How Much is a Square Foot Worth in Your Garden Centre?
Written by John Stanley
According to retailers in the U.S., the average yearly sales per square
foot should be $340. Some businesses obviously exceed this, working on
an average that exceeds $700 a square foot. To convert this, it means
that you should be achieving $2,500 to $6,500 per square metre.
How Much is a Square Foot Worth in Your Garden Centre?
According to retailers in the U.S., the average yearly sales per square foot should be $340. Some businesses obviously exceed this, working on an average that exceeds $700 a square foot. To convert this, it means that you should be achieving $2,500 to $6,500 per square metre.
My challenge to you is, are you average or are you exceeding the retail benchmark figure? Beyond that, do you know how each category is actually performing in your business?
Many garden centres benchmark average sales per customer, stock turn and gross profit and these are valuable performance measures, but benchmark sales per square foot is also a valuable business tool. Benchmarking allows you to see how your business compares to other businesses in retailing, and allows you to compare on a “like by like” basis with other garden centres, as well as forcing you to ask questions on how you can improve your own business.
In the United Kingdom, for example, the Garden Centre Association carries out a monthly audit between its members to allow companies to monitor their business and often ask themselves the questions they would not normally otherwise ask.
Traditionally, retailers have asked a global question, “what are my overall figures per square foot?” This is fine, but category performance figures are far more valuable.
Where do you start?
The key is to compare “like with like.” When I work with retailers I get them only to analyze retail space. Do not include parking lots, offices, storerooms or any other ancillary areas.
When it comes to pathways I get them to divide the pathways proportionally between the selected categories to ensure that we can compare as near as possible with a like by like situation in a similar garden centre.
If you have never benchmarked your garden centre in this way, I suggest you start using a simple approach using the following categories:
1. Garden care (Chemicals)
2. Growing media (Bagged soils, composts, mulches etc.)
3. Seeds and bulbs
4. Indoor living
5. Outdoor plant sales area
6. Undercover plant sales area
8. Restaurant/coffee shop
I realize that not all garden centres will have these categories, but this will indicate your performance levels.
Calculate the total sales for a 12-month period within the category and divide this into the square footage available for the category. The higher your figure, the better you are performing.
What does this tell us?
Let me give you an example. The figures are actual figures. For confidentiality reasons I will not reveal the name or location of the two businesses, but both are profitable garden centres in the same catchment area.
|| Garden Centre A
|| Garden Centre B
| Garden care
| Growing media
| Indoor living
| Outdoor plant sales
| Under cover plant sales
I must stress, these are genuine figures and compared with the retail high street benchmark of $3,000, we have a long way to go.
Compared to “Main Street” $3,000 we must realize that the majority of stores retail in more intensive space, are not destination stores, the majority are not relying on a seasonal trading pattern and do not trade indoors and outdoors. You would expect our retail sector to have lower performance figures.
But, having said that, outdoor plants retailed in a traditional way (rows of plants in a grid layout) is not the way to inspire customers to buy. Store A had a grid layout and achieved $126 a square metre, whilst the non-grid layout Store B created $270 a square metre.
What the indicator results like this bring out is that the traditional drivers of the industry, plants, growing media and garden care, have been replaced by new category drivers and especially by indoor living, gifts and coffee shops. This does not mean we should neglect our core categories as retailers, but we need to be aware there are new drivers out there that are changing the industry.
Benchmarking like this allows you to ask why you are only achieving $450 a square metre from indoor living when another retailer in a like by like situation can achieve $5,670 from the same space.
When I analysed both businesses I found that Store A had a “1980s” layout. The plants were separated from the containers, the retail managers had no idea of what was fashionable and the signage system adopted was horticulturally correct, but lacked any impulse buying messages for the consumer.
Store B was in tune with modern interior fashion statements, integrated their merchandising and inspired people to buy. The result was that without any capital outlay the business was 12 times more successful in this category than Store A.
Change at Speed
As this industry continues to change at such speed, we need to ensure we benchmark our business a lot more closely. There are various tools at our disposal. I am not suggesting this is the only tool we should adopt, but it does force managers to manage, rather than care for a category in your garden centre.
John Stanley is a qualified horticulturalist, obtaining his degree in horticulture in the U.K. For 10 years he was a lecturer in Garden Centre Management prior to starting a consultancy company in garden centre design and management. John has written five books specifically on garden centre management and design. He works with garden centres in 17 countries including the USA, U.K., Canada, South Africa, Saudi Arabia, Germany, Italy, New Zealand and Australia. John can be contacted via his website www.johnstanley.cc or phone 08 9293 4533.