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Independents Can Compete Successfully

Marketing: Independents Can Compete Successfully with Mass Merchandisers

Bedding plants sales are a major component of the sales at the big box stores.
Bedding plants sales are a major component of the sales at the big box stores.

The entire retail industry is in a transition mode as the world experiences the ever-expanding reign of mass merchandisers, often referred to as chain stores. The independent lawn and garden retailer now must compete with Home Depot, Kmart, Wal-Mart, and Lowe’s, among others, for the home gardeners demand for plants and related accessories. When the “big box” stores first appeared on the retail scene in the 1980’s many independents felt that profits would be drastically reduced. However in retailing studies there have been numerous surveys that show just the opposite.

In small towns where Wal-Mart first located, over-all general merchandise sales increased strongly (1). Businesses that sold goods or services other than what Wal-Mart sold had higher sales due to the “spillover” effect of the additional traffic that Wal-Mart attracted. If a store tried to sell exactly the same product as Wal-Mart, without lowering the price, total sales at the independent were reduced.

Determining how to compete against mass merchandisers is probably the most important challenge that independent garden center retailers face. By examining how the prospering independents continue to do well year after year, in spite of the tremendous competition, new comers to the world of retail plants sales can design their future operations to be successful as well.

Chain Stores Will Always Compete Best on Price

Independents often find it is very hard to compete on price alone for the sale of the more common annuals and certain perennials.
Independents often find it is very hard to compete on price alone for the sale of the more common annuals and certain perennials.

The big box chains such as Lowe’s and Home Depot were designed as large hardware stores catering to the do-it-yourself shoppers. With time they added garden departments and have since flourished to serve customers who are looking for finished plants that they can arrange in their yards in a simplistic fashion, without further input other than basic watering. Bedding plants and a relatively narrow selection of perennials, which have a proven national sales record, are the most commonly stocked and sold items. Shoppers select these types of plants based on price. Plants are displayed on Isles on a grid structure, as is the case for food at a supermarket, to speed the passage of shopping carts. Many of the shoppers at chain stores don’t consider themselves true gardeners. They buy on impulse, and readily admit that they are comparing prices between other chain stores. Unlike the shopper at a retail garden center they are not looking to purchase finished “lifestyle statements”, but are rather are selecting plants so that they can make their own design (1).

Due to the volume purchasing power that chain stores possess, independents will simply not be able to compete on price alone, for the same identical product. If an independent does carry a similar product in order to show the consumer that the store has a full line of plants, generally a price increase of no more than 10–20% has been found the limit in terms of buyer’s acceptance (2). Shoppers usually know the prices of products they purchase frequently or ones they have seen commonly advertised in newspapers and on the radio. However, they don’t know the price of “blind” items that are infrequently purchased. Garden center retailers should consider displaying seasonal, frequently purchased products, near the store front, while keeping the more lucrative “blind” items at the back of the store.

Selection Strategies

This nice display of Golden Threadleaf Falsecypress (Chamaecyparis pisifera “Filifera Aurea’) has plants of different sizes all arranged in an attractive array.
This nice display of Golden Threadleaf Falsecypress (Chamaecyparis pisifera “Filifera Aurea’) has plants of different sizes all arranged in an attractive array.

Successful retail garden center operators have found that their customers thrive on an excellent selection of plants and products, all of which have colorful labels with prices clearly marked. Shoppers who consider themselves true gardeners thrive on themed displays of quality plants, in all sorts of different sizes and species. Successful independents avoid carrying the same product as would be stocked by a mass merchandiser. The full service retail garden center will carry the complete line of a particular item, weather it be plants of hard-goods. Shoppers will spend more time looking at a display that inspires them to explore all the different cultivars of particular plant. Many of them will actually bring their plant identification books along with themselves to the garden center to seek out a particular plant for their garden! Most certainly consider stocking much larger plant sizes as would be carried by a chain store. The more affluent buyer has the money to spend on the more mature plants. The return on investment on larger plants is many times over that of traditional 1-5 gallon container plant as sold by chain hardware stores. Most independents will readily re-pot container stock into the next larger post size with understanding that more mature plants bring increasing profit levels as they grow larger. Be sure to offer home delivery for an appropriate charge based on mileage for this larger plant material.

Niche Categories

Conversely, those retailers that are not interested in every different plant category will greatly enjoy the narrowed niche that they can create. It is not uncommon to find specialty independents that cater to the likes of purveyors of roses, dwarf conifers, Japanese maples, drought tolerant plants, native plants, or indoor plants. These types of operations are often highly intensive, featuring in-store classes with notable speakers, maintain colorful web sites, and are often highly featured in local media stories. Such an operation does not require the extensive land holdings required for a full service nursery. With an eclectic array of high quality plants specialty independents can be some the most lucrative in the retail trade. The Oregon Association has developed “The Guide to Oregon’s Retail Nurseries” in a three-color foldable map that shows the locations of all OAN-member retail nurseries in Oregon. A total of 139 retail locations are listed in 70 communities throughout the state. Nursery name, address, phone number and web site are listed. For further information turn to: http://www.oan.org/resources/resources1.html

Quality Backed by a Guarantee

This high end independent garden center has an extensive array of plants, all clearly situated by use. The extensive use of signage is greatly appreciated by the serious gardener.
This high end independent garden center has an extensive array of plants, all clearly situated by use. The extensive use of signage is greatly appreciated by the serious gardener.

Only the best plant stock and hard-goods should be carried at an independent. It is not uncommon to find mass merchandisers who stock nationally purchased plant material that is poorly adapted to the area in which a particular store is located. Successful independents state that today’s chain store buyer is tomorrow’s garden center customer! Customers are willing to spend more on both actual as well as perceived quality. As in much of the retail world distinctive merchandise sells itself if it has been tastefully advertised and displayed. Shoppers are looking for unique one-off items that reflect their individual tastes. Under this scenario, shopping can become a most enjoyable experience! The retailer does not have to purchase through an independent broker, thus further increasing the product mark-up, as well as the ability to cater to local customer needs.

The continual use of deep discounts that the chains use to lure customers is generally not used but once a year by independents. Any business that has to survive on continual sales is generally competing against other marketers for impulse items, with inherently lower perceived quality.

By offering a nominally price warranty, retailers can offer customers the peace of mind that will they be compensated for acts of nature that have impacted their purchase. Some retailers actually find that they can make money by selling extended warranties.

Personal Service at its Best

Astute retailers know that true gardeners are looking for well trained staff that have a good grasp of plant characteristics. In a detailed survey of New England homeowners (3) 89% of respondent had at least a moderate confidence in the information obtained from independent garden centers and nurseries, as opposed to only a 24% confidence level in information provided by a staff member of the garden department of a large chain store. Customer confidence was rated especially high for the purchase of longer lived trees and shrubs.

Store personnel at independents need to have pleasant dispositions towards customers. A friendly caring attitude is considered one of the best customer retention strategies for independent retailers. If staff are classified as “associates” (4) they tend to take a greater pride in their work, thus helping form a team approach to store sales.

In-store service can be supplemented by having a having a web site for the store so that shoppers can find answers to their questions before they even visit the establishment.

United Kingdom Retailers Set a World Example

Home gardeners on British Isles have a long history of being some of the world’s most devoted gardeners. Retailers are represented by industry-lead group known as The Horticultural Trades Association (http://www.the-hta.org.uk/), which for over 100 years, has been a voice for the industry in all phases of lawn, garden, and commercial nursery industry. In order to recognize some of the best retailers in the industry, the Trade Association established a Garden Centre Association (http://www.gca.org.uk/) in 1986 to recognize operators that met the following criteria:

  • Willingness to share share information on all aspects of their operation with other members from senior management to the shop floor,
  • Strives to achieve excellence in customer service, plant quality and reliability,
  • All member garden centres are subject to annual inspections by an independent auditor and must satisfy stringent standards to remain in membership,
  • Representatives of an independent monitoring company visit member garden centers to assess the quality of facilities for the public and customer greeting standards.

Besides their superlative customer service, U.K. retailers find that carrying a full compliment of “add-on” items other than plants can markedly improve their total return. English garden center operators are known for their extensive holdings of patio furniture, ceramic pottery, kitchen giftware, specialty clothing, patio bricks and stones, bird feeders, and aquatic items including Japanese koi to help shoppers meet their lifestyle approach to both outdoor, as well as indoor living. Combined with a café which offers light snacks and specialty drinks these independents have taken the concept of a destination garden center to its fullest extent. The Garden Centre Association has published book listing all its members (5).

In Summary

Smart retailers will generally find that having a mass merchandiser in their neighborhood actually improves their bottom line. By combing a healthy, fresh, and well-maintained group of distinctive plants, clearly labeled and signed, serviced by knowledgeable and friendly staff of associates, prospective garden center retailers should be able to establish their niche as well.

References

  1. The impact of Wal-Mart stores on retail trade areas. Kenneth Stone, Iowa State University, March 1992, VNA Newsletter.
  2. Battling the big boys. July, 1992. Carole Turner. American Nurseryman, p. 29-40.
  3. Consumer product and service preferences related to landscape retailing. 2001. Mark Brand and Robert Leonard. HortScience 36(6); 1111-1116.
  4. The role of independent garden centers versus the mass merchandiser. 1996. John Stanley. The Digger, Oregon Association of Nurserymen, February, 1996, p. 31-32.
  5. Garden Centres and Gardens of Great Britian. 1999. Barbara Vesey. Travel Publishing Limited, 7a Apollo House, Calleva Park, Aldermaston, Berks, RG7 8TN.