By John Stanley
By John Stanley
Does Ukraine have Garden Centres? This question has been asked of me a number of times over the last few weeks. Last winter I was invited to Ukraine to work with garden centres and present a workshop to the industry. This was my first visit to the country and new experience for me.
Ukraine is one of the largest countries in Europe, but a country that has had a sad history over recent years. Before the “crisis” the retail garden sector was worth around $120 million; after the crisis the industry is estimated to be around $20 million, although there are green shoots and growth is coming back as the country hopefully settles into a more peaceful future.
This is a small garden industry. Although there are 44 million people in Ukraine, only 0.5 per cent are looked upon as rich, which gives you 22,000 people who could be interested in gardens. There is no middle class.
As a result there are around 100 wholesale nurseries, 47 garden centres and 1,000 landscapers. These landscapers, as you would expect, range from very professional designers to a guy with a Lada and a wheelbarrow.
As in most countries I work in, the industry is seeing a large amount of change.
Alas, most independent garden retailers are seeing a decline in sales while the newly launched Home Improvement stores are developing and growing the garden market.
LESSONS LEARNED IN UKRAINE
The industry has shrunk for number of reasons, but many growers have a strange way of doing business.
Around 30 per cent of growers supply plants to independent garden centres in the normal way. The season ends in November and garden centres shut down. These nurseries take back the plants from the garden centre and pay the garden centre for the plants they have not sold and resell them the next year at the same price. One result of this has been some retailers not promoting plants the way they should as they know they will get paid come what may and the growers have been finding the model has not been viable. Luckily more growers are now realizing this is not a profitable model moving forward and are changing the way they do business.
Ladies Day (March 8) is the big day. I am told 40 per cent of flowering plants and cut flowers are sold on this day.
I visited the Home Improvement stores on the lead up to Ladies Day and they were busy – their garden centres were full of colour.
However the independent garden centres I visited were mostly closed as they do not open until two weeks after Ladies Day. When I asked why, I was told that garden centres should focus on shrubs and not impulse flowering plants. This is missing a huge opportunity. Consumers tend to continue to shop at their first destination of the year as long as they have had a great experience and as result this is why the home improvement stores are seeing growth.
One message to me was to follow the leader. Roshen is a Ukrainian confectionary company that sells high quality, high price sweets and chocolates. The stores are like the Disney of confectionary. These stores highlight that if you create the experience the consumer will want to visit your store and buy things. Many independent garden centres in this country still have the approach that you grow the plant, place it on the ground in a sales yard and the customer will buy it. Ukrainian customers, like other customers, want an experience. They may have less disposable income, but they will still spend on the experience.
Ukraine may have a small market, but progressive independent garden centres still have an opportunity to make a difference while the traditional retailers are losing market share.
John Stanley is a retail business coach, consultant, speaker and author. His expertise is in customer-focused layout, merchandising, marketing and branding, and customer-focused selling and service. Visit his website at www.johnstanley.com.au.