Know Your Business

January 27, 2007
Written by Michael Lascelle

With the hectic Christmas season behind us, and spring rush still months away, January and February are the best time to ponder the past year with an eye towards change.
20Asking yourself the right questions can lead to profitable change

With the hectic Christmas season behind us, and spring rush still months away, January and February are the best time to ponder the past year with an eye towards change. Just what those changes will entail may vary by circumstance, but as sellers of a very narrow line of products, we also have many common denominators to draw upon.

We all know that the garden centre and nursery business can be unpredictable at the best of times, and that many detrimental factors (such as wet spring weather) are completely out of our control, but there are still many small details that can add up to make a big impact on your bottom line. With this in mind, I have prepared a series of questions and comments, designed to help you examine those aspects of your business that might warrant some change in 2007.

What is the average age of your customers?
The age demographic of your customers is becoming increasingly important, particularly as the ‘baby boomers’ get older and approach retirement. Many of these people are selling their homes and moving into smaller apartments and condominiums, and subsequently spending less on their gardens.

At the other end of the spectrum, one has to wonder if young couples will have any money left to invest in their landscape, given that the price of housing is skyrocketing across the country, and the cost of living is surging with it. Currently, I believe the best target market to be the middle-aged ‘nesters,’ or those people who forgo the vacations in favour of spending that money on improving their homes and gardens.

Are your clients satisfied with your customer service?

This question should read…are your customers satisfied with your staff? Any client comments made about your staff, be they good or bad, should be taken very seriously. Generally, people are busy and if they have taken the time to comment about your staff, they have either had a very pleasurable shopping experience or something has gone terribly wrong. Admittedly, some complaints are without merit, but if you are receiving multiple complaints (from different people) about one particular staff member, then maybe it’s time to evaluate their place within your business, or at the very least, talk things out with them by expressing your concerns. Alternately, those staff members drawing praise to your business should be rewarded in a manner that reflects their efforts over the year.

How much does the average customer spend at one time?
Knowing how much an average sale amounts to over the course of 12 months, is a great way to keep track of your market share from year to year. Once calculated, you can know at a glance if a sales slump is due to fewer customers or a lack of desirable merchandise. Another possibility would be ineffective sales staff, and it is critical that you keep an eye on this, particularly when sales are being rung into cash registers without recorded commissions. In addition, you should share this average sales figure with your staff, so they have some sort of benchmark to compare to, and possibly improve upon.

Are you getting any consistent feedback about your prices?
There will always be people out there who will complain that your price is too high, but when you consider those comments over the course of a year, you generally get a clearer picture of your customer’s thoughts. If those comments lead you to believe that your prices are lower than your competitors are, then maybe it’s time to increase them slightly, but before you do, shop around a little to compare both the prices and product quality.

Then you have to decide if an “across-the-board” price increase is prudent, as many products (e.g., fertilizers and common junipers) are marketed too competitively to warrant anything but the slightest price increase. In contrast, if your customer feedback suggests that your pricing is consistently too high, ask them where they saw the cheaper product and find out if it is comparable in size and quality.

If it is, then you will need to contact your wholesale supplier in order to discuss prices, because the practice of dumping product en mass at box stores and supermarkets – below the cost available to garden centres and nurseries – has become all too common lately.

If your supplier is unwilling to offer you the same price, then I would seriously consider dropping the product line and replacing it with another as soon as possible.

Are your customers asking for products that you currently do not sell?
You should ask your staff to keep track of customer requests for new products, and discuss this regularly at staff meetings, asking their opinion of any new items. While it may be impractical to stock upon request, newer plants and products do tend to have a faster turnover, at least for a limited time.

By way of example, plants sales in particular are highly influenced by consumer magazines and newspapers – so when those ‘top-ten perennials’ or new introductions are unveiled, you will need to know where to buy them in order to have them on hand as soon as possible.

Moderation is key here; I have seen many retailers invest heavily on the whims of a few customers, only to find buyers shy away from the higher prices that the newer products command.

Has the competition increased in your local market?
I think we often spend too much time worrying about the competition – time that would be better spent fine-tuning your own business. A well-run nursery or garden centre will always have a better plant selection, superior customer service and a more inviting shopping experience than any box-store or supermarket can offer. By focusing on your own business interests, changing your product lines when necessary and hiring knowledgeable staff (who are good with people) you can ensure that you will continue to be in the business of selling plants for many years to come.

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