January 13, 2017
David and Goliath
BY DIANE STEWART-ROSETen tips for independent retailers:
How to win against big boxes
To define the battlefield, let’s examine our competitor. The big box occurs in various forms: internationally (Home Depot) or domestically-owned (Rona), wide product categories (Walmart) or narrow with a hard-goods or home improvement focus (Lowes).
Their characteristics are familiar:
- Large-scale buildings, usually part of a chain of stores
- Area encompassing 50,000 square feet or more
- Free-standing, rectangular, single story
- May offer low prices based on volume.
Without a doubt, they are quite different from independent garden centres. Big boxes welcome our product categories for profitable margins and rapid inventory turns on a seasonal basis. Given their scale, how can we compete on a level playing field?
Happily for independent stores, the big box does not define itself by ample staffing and patience for intensive, informative service — creating a market opportunity for our industry. In a recent TV commercial, a woman drags a big box salesperson from “fertilizer” to help her partner select appliances, claiming that she found someone to help. Delivered with a note of humour, we understand the consumer needs product information, and struggles to get it. There is a good message here for independents: Be sure to escort customers to a salesperson, either a generalist in customer relations or one knowledgeable in a particular department.
Data from Garden Centres Canada surveys indicate that since the 1970s, independent garden centres attract a high percentage of female shoppers. Shopping in specific departments was often divided among couples according to spheres of responsibility. I propose that while roles have changed somewhat since that time, the ratio of female to male shoppers is reversed in many big box stores, due to both the product lines and retail atmosphere.
The next move is yours!
Fast forward to this century, when more couples seem to share garden care responsibility, but some chores likely still fall to one partner or the other. The partner responsible for selecting live goods and home décor items may not be the same partner maintaining the yard or buying tools and lawn fertilizer.
New and younger customers, with limited garden knowledge, respond well to sales events at big box stores, and perhaps do not value quality and selection. Independent stores have an opportunity to educate younger generations in their stores. Bark chips, emerald cedars and 10-in. hanging baskets are favourite lead products for advertised sales in the big box stores. But after a short time, the selection and quality of live goods is poor. Inventory and quality management seem weak too, although this area can be difficult for independents as well when the high season is in full swing.
In the early 1980s, White Rose offered in-season discounts of 20, and then 30 per cent on high-profile spring lawn fertilizers and peat moss, which were lead and profitable products at that time. I recall this strategy throwing me into a complete panic. While moderate discounting of these lines has persisted, across-the-board discounting of product lines has not. We can be patient while the big boxes experiment, as long as we don’t lose customers. “Never be embarrassed about stating your price,” said my very first boss, who was also an owner of an independent garden centre.
Author and speaker Denise Lee Yohn, writing for The Harvard Business Review on “Big Box Retailers Have Two Options If They Want To Survive,” describes challenges facing this retail sector, along with evidence of declining demand. Yohn explains that, “experiential categories are becoming the new consumer indulgence.” She observes that Ikea and Bass Pro Shops have learned to successfully market experiences, in combination with discounts, to create exciting consumer-oriented event-shopping.
At the time of this writing, Walmart, worrying about declining retail sales and its own giant competitors, purchased the private start-up Jet.com. The objective was to acquire a real-time, online shopping business strong in building relationships with Millennials. The rising volume of online purchases, “… may make the titan of efficiency less profitable and force it to close more stores. It is not unlike the scenario that, not so long ago, Walmart inflicted on small chains of local shops,” commented The Economist. In my own area of Toronto, a huge book retailer opened multiple locations, thus forcing longstanding neighbourhood specialty stores to close — only to close and collapse some of its own chain locations several years later.
Ten tips for battling the big box on your own turf
Stay focused on your own profitable and leading product lines. Use inventory management systems, to identify growth areas, and those where a review or new goals are needed. Identify new sub-lines for potential expansion.Service sells, whether it is hardscaping installation and live nursery products, bulk soil delivery or customized annual containers. Identify and promote the lead services that drive customer traffic.
Create a genuinely welcoming and friendly atmosphere. Greet customers, put aside your “work” and help them with their garden knowledge and selections. Big box stores have flirted with greeters and then retreated.
Maintain knowledgeable staff or an active sales training program to maximize sales once customers are captured in your store. Have staff available to answer questions in the peak season, to avoid frustrating customers new to the gardening experience. A salesperson posted at the checkout can thank customers — and identify add-on sales.
Advertise actively in your proven market. Repeat messages that deliver a proven customer response, discard those that do not. Keep your advertising program flexible, with funds in reserve for implementing new ideas. Build on the big box campaigns; offer their products at your own pricing.
Build sales in the shoulder seasons, when you still have your customers’ attention. Keep your inventory well-managed in the off-season, which the big box stores are unable to do. They are good with moving product and generating customer traffic, but weak in live goods.
Stay firm on return and refund policies. All big box stores demand proof of payment for returns, within limited timing. Stay focused on your bottom line and profitability, as the big box may have “behind the scenes” corporate strategies that may undervalue the profitability of individual stores.
Create exciting community-oriented events that draw customers. The competition may not be able to react quickly or plan in advance for anything more than targeted individual product promotions or a weekend sales event where taxes are “included.”
Keep responsive to spring; get open and get ready to capture the sales you are entitled to, with products and services the consumer expects you to deliver.
Explore and develop relationships with Millennials and Echo Boomers. As the Boomer generation ages, their needs and interest will change. Independents must adapt to a changing market base. Understand that most gardeners learn from experience over a lifetime; get ready to coach upcoming generations as an investment in your business.
Define the battlefield, understand the competition and use this intelligence to your own advantage. Go ahead and win the war!
Diane Stewart-Rose is a graduate of the University of Toronto, who has spent most of her adult career in the garden centre industry, working in management and as a consultant.