Pricing pressures: are you keeping up?
By Dave Harrison
'Sustainability' was promoted as a
major theme at this month’s Ohio Short Course, and it was, courtesy of
a couple of sessions. But it was clearly overshadowed by a pair of
other themes on the minds of growers.
'Sustainability' was promoted as a major theme at this month’s Ohio Short Course, and it was, courtesy of a couple of sessions. But it was clearly overshadowed by a pair of other themes on the minds of growers.
Yes, energy (prices, conservation and alternative fuels) was one of them. No surprise there.
But the industry’s pricing challenge was the other prime subject of discussion. 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.
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 accordingly and be proud of your prices.”
Quite often, his competitors will raise their prices “to follow suit.”
Our online POLL results have shown that as of July 8 of this year, 45.2 per cent of responding growers did not raise prices this year, while 31 per cent held increases to four per cent or less. Only 7.1 per cent increased prices by 10 per cent or more, while 16.7 per cent had increases of five to nine per cent.
Do you consistently raise prices to reflect input costs? What impact has big box retailers had on pricing? Do you routinely drop product lines that aren’t profitable? Have you differentiated yourself in your marketplace?
We’d like to hear from you.