats why some stores look great and others trashy. Some management love their garden centers and others could care less they have one. That’s the difficulty for me, to see what I know is a good quality product not be watered in 100 degree water for days because someone just called in sick. It’s embarassing to us a grower as well to see our product look poorly in stores.

More From Finance/Operations...

April 11, 2017

Jerry Halamuda of Color Spot Nurseries Retires

The co-founder of Color Spot Nurseries has retired, effective immediately, and has named a replacement.

Read More
Socius Webinar

March 30, 2017

Webinar to Offer Tips on Properly Managing Your Business for Growth

“How to Survive and Thrive: New Revenue Building Tools for Growers,” presented by Socius, takes place on April 6.

Read More

March 21, 2017

How Greenhouse Vegetable Growers Can Prepare for a Product Recall

The United Fresh Produce Association is holding a Recall Ready Workshop in April that is designed to help growers properly manage a recall, from liability to communications.

Read More
Latest Stories

April 11, 2017

Jerry Halamuda of Color Spot Nurseries Retires

The co-founder of Color Spot Nurseries has retired, effective immediately, and has named a replacement.

Read More
Socius Webinar

March 30, 2017

Webinar to Offer Tips on Properly Managing Your Busines…

“How to Survive and Thrive: New Revenue Building Tools for Growers,” presented by Socius, takes place on April 6.

Read More

March 21, 2017

How Greenhouse Vegetable Growers Can Prepare for a Prod…

The United Fresh Produce Association is holding a Recall Ready Workshop in April that is designed to help growers properly manage a recall, from liability to communications.

Read More

March 14, 2017

Expanded Customer Footprint, E-Commerce, Succession Key…

Costa Farms' acquisition of indoor foliage producer Delray Plants rocked the industry, but the story behind Delray Plants' sale is the same as for many growers struggling with succession planning. For Costa Farms, the strategic purchase expands its customer footprint and also fast tracks its foray into e-commerce.

Read More

March 10, 2017

Costa Farms Expands With Purchase of Indoor Houseplant …

Costa Farms annnounced March 10 that it has acquired Delray Plants, one of the leaders in the indoor houseplant industry. The two operations are committed to the same values, principles, and goals to grow the industry, and will fit well together to accomplish this, say Randy Gilde, CEO of Delray Plants, and Joche Smith, CEO of Costa Farms.

Read More
Ken and Deena Altman

March 7, 2017

Altman Plants in Escrow to Purchase EuroAmerican Propag…

Ken Altman, a co-owner of Altman Plants based in Vista, CA, has confirmed that the operation is currently in escrow to purchase EuroAmerican Propagators, the Bonsall, CA-based young plant and finished plant grower that filed Chapter 7 Bankruptcy on Jan. 23, 2017. Ken and Deena Altman are co-owners of Altman Plants and The Plug Connection, along with their son Matthew, who has recently bought into the family business. The 55 acres of land and all of the facilities on it, which were previously owned by Jerry Church, a partner in EuroAmerican Propagators, are part of the purchase agreement currently in escrow, Altman says. However, it would not be absorbed by Altman Plants, which in 2016 was number 3 on Greenhouse Grower’s Top 100 Growers list with more than 11 million square feet of environmentally controlled greenhouse production, 62 acres of shade production, and 400 acres of outdoor field production. Altman Plants’ property […]

Read More
EuroAmerican Propagators Greenhouses

February 14, 2017

Suppliers Comment on Plant Genetics’ Fate After EuroAme…

Since the operation’s bankruptcy filing on January 23, 2017, suppliers associated with EuroAmerican Propagators have updated Greenhouse Grower on what the operation’s bankruptcy means for them – and how it will impact grower customers.

Read More
Stephanie Whitehouse

January 17, 2017

Stephanie Whitehouse Takes Her Passion for Plants to Di…

Stephanie Whitehouse, who has spent the last seven years as the Sales and Marketing Director for Peace Tree Farm in Kintnersville, PA, recently joined Dickman Farms Greenhouse and Garden Center in Auburn, NY, as the company’s new Retail General Manager.

Read More
Laura Drotleff

December 6, 2016

Are You Driving Young Growers Away? [Opinion]

In a time when the industry is facing a critical shortage of both labor and skilled, educated growers, it's important that grower operations don't unwittingly turn candidates off to a career at their business or in the industry in general. Take a closer look at your hiring practices to ensure you are being inclusive and not breaking any laws.

Read More
Trays move on an overhead conveyor to the end of the production line, where workers carefully pack the cleaned, sized, graded, counted and sorted Calla tubers

November 29, 2016

Texas Judge Halts Overtime Rule; Here’s What It Means F…

According to Craig Regelbrugge at AmericanHort, the injunction against the overtime rule is welcome news for horticulture.

Read More
Craig Regelbrugge, senior vice president of AmericanHort - Feature image

October 25, 2016

Contribute To HRI To Help Honor Industry Advocate Craig…

In honor of Craig Regelbrugge's extraordinary contributions to the horticultural industry, AmericanHort and the Horticultural Research Initiative created a special HRI endowment fund in his name: "The Craig Regelbrugge - Advocates for Horticulture Fund."

Read More
Lucas Greenhouses Shipping

October 6, 2016

Greenhouse Shipping Costs Down, But Concerns Remain

Lower gas prices have led to lower shipping costs for some growers, but many continue to seek out ways to become more efficient.

Read More
Pansy ‘Cool Wave Blue Skies’ (Wave)

September 20, 2016

PanAmerican Seed Settles Alleged Trade Sanction Violati…

PanAmerican Seed, a division of Ball Horticultural Co., has been charged with violating trade sanctions to Iran over a number of years. According to a release from the U.S. Treasury department, PanAmerican Seed made 48 indirect sales of seeds to two Iranian distributors. The company shipped the seed to consignees based in countries in Europe and the Middle East. PanAmerican Seed’s customers then arranged for the re-exportation of the seeds to Iran. The release states that the Office of Foreign Assets Control (OFAC) determined PanAmerican Seed did not voluntarily self-disclose the alleged violations to OFAC, constituting an egregious case. “We believe that the settlement was extreme; however the alternative was to litigate with the U.S. government, which would take months, if not years,” says Todd Billings, Chief Financial Officer for Ball Horticultural Co. When asked what Ball Horticultural Co. has done to ensure that violations to trade sanctions do not […]

Read More
young-plants

September 20, 2016

The Top Young Plant Growers, And Four Critical Challeng…

In Greenhouse Grower’s 2016 Top Young Plant Growers Survey, growers discuss the latest challenges and opportunities in fulfillment, shipping, labor, and crop protection.

Read More
Cavicchio Greenhouses

September 6, 2016

Cavicchio Greenhouses Wins Inaugural Sustainability Awa…

The Sudbury, MA, growing operation sustains more than 250 acres of annuals, perennials, and nursery stock, with a number of practices to mitigate its impact on the environment.

Read More
Charlie Hall Feature Image

September 6, 2016

10 Insights From Charlie Hall’s Green Industry Economic…

With the uncertain current economic climate, Texas A&M economist Charlie Hall says now may be the perfect time to invest — as long as you do it smartly.

Read More
Penn State Plant Bud

August 23, 2016

AmericanHort Is Helping Plant Importers Adjust To New R…

A report from Craig Regelbrugge at AmericanHort says the government is implementing a streamlined system for imports, in which all required data will be submitted electronically through a single window.

Read More
Plug Connection Assortment

August 9, 2016

AmericanHort’s Plug And Cutting Conference Will Feature…

This year’s conference, which takes place Sept. 19-21 in Carlsbad, CA, features discussions on water, pest and disease control, and production inputs, as well as a biocontrols workshop and tour of local cuttings facilities.

Read More