The animated comments on the blog Garden Rant about garden centers that charge too much for plants (from gardeners’ points of view) and retailers defending themselves has been on my mind this week.
The spring season has been a tough one, and money is on the mind of just about every garden retailer I talk to. They’re worried that too many years like this one will force them to close down, although almost no one is coming out and saying that out loud. Consumers are feeling the pinch themselves, and are worried about their homes losing value, their gas bills going up so quickly and on and on.
Customers want value for their money. They always have and they always will. Some retailers like Target have built a major revival on doing just that.
Admittedly Target has a volume business model where low margins are made up for by the huge number of items being sold. Yet even stores like Nordstrom, with its vaunted customer service, offers enough items at affordable prices that lets customers enjoy the burnished high-end reputation while walking out with a mix of sale items and full price.
So what is a beleaguered garden retailer to do?
Take a page from Wildseed Farms’ strategy
John Thomas of Wildseed Farms in Fredericksburg, Texas, once told me that people judge whether a store is a shopping store or a browsing store by picking up a product near the entrance to see what it costs.
If it’s expensive, then they’ll go ahead and stay, but with low buying expectations. But if it’s attractive and low priced, then they know they can afford the store and shop with a much more open mind.
Let me take his point a little further. If you have fun products up front that are affordable, you earn shoppers’ trust in your pricing. If they see a high priced item further in the store, they are more likely to think that the product is worth the price, as opposed to the browser who will see that price as just additional proof that you hike up prices.
Check out Ian Baldwin’s idea on prices
Keep an eye out for Ian Baldwin’s upcoming article in our August issue of Garden Center. His take is that there are about 50 commodity products in your store, products that aren’t fancy, that you should price competitively on.
If you have a common perennial for $29.99, when Home Depot or Lowe’s has it for $8.99, guess where customers are going to buy the product?
As anyone who has followed Ian’s articles over the years knows, he’s usually pushing garden centers to protect their margins and to not be shy about charging what a plant is worth. But when it comes to these commodity products that customers know so well, you risk lowering customer trust if you charge more than twice what others charge for the same item. And worse, you risk driving them to the competition.
Key to both John and Ian’s suggestions is the customer. You need to earn your customers’ trust while still holding on to margins high enough to allow you to cover your expenses. Both are urging selective pricing strategies. Makes sense.
-- Carol
Back in the day - running my own nursery - I remember a report indicating that geraniums were then the key comparison crop. We kept those in line with everybody else but increased everything else particularly the specialty stuff by a hefty margin. And it was always the stuff in bloom and looking great that went by the door - the kids always knew what to fill those benches with or what to replace it with if it was there for more than 24 hours. Nothing out of bloom was allowed anywhere near the entrances. Color sells!
Posted by: Doug Green | June 12, 2008 at 12:18 PM