Summerwinds Breaks The Price Barrier
In 2012, Summerwinds volunteered to work with Greenhouse Grower RETAILING’S 10% Project to test how consumers react to higher and lower plant pricing. The retailer allowed our team (Editor Carol Miller, Michigan State University’s Dr. Bridget Behe, Dr. Charlie Hall, and his Texas A&M colleague Dr. Marco Palma) to take select plants and lower and raise prices over three weeks at its Northern California stores.
Four years later, we checked in with Brian Hjelmstad, Summerwinds’ Vice President, Buying & Merchandising, to see what changes Summerwinds has made as a result.
Q. How did participating in the 10% Project change how Summerwinds prices plants?
A. It opened the eyes to the buyers and managers and taught them to not to get stuck on the margin percent. We all work on a patricular margin per category, and that can create a perception we can only get a certain amount. Depending on the marketing of that breeder, whether it was a Burpee product or Sunset Collection, they realized it has a higher perceived value.
Displaying stuff and marketing plays a big part in the item being sold. We came away from it knowing we undersold some of our product. So we’ve looked at a lot of product differently.
Q. How are you changing prices?
A. We use price breaking points.
Q. In what way?
A. If we had something that sold at $19.99, the next breaking point is $24.99, and they’d go to that instead of $29.99. The reverse can happen, too. If the product comes in, and we realize it was a bad buy, it’ll go down. Because of what we learned, we did a lot more of finding those breaking points.
Q. Was that the only change that came out of the study?
A. What we also realized since we did this test in 2012 is that we were able to change price in season. We usually set prices for the year in the fall before. We have now adopted
that it’s OK to do a price change in the middle of the season.
Q. How does that work?
A. OK, We’re going into the fall. I’m looking at what we have booked in our computer. We’re coming into mums, cyclamen, camillias… Now might be a time to take a price change instead of waiting until the beginning of the year.
So instead of annually, we’re doing it monthly, though only by need and category. It’s not everything. It could be organic vegetables, it could be jumbo packs, it could be 6-inch categories. We’re not changing the price on the entire store monthly. As long as we give growers enough lead time, they are able to adjust [the price tag]. It doesn’t take them long to do it. Also, our prepriced tags usually come into play on the bigger stuff. The small stuff isn’t usually prepriced.
As mums come in, we still have them booked at a certain price. Going into the season, we may look at it, knowing there has been some pressure on labor. The growers are going to start taking price increases. We’re hedging that, instead of playing catch up next year.
Q. So all your main growers are prepricing plants?
A. There are some in the Arizona market who don’t have computers. We have our own system, so we do it ourselves.
Q. Do you ever reduce prices after the product gets in the store? Say, if plants arrive and there are some that are larger and fuller than the others, so do you ever increase prices in that situation?
We don’t do it in the middle of the season, unless it’s an obscure category or hanging basket. The prodcut mix in baskets changes rapidly. You start with calibrachoa, then fill baskets with upgraded stuff. So we’ll change the price on those.
A lot of growers will put them in an urn instead, we’ll get out and change the price on these. That would be an in season change.
But if it’s jumbo packs, we don’t raise the price on those.
Q. Any further thoughts?
A. We learn a lot from grocery stores. If they can do have different prices on the same thing, so can we. So a 1-gallon pot versus a 6-inch pot, you can have the same plant, and so get more money. But only if it looks fuller and better. It depends on the grower.