Don’t shortchange yourself on value

September 29, 2008
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The description, “fair at best,” sums up the greenhouse season so far this year. Many growers are struggling to make ends meet receiving 2003 crop prices against 2008 input costs. And for some crops, “2003” prices would be cause for celebration.

The issue of shrinking profit margins was discussed during a couple of presentations during this year’s Ohio Short Course. Why can’t flower and vegetable growers pass along regular price increases? Is it a case of over-production in certain product lines? Aren’t we doing enough to grow the market?

Dr. Charlie Hall of Texas A&M noted that the “key to profitability in this industry is not selling more flowers and plants, per se. The key to profitability is getting more dollars for the flowers and plants we do sell.” He said that the “most meaningful increase in margins in the future for most firms will have to come from the demand side of the equation (price).” The best way to do this is to “successfully differentiate yourself in the minds of customers.” Stand out in the marketplace. Be noticed. Be needed. Be unique.

He noted the wholesale price of a 5” poinsettia was about $2.50 in 1965. Last year, he found the price had only grown to $4.61. Yet input costs, clearly, have more than doubled during that same period.

One grower/retailer not afraid to be a price leader is Andy Buyting of Green Village Home & Garden in New Brunswick. Green Village is well known for quality products, excellent merchandising and superior service. “Subconsciously, price is a reflection of value to many customers,” he said in his Short Course presentation. “If you have the best products, price them accordingly and be proud of your prices.” Customers are not coming into your independent garden centre operation to buy the cheapest plants in town. They’ll find them at the big box stores. “They’re coming to you to buy the best.”

This is the start of the conference/trade show season in Canada. It starts this month with the CanWest Show in Vancouver. It’s followed next month by the Canadian Greenhouse Conference in early October, one of the largest pure “greenhouse” shows on the continent in terms of trade show and educational sessions. November features conferences in Saskatoon, St. Hyacinthe, Edmonton and Halifax.

They’re treasure troves of great ideas to boost productivity, reduce disease and pest pressures, maximize energy usage, improve product quality, assess niche market opportunities, study new varieties, and evaluate automation and mechanization options. And that’s just the trade show expertise. The seminars are the bonus.

The “pricing” issue will be front and centre at those shows, no doubt about it. This issue is not going away. It’s the biggest challenge the industry faces.

Do you consistently raise prices to reflect input costs? Do you drop product lines that aren’t profitable? Have you differentiated yourself in your marketplace?

An industry can all but give away products for only so long.

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