Wojo’s Greenhouses Increased Nursery Department Profits 64 Percent By Eliminating End Of Season Clearances [10% Project]
Marking down plants at the end of the season is a common practice to clear out old inventory. But do these sales really generate more traffic and sales? Or can garden retailers get away with no discounts?
After reading about the 10% Project’s pricing study (conducted with the help of three regional garden center chains and Texas A&M and Michigan State Univeristy researchers), Joe Lutey, General Manager at Wojo’s Greenhouse, Ortonville, Mich., decided to see what would happen if it did not discount plants at the end of the spring season.
Here, Lutey answers our questions about how his experiment played out:
Q: Why did you decide to eliminate your fall clearance sale?
A: Our decision to eliminate a broad clearance sale was spurred by a presentation of the article ‘Low Prices Do Not
Sell More Plants’ from the August 2012 issue of Today’s Garden Center during an employee meeting. Our department managers all got on board with the idea and were prepared to test our own results.
Q: What had you done in the past when it came to fall clearance?
A: Our past sales practice was all tree and shrubs would be 25 percent off after Labor Day and then 50 percent in October until we closed. Our perennial department would run some variation of a multiple sale, “Buy three, get one free,” for example.
Q: What did you do differently?
A: Last fall, we resisted tradition of an across-the-board sale. Product that was low quality or that we simply had too much of would go on sale. This began as early as June on some product that we knew we needed to move quickly. We looked at what plants we knew we could overwinter to have a great product for spring were never marked down. Very few plants were sold at a discount.
Q: Did you get any feedback/pushback from customers?
A: The simple answer here is ‘Yes.’ Our guests still asked where and when the clearance sale would be. Many of the the questions came from those who only shop our sales and clearance items. It was a tough process to explain to them that was not our business model at that time. We did employee training on why we would not clear out product at a discount so that everyone was on the same page and our guests had a consistent answer. We were very pleased with the number of guests who would ask about upcoming sales, see how great our overall value was with product mix, warranty, plant quality and service and still buy their plants and happily pay full price.
Q: What were the results?
A: Results were fantastic. Gross sales were reduced by 12 percent but that is just a small part of the equation. Our gross discount dollar amount was reduced 78 percent, leaving our net sales up 10 percent and profit up 44 percent. We sold fewer plants, which cost us less and kept more of the money.
Q: Anything else you learned from this process? What will you do next year?
A: Not sure how the lack of a clearance would affect us, we kept our inventory very light going into September. We ran out of some key items too soon and missed sales out of fear of having to discount the product. We took great notes and set minimum inventory standards for key items to keep on hard throughout the fall. We are constantly working to improve our inventory control to ensure that we are not long on any single product that would require us to sell it at a discount while having enough to meet demand. The other focus this year leading into fall is plant maintenance and quality. Keeping plants looking like they are worth full price does require constant attention. This has made it much easier to help respond to the questions or occasional push back on the plants not being on sale. This upcoming fall at Wojo’s, look for great quality plants, a wide selection and smiling faces selling plants at full price.