Greenhouse Canada

Features Business Retail
Inventory 101

October 31, 2008  By Michael Lascelle


In a perfect world, every garden
centre would sell-out their entire inventory in a timely fashion and
with a good profit margin. Unfortunately, this is not a perfect world
and given the slowing economy we need to be more diligent than ever
with the ebb and flow of the products we deal with.

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Keep product like fall-blooming bulbs front and centre to ensure that it sells out before the season ends.

How to track and manage your stock

In a perfect world, every garden centre would sell-out their entire inventory in a timely fashion and with a good profit margin. Unfortunately, this is not a perfect world and given the slowing economy we need to be more diligent than ever with the ebb and flow of the products we deal with. That’s not to say that the nursery trade can’t be profitable during a recession – we just need to find ways to increase our inventory turns, watch and respond to sales trends, properly manage loss leaders and carefully keep track of our stored inventory.

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Look back before you look ahead
If retail sales have taught me one thing – it’s that nothing remains the same, and 2008 was just as unpredictable as the years before it. Given the trend towards condominiums and smaller urban lots, it was no surprise that shade tree sales – particularly those of larger species – were on the decline. Fruit trees, along with berry bushes, grapes and vegetables seemed to buck this downward trend as home gardeners are starting to show a strong interest in growing their own produce. Perennials were another top-selling group this past season, with Heuchera, ferns and ornamental grasses still keeping their sales momentum. Similarly, organic-based insecticides and beneficial insects are steadily gaining market share against chemical pesticides – the use of which is being discouraged by many municipal bylaws as well as provincial restrictions. Keeping track of these selling trends and making sure your purchaser(s) adjusts the inventory accordingly, is an ongoing concern requiring your constant attention.

Increase your inventory turns
There’s a reason why grocery stores stock magazines and chocolate bars at every check-out line and it’s called impulse sales. We should be doing the same with fertilizers, bone meal and even fresh flower bouquets. Be especially diligent when it comes to perishable products or those with a very limited sales window. Two good examples of the latter would be fall-blooming bulbs that are often sold in the slower late summer season and
dormant sprays, such as lime sulphur. Keep these products front and centre, and only order enough product to ensure that it is sold out before its season ends – because there is no market for leftovers. Another good sales tactic is to create sample planters utilizing seasonal stock. Quite often, customers will end up buying many of the sampled plants in order to freshen up their containers at home – all they need is a little inspiration.

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Sample planters are a great way to sell seasonal colour.
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The market for organic pesticides is growing every year.
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Fertilizers should be kept near the cashier for impulse sales.

Examine your loss leaders
Every retail sector has its own loss leaders, or those cheaply-priced items used to increase customer traffic. Garden centres tend to use plants as loss leaders, although this is not always the case. One example worth examining is fish stock and the aquatic department. Given the investment in holding tanks and filters, the daily maintenance and labour costs involved the profits on fish stock are marginal at best. But when you consider the peripheral sales of aquatic plants, pond liner, pumps, food, water testing kits and accessories there are clearly some benefits to selling fish. The other consideration being that not selling fish means that you will eventually have to send potential customers somewhere else to spend their money.

Smart storage for inventory management
Many garden centres are lowering their wholesale costs with bulk purchases of popular products such as fertilizers and pesticides with much of the ordering being done for the spring booking season. Given the volume of these mass shipments, it is impossible for most nurseries to put all of this product on the shelf at once, so some sort of storage is inevitable. Storage areas should be easy to access with boxes clearly marked to indicate contents at a glance. Staff should also be made aware of stored items so that when the shelved inventory is depleted it can be restocked with the stored product – it is far too easy for the stored items to be overlooked and for new product to be unnecessarily ordered.

Monitor stock often not just annually
Admittedly, there is a fine line between having too much and too little inventory, and the best approach is to monitor your stock monthly, rather than wait for those once-a-year inventory numbers at the business year-end. Even those stores with computerized inventory tracking (UPC / SKU) still require people to order their stock so ultimately it is the department managers who should be responsible for a timely inventory turnover. It is those extra pair of eyes stocking depleted shelves, promoting products with lacklustre sales and looking for new merchandise that allow the business as a whole to function profitably.


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