Abandonment Or Revolution?

For more than 10 years, our industry has heard that we must change. The word “change” is probably used most often related to production or marketing our product.

The fact is that change is a continual process that happens whether we want it to or not. Many changes that occur are beyond our control. We must accept and adapt to them or reject them in order to do what is best for our businesses or ourselves.

We must remember that not all changes are for the better, and, in fact, many may drastically damage or destroy our businesses or our lives.

I’m a great fan of Tom Peters. I have most of his books, including “In Search of Excellence.” And I attended one of his seminars in Chicago in 1984.

Another book he wrote was “Tom Peters’ Seminar: Crazy Times Call for Crazy Organizations.” Peters wrote, “We must move beyond change and embrace nothing less than the literal abandonment of some of our practices that brought us to this point.” I believe we may have to revolutionize our businesses instead.

Reality Check

It is obvious we are in a depression, not only in the United States but in many other countries as well. Banks are failing. Businesses are going bankrupt. More than five million people are unemployed. There will certainly be a movement toward getting the most you can for the lowest cost.

For example, in Michigan, about 13 percent of the workforce is now unemployed. In the United States, the unemployment rate is about 8 percent. It should be obvious consumers will be looking to buy plants, both vegetables and flowers, at the lowest price possible.

Many retail stores that sell food have seen decreases in sales. Walmart, because it saves shoppers 15 percent on the typical cost of food, has still made a profit.
It has been documented that food purchases at all other supermarkets cost consumers $146 billion. At Walmart, consumers spent $124 billion for groceries for the same quantity of food. These figures are from Charles Fishman’s 2006 book, “The Walmart Effect.”

As the depression continues, I believe people who’ve lost 30 to 40 percent of their retirement income and those who are unemployed will seek ways to reduce costs. Food will still be essential, but many will start to grow their own vegetables again. This should create a great market for bedding plant growers.

Now is the time to help the consumer be frugal. We may even go back to the old Victory Gardens of the World War II era when people planted a garden to feed themselves and their families.

Resorting To The Past

We can help consumers grow their gardens with the right plants, accurate cultural information and even an outline of what the garden should look like to provide the food they need. Cornell University Cooperative Extension has a fine website on vegetables and how to grow them.

To help consumers be frugal, try offering them plants at a price that will allow them to produce vegetables at a savings of between 10 and 30 percent of what it would have cost to buy them at the supermarket.

I’ve seen one local garden center grow vegetable transplants in 32-cell flats, with eight packs of four plants each, for $10 to $12 a flat. The garden center allows customers to mix and match the plants in the flats so they get the vegetables they want to grow.

With this method, consumers could get 64 plants for less than $25, or they might buy four flats with 128 plants of their choice for $50 or less. The cost would be between 30 and 40 cents per plant.

The number of fruits per plant can vary, but, as an example, I went to the supermarket myself and paid $1 for one cucumber and $1.99 for one green pepper. With our plants and the proper knowledge, the consumer can reduce the cost of vegetables by about 50 percent.

I, however, believe you will see less demand for 1- or 2-gallon containers with one tomato plant or one pepper plant where the price is more than $5 per plant.
Part of Walmart’s secret to success is that it attracts customers with low prices. None of the top 15 items sold by Walmart sell for more than $3. This proves the small stuff matters.

Connecting Past & Present

There have been at least 10 economic crises since 1837. There is an excellent article about these events in the Feb. 16 edition of Newsweek. The most famous crisis, of course, was the Great Depression, which was precipitated by the 1929 stock market crash that wiped out $30 billion in five days. It took 10 years and World War II to recover from that crash.

The 1932 election ushered in the New Deal, the Works Progress Administration, Social Security, Fannie Mae, the Federal Deposit Insurance Corporation and the Securities and Exchange Commission. The government took control of the programs to put people to work.

We see the same approach by government today. The recently passed stimulus package and the previous bailout of financial institutions combined have more than $1.5 trillion of aid. Some banks and brokerage firms have gone bankrupt or have been sold to other institutions.

For a historical perspective, when the market panic of 1837 occurred, nearly half of the 850 banks in the United States failed, and we had seven years of high unemployment. This economic crisis was triggered by rampant land speculation and the collapse of a major bank.

I’m afraid the next few years will be difficult for everyone. I know a number of greenhouse businesses that are going or have already gone bankrupt. However, tough times will eventually pass. Strong growers will survive. Remember, life without friends, fellow growers and suppliers, and loyal customers is like a desert without an oasis.

Many of the older growers will remember Fred Gloeckner. In difficult times, when it was hard to get money from the banks to run the greenhouses, Gloeckner would come on sales calls and talk with the growers. He would help them decide what to grow and provide advice to help them out. He would say, “I’ll send you all the plants and seeds you need, and you can pay me when the plants are sold.”

For years after that, when times got better, many growers still bought from the Gloeckner Company because Fred was not just their supplier, but he was their bank and, most of all, their friend.

Take time now to know your friends. You may need to help them or they may need to help you. Set up a network of people who will help you survive the tough times.
And remember, the rich person is not the one with all the money, but rather the person who knows how to lead. I hope you have planned this season well and that you will prosper and stay healthy.    

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