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Brian Minter Keys to Profitability
Written by Brian Minter   
With the memories of a weather-challenged 2011 fading fast and as the 2012 season begins with hopes of a good year ahead, our bottom lines need nurturing. We all have our own thoughts on how to improve our net profits, and our accountants are always going to remind us about keeping a lid on our expenses, inventory and overhead costs, but there’s much more to it. I asked a few folks operating some of the best garden centres in Canada and the United States for some of their bottom line priorities for 2012, and I was delighted to hear a diversity of ideas.

Leanne Johnson of GardenWorks in British Columbia mentioned their plans to do a SWOT (Strengths, Weaknesses, Opportunities, Threats) assessment to determine the single greatest barrier to growth in the coming year. This is something most of us seldom do. It could be things like inadequate parking, a particular competitor, wrong inventory, poor store set up, missing people skills or right sizing register/checkout stations. The process of looking at what we are not doing as well as we could is a brilliant strategy. It often identifies a particular obstacle that we haven’t considered, and that once addressed could easily increase our bottom line.

Jack Bigej of Al’s Garden Center in Portland, Ore., was very clear about the importance of attention to detail as seen through the eyes of our customers. This includes everything from your surrounding landscaping, ease of parking, storefront appearance, store cleanliness, well cared for inventory, creative display merchandising, pricing signage, the interaction between team members and customers, cashier wait lines and complaint handling to the overall store ambience and shopping experience. Great jugglers always innovate by using more than three balls or by doing other things at the same time, taking their performance to the next level. We’re both entertainers and jugglers. Take your eye off the ball for a split second, and the act falls apart, as will our customers’ experience. Bigej’s message is: details, details, details!

Dale Bachman from Bachman’s, a leading edge garden retailer in Minneapolis, mentioned that after a very weather challenged year in their area last year, they are focusing on ‘net margin’ goals. Today we are experiencing increasing competition in all sectors. As consumers are making price a higher priority in their buying habits, we tend to be more sensitive to competitive price points. Vacillating weather, Bachman pointed out, creates the need to do markdowns to clear out some product and deal with spoilage and loss on others. It’s not just the traditional ‘set the price to get the margins’ anymore; it’s being very innovative and creative in your sales strategy to achieve that net margin. Focusing on this net is really the key to profitability.

Jerry Stauffer of Stauffer’s of Kissel Hill stores in Pennsylvania, agreed with Bigej on the importance of hyper attention to details, particularly in preparing for the peak selling period. Whether it be the key six weeks or the traditional 100 day period from mid-March to mid-June, Stauffer is bang on. We tend to think in terms of getting through the busy season versus milking it for all it’s worth. To optimize that prime selling window, we need enough of the ‘right inventory’ for the busiest times and personnel need to be trained to sell add-on products. We need to have in place the right sized exit tills, service to cars, extended hours of operation and targeted promotions. It takes almost a military strategy to plan and execute a retail campaign. A few crucial days in May can outperform the first quarter of the year!

Dave Van Duyvendyk of Dutch Growers in Saskatoon had some very good points about joining a buying group that is compatible with your business philosophy.  Focused group buying can provide you with better margins, dating terms to help with cash flow and sharing of ideas to focus on new trends and products with the best return on investment. He observed that diversifying was key to new opportunities and ladies fashion was working nicely for them.

Dan Mulhall of Mulhall’s in Nebraska willingly shared his thoughts on a new marketing strategy. They are moving away from traditional radio and newspaper advertising to almost exclusively e-mails and e-blasts to promote their seminars, workshops, specials and events. They are also adding video links to their e-mails where today’s tech-savvy but time-constrained consumers can click onto the site to get a video preview of what’s coming up. The value add of video snippets will be a wonderful addition to capture customers’ attention, especially of the X generation and older Ys. Food gardening could possibly be a huge hit here.

Brad Siebe, general manager of Swanson’s in Seattle, Wash., will be focusing on bottom line management for the coming year. He said ongoing economic troubles, and the reaction to them, were eroding margins, and the need to refocus on the net / net was very important. Swanson’s is known for setting trends in new and very high quality plants and plant products. Their vastly differentiated selection and quality enables them to charge higher prices to enhance margins. It’s a strategy that works well for them, and they attract a customer demographic that is very willing to pay for this value differentiation.

There are many more great garden centre operations from whom we could all benefit by learning and understanding their approach to profitability for 2012. I selected folks I know who are doing a great job in garden retailing. I think their tips offer some insights that we can add to our strategies for this year. As a point of interest, I asked most of them their gut feeling for the year ahead, and everyone felt a cautious optimism – a good sign!
 
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