The Power of Many
By Stephen Head
By Stephen Head
Buying groups are a powerful force in today’s retail landscape, offering members the competetive advantage of bulk buying and marketing.
Is The Garden Centre Co-op Group Right For You?
Buying groups are a powerful force in today’s retail landscape, offering members the competetive advantage of bulk buying and marketing. Through these groups, product selection is honed and retailers can achieve merchandise discounts they may not have been able to negotiate independently. Albeit at first glance it looks as though retailers are ganging up on their suppliers, this is not the case. These groups recognise the need to work together; they also recognise that suppliers are a key link in the chain of their success.
As important as it is, garden centre buying groups do more than just save their members money. They offer a vehicle for an exchange of ideas, from merchandising to benchmarking performance, advertising and marketing materials that would often be out of reach of to an independentHome Hardware is one of the earliest examples of co-operative retailing in Canada. Formed in 1963 by independent hardware dealers who, like many of today’s garden retailers, found they had a hard time competing profitably through the traditional methods of distribution. From around 120 member stores in 1963, they now have nearly 1000. The garden industry might not be quite there yet, but it does show what can be done as a group that would not have been possible individually.
What draws seemingly competitive business owners together to form these alliances? Some say it is desperation with increasing competition, others see the future and potential offered by such alliances. John Reeves of the Reeves Nursery & Florist in Ontario, a founding member of the Garden Centre Co-op, says it was becoming more difficult to buy competitively and the box stores were not far away. That was 20 years ago before the box stores were established in Canada. Some said the box stores would not last, people liked personal service and would pay for it, but we have all seen that this prophecy was wrong. While some people will pay a premium for personal service and ambiance, the founders of the Garden Centre Co-op had a vision and the foresight to pre-empt what was inevitable.
Consumers are not short of choices as to how to spend their leisure dollars. This is not the time to be a passive retailer, waiting to see who comes through the door and what they buy.
“Without an edge, such as the buying group, you cannot be competitive and expect to grow in this market place,” says Reeves. In the garden market there is fiercer competition from box stores, discount merchants and corner lot vendors, all vying for a piece of the pie. The only way to survive is to evolve and stand out.
No product groups are sacrosanct; thirty years ago, a gardener who wanted garden plants and products naturally went to their local nursery and was less likely to shop around. Today, the garden centre operator needs year round business to thrive and develop. Plants are no longer the sole domain of the nursery retailer, as mass merchants and non traditional garden retailers are in on the act. Margins are being squeezed all the time and prices have seen little movement over past years, often only modest increases that may not reflect the increases in the cost of doing business.
Benefits are many fold
To address the margin squeeze some buying groups have developed their own label, making quality products only available through member stores. While helping to reinforce identity, they also offer an opportunity to generate a respectable margin. Although the garden centre co-op does not have their own label, one member, the Art Knapp group, a chain in B.C., has their own label, which they make available to other members.
Buying groups are much more than just ways of buying at lower prices. A strong marketing program can stretch even the most innovative retailer – reaching the maximum number of people with an effective message that is professionally presented and cost effective. We just need to look at the Home Hardware approach to recognise its value.
Information exchange is another, rather more intangible benefit.
“It gives us something to compare results on,” says Reeves, “it only works because our members are not immediate competitors and so there is not a conflict of interest between them.”
Additionally, many buying groups offer their members training sessions and educational seminars, at a cost that would be out of reach for many individual stores. If you have ever tried to organise specialised training, it quickly becomes apparent how costly this can be. A specialised training session could easily cost $5,000, but if you only have five staff, this equates to $1000 a person. However, shared between 20 stores, each sending five people, that’s $50 a person – a pretty good deal, and it does not take long reap the benefit of a $50 investment in training.
Suppliers can gain from the garden centre co-op as well as its members. With its 42 member centres nationwide, the co-op utilises a central billing procedure with their members, which is an added attraction for their suppliers says John Reeves. Members order from the approved suppliers through the usual channels, but the invoice goes to the groups central office for payment and the member pays the group.
“This makes sure the supplier gets paid on time, and they only have to deal with one office for payment, which they love,” says Reeves. Buying groups can also help manufacturers expand distribution and get new customers while reducing costs. Smaller retailers are becoming more difficult to service due to rising costs, cut backs and remote locations, so this can be a good arrangment for all parties.
Joining a buying group does not mean a loss of independence; most members of the garden centre co-op operate under their name. The only exception to this is the Art Knapp Group, in B.C., who have operated for many years under a single corporate identity. Although each store is independently owned, they all have a similar appearance, their own label product and flyers, but with individual management styles. They are a widely recognised brand to B.C. gardeners, but even with 15 stores the group saw the benefits of being part of a bigger national organisation like the Garden Centre co-op.
Although many members tout the benefits of buying-group affiliation, only a minority of small retailers have joined. These groups can be found the world over, operating successfully and representing many successful independent garden retailers. If you think this might be the right avenue you for you, contact Henry King, Art Knapp Plantland, Penticton B.C., the current president of the Garden Centre co-op. Telephone 250-492-5703 E-mail: email@example.com.