Pricing Annuals More Profitably: Advice From Dambly’s Garden Center And Four Seasons Greenhouse
Think about the spice rack at your local grocery store. All the spices are in bottles that are the same shape and size and similarly labeled. However, the retail price of basil and saffron are not the same and the wholesale cost is very different.
Imagine if you had to order the spices and did not individually track them. That is what is happening in many annual departments across the country.
Garden centers do not often track annuals individually and they are losing gross margin dollars and sales as a result. “That’s how Mom and Dad did it, and it is easy for cashiers and customers so why change?” is the common thought.
Some garden centers, however, are breaking the old habit and have started tracking individual annuals in their stores. They have overcome some of the stumbling blocks and challenges that Mom and Dad were afraid of — with positive results.
Extra Effort Pays With Profits
Five years ago, Harold Dambly of Dambly’s Garden Center in Berlin, N.J., started to track annuals individually.
“In spring we track all varieties of 4- and 6-inch annuals as well as hanging baskets. We use broad price points so that, while all the varieties are tracked separately, they don’t necessarily all have different prices. That keeps it simple for customers,” Dambly says.
The garden center’s POS system has given them the power to do this and more. Dambly’s buys in its plant stock, so tracking individual annuals is not a simple task. But the rewards are worth it, he says.
“We use a few different methods to apply UPCs. The most convenient is when growers pre-ticket with individual UPCs. It speeds up the processing time at the store,” Dambly says.
Chef Jeff’s and Garden Elements are two collections from local growers that are pre-ticketed with individual UPCs, making them ready to go to the sales floor right off the truck.
Dambly’s seeks out the best growers and never deviates from having top quality plants, even if extra labor is needed to get the annuals onto the sales floor. That means ordering from some growers that do not provide any labeling with prices or individual UPCs. Dambly’s must process these before they go to the sales floor.
Dambly says getting annuals to the sales floor as quickly as possible in the spring is critical, and his POS system helps make that happen. POS history reports assist in placing accurate spring preorders. When the final confirmations are received from growers, labels are printed long before the orders arrive. Some labels aren’t used because of grower substitutions, but having them preprinted helps get the plants out on the sales floor quickly.
“The cost of any unused tags is small compared to the potential loss of revenue of plants not on the sales floor quickly,” Dambly says.
Inventory Benefits Of Tracking
The garden center’s weekly reorder system has also changed. The process of walking around with a clipboard and availabilities has been replaced with several reports from the POS system. This process could not have changed if they did not track annuals individually.
“The process is more efficient now because undivided attention is given to ordering and there are no interruptions by staff or customers,” Dambly says.
In addition to the commitment to tagging annuals individually, Dambly’s is also committed to making sure the inventory numbers are right. Receiving, mark outs and accurate tagging of annuals is critical. A gross margin percent from POS that is out of line with expectations can help identify errors in receiving or tagging as well as large sales to landscapers, any of which can affect the accuracy of the ordering.
The most dramatic improvements with tracking individual items at Dambly’s have been in the categories of organic and conventionally grown herbs and vegetables. The biggest win has been in the ordering process.
These categories often had missed sales opportunities with out-of-stocks on a variety that a customer wanted. Tracking influenced preorders and just-in-time reorders so specific varieties of tomatoes, for example, are now available when customers want them. This improves the categories’ turns and the gross margin dollars for the garden center.
Individual Tracking Eliminates Assumptions
Four Seasons Greenhouse and Nursery is a grower-retailer in Dolores, Colo. Like Dambly’s Garden Center, co-owner Gail Vanik has been tracking individual annuals for a few years. Four Seasons grows most of what it sells with a only small portion coming from a nearby grower.
Vanik started tracking individual annuals four years ago and after a year, refined and expanded the process to include tracking of six-pack varieties. While the price point of the six-packs is the same, she can tell what’s selling and identify trends with POS reports, which help in scheduling greenhouse production.
As a grower with many sizes, shapes and colors of containers available, Four Seasons Greenhouse has established different price points with signature containers. This makes it easier for customers to identify prices when shopping. Vanik never uses formulas when setting price points, focusing instead on gross margin percentages and gross margin dollars generated by items. Setting price points requires that she know the cost of an item and that she be committed to keeping the cost of items accurate in the POS system, updating things as frequently as necessary.
Collecting and analyzing the information has led to increased profits. Geraniums, which were $4.99 in a 4½-inch container, are now $5.99 in a 5½-inch container. The soil and container costs did increase, but not at the same ratio as the price increase, creating more gross margin dollars. There was no significant price resistance because staff educated consumers that the better quality plant they received was the result of a larger pot.
The biggest surprise for Vanik was the staff’s perception of what was selling well.
“Our employees thought we sold more 12-inch baskets when looking at the space that they occupied, but in fact, we sold more 10-inch baskets. They were also sure that we sold more 3½-inch tomato plants, but in reality, the six-packs of tomatoes outsold them by a margin of two-to-one,” Vanik says.
Inaccurate information can negatively affect planning and ordering, which trickles down to sales and gross margin. With the individual tracking and the POS system, profitable business decisions can be made with accurate information, as Four Seasons can attest.
More Data Allows Value Pricing
Both Dambly’s and Four Seasons use value pricing to increase margin dollars and profits. Their primary method is using a price differential with products that may not be readily available for price comparisons in the big box stores.
For example, working with Centerton Nurseries in Bridgeton, N.J., the Chef Jeff’s collection helps fill the edibles supply for Dambly’s. The brand is not available in the box stores, so the garden center can value price it without fear of being priced shopped.
However, Dambly knows the exclusivity of Chef Jeff’s may come to an end and is always on the lookout for reputable suppliers with great product.
Using price differential for products whose prices are unknown and hard to compare is the easiest way to increase gross margin dollars. This does involve a commitment to the plant or the collection of plants. You need to learn about the plants and the other retail establishments that are selling it, commit to using all methods available to you to market the plants including social media, advertising, press releases and the POP that is available and then commit to order in sufficient quantities.
It’s OK To Start Small
Too much information can become overwhelming, and you can lose money by spending valuable time on insignificant items that will not have substantial financial rewards. Start tracking where it will produce the most return on your investment. Maybe it is herbs and vegetables or hanging baskets. Perhaps it’s the items like your best-sellers that you always seem to be running out of. Or maybe it’s the unsalable colors or varieties that end up deeply discounted in order to move them.
Take advantage of the many different plant collections and introductions available such as HGTV HOME Plant collection, Hort Couture, Chef Jeff’s and Garden Elements to name a few. Many come with branded labels, and the items have their own individual UPC codes that can be added easily to a POS system for tracking.
If you have not yet made the jump in technology to a POS system, ask your vendors if they keep track of your orders. A simple spreadsheet can also do the trick if that’s the only option for organizing and evaluating your data.
Of course, you must keep business fundamentals in mind, like access and flow when looking at what strategies to implement for individually tracking annuals. If your parking lot becomes gridlocked on busy days now, consider making investments to improve your facility and the customer’s experience. These may include investing in a POS system, using touch screens, purchasing extra registers and changing procedures for receiving or the floor plan of your store. Consider all options and technology available to you in order to get the data to make decisions and adopt buying strategies that will improve gross margin dollars. In return, the improvements will help pay for the investment and return more profit to you.