GLEE is the huge garden center show held every year in Birmingham England. With over 25,000 visitors, it's Britain’s biggest wholesale garden center show. GLEE also has a large area dedicated to pet supplies and aquatic supplies, reflecting the diverse range of products sold in British garden centers today.
Peter Dawson of PJMD Horticulture gave a press briefing to describe the current state of the garden center industry. The bottom line is that 2007 was a difficult years for British garden centers due to a very cold and rainy spring. Retail sales at garden centers have been in decline for several years running: $8,892,000 (2004); $8,002,000 (2005); $7,534,000 (2006). Preliminary information indicates 2007 sale are well below 2006 numbers.
New strong forces are entering the market. The powerful entrepreneur Tom Hunter has controlling ownership in Blooms of Bressingham and in Wyevale, which, with over 120 locations, is England’s largest garden center chain. The giant retailer Tesco has purchased the 21-garden-center chain, Dobbies. Asda (Wal-Mart) has informed some suppliers of its intent to build 30 garden centers. At the same time, other major retailers are offering garden items during the peak selling season. Internet sales have taken some of the market share and are growing fast. Meanwhile, B & Q with 340 DIYs operates 340 garden centers as part of their stores. Home Base and Focus—large DIYs—compete in the garden center space. There's plenty of competition in the garden center business.
Sound like anyplace close to home?
Part of the trip included tours of two of the leading garden center around Birmingham. One was a single-unit operation that had the distinction of being voted the best garden center in England and the other was part of a chain owned by a French company. Both operations were amazing places to visit and spend time. Our hosts were open about percentages and business. The most astonishing number for me was that the sale of plants amounted to 18% of gross sales. Plant sales just equaled the sales of prepared food in the in-store restaurant. The stores sold a wide variety of gourmet food and gift items, and one had a fine meats counter. Both of these stores have succeeded in becoming compelling destinations, a wonderful place to spend time wandering around and buying stuff.
Before going to GLEE, I was in Cleveland for Green Profit's Retail Experience, which had two days of garden center tours. These American operators were just as compelling as destinations as their British counterparts. My favorite experience was seeing the gourmet dog treats at Petittis. It still hurts my head how many of these dog treats they sell. One of the garden centers had wonderful greengrocer produce within the store. Another sold clothing in some volume.
My conclusion from visiting all these retail masters: They have figured out that the experience is far more important to the shopper than the individual price of each item. People paying $1.75 for a fancy dog biscuit just aren't very price sensitive; they are very experience sensitive. Good experiences keep them coming back and buying things they may or may not need.
The number of affluent people and the level of that affluence have grown remarkably worldwide. While these people aren't particularly price sensitive, they are, however, value sensitive. Just because they have a lot of money doesn't mean they'll allow themselves to be taken advantage of. It's probable that they may be more value sensitive. They don’t want the really cheap product that won't last. "Poor people" have to buy that stuff because they have no money to buy the better quality.
This summer has proven to me that the experience, including service and atmosphere, is something that people value a great deal. It's part of the product price and clearly something a lot of people are will to pay for. It was nice to see that independents are alive and well, even if it means they don’t sell as many plants as I'd like.
Showing posts with label Grower Talks. Show all posts
Showing posts with label Grower Talks. Show all posts
Tuesday, September 16, 2008
Garden Center Summer - 2007
The OFA Short Course begins the summer trade show season. Always well attended by growers and retailers, it has become a must-attend event. This year saw the birth of a new show: The Independent Garden Center Show in Chicago was held in August. Many independents garden center operators were at the show looking for things to put in their centers. For sure, this show will grow, though hopefully not so fast that exhibitors are drastically increased for the benefit of the show owners while the number of buyers does not proportionally increase.
I wasn't able to attend many of the education sessions, but I did see the color trends put on by the people who own Pantone. My one complaint was that there were so many colors and pallets selected as “trends” that it seemed pretty useless to me. In my opinion, there are very few “bad” colors, only bad combinations of colors. Clean, clear colors, including black and white, are always “in style.”
September brought the Retail Experience conference, put on by Green Profit magazine, in downtown Cleveland. Retail Experience is much more of a pure-education conference with a mini trade show. Split sessions made for very difficult choices. Part of the conference included two days of touring local garden centers: one day on the east side and the next on the west side, three each day. I've never done one of these arranged garden center tours, so it was wonderful for me. Each garden center was completely different from the others, and all were real destinations where you could spend a chunk of a day. All of the operators were beyond generous in opening their operations and sharing their knowledge with the group.
Our last stop was the Petitti Home and Garden Center, one of eight operated by the Petitti family. This was their flagship store, which backed up on a freeway and wow, what a place. Although there were many very interesting areas of the garden center, the one that took me aback was the free-standing display of the most beautifully decorated cookies. It took a while to realize (and even longer to accept) that these were gourmet doggie biscuits for sale. One of the tour guests asked A. J. Petitti what kind of shelf life the biscuits have to which he replied, “I’m not sure since we have to restock a couple times a week anyway.” I've lost sleep over this experience.
One of the educational sessions featured Andy Buyting, the owner of Green Village Home and Garden, who talked on market planning and pricing to compete effectively with the big boxes. Andy also had a book to promote called The Retailer's Roadmap to Success.
Not long ago, I was invited to a Florida Chamber of Commerce session titled "Imagining an Innovative Economy.” The session had lots of high-level business and institutional representatives. They had hired a brilliant third-party consultant from IBM to conduct and moderate the session. During his presentation, he shared the experience of working at IBM during a difficult transition when the company had to change and had no money. He spoke of the three boxes that we live our business lives in: The first box is where we live almost every minute, operating the company to stay in business and on budget. This occupies between 95% and 105% of our time. The third box is where we imagine the future we would like to have, what we would like to be and look like five and ten years down the road. The hardest box to live in, though, is the second box. That is the box that includes the plans and action steps we must take to get to box No. 3.
Andy Buyting wants to franchise the Green Village and Garden Center model, and he decided that the action step for him to take was to write a book sharing his methods with the retail world. I went out and bought the book, despite not being a retailer. After all, isn’t it worth $20 to fast track yourself to mastering the second box like Andy did? For the price of the book and the time invested, you may find yourself well on your way to your third box.
I wasn't able to attend many of the education sessions, but I did see the color trends put on by the people who own Pantone. My one complaint was that there were so many colors and pallets selected as “trends” that it seemed pretty useless to me. In my opinion, there are very few “bad” colors, only bad combinations of colors. Clean, clear colors, including black and white, are always “in style.”
September brought the Retail Experience conference, put on by Green Profit magazine, in downtown Cleveland. Retail Experience is much more of a pure-education conference with a mini trade show. Split sessions made for very difficult choices. Part of the conference included two days of touring local garden centers: one day on the east side and the next on the west side, three each day. I've never done one of these arranged garden center tours, so it was wonderful for me. Each garden center was completely different from the others, and all were real destinations where you could spend a chunk of a day. All of the operators were beyond generous in opening their operations and sharing their knowledge with the group.
Our last stop was the Petitti Home and Garden Center, one of eight operated by the Petitti family. This was their flagship store, which backed up on a freeway and wow, what a place. Although there were many very interesting areas of the garden center, the one that took me aback was the free-standing display of the most beautifully decorated cookies. It took a while to realize (and even longer to accept) that these were gourmet doggie biscuits for sale. One of the tour guests asked A. J. Petitti what kind of shelf life the biscuits have to which he replied, “I’m not sure since we have to restock a couple times a week anyway.” I've lost sleep over this experience.
One of the educational sessions featured Andy Buyting, the owner of Green Village Home and Garden, who talked on market planning and pricing to compete effectively with the big boxes. Andy also had a book to promote called The Retailer's Roadmap to Success.
Not long ago, I was invited to a Florida Chamber of Commerce session titled "Imagining an Innovative Economy.” The session had lots of high-level business and institutional representatives. They had hired a brilliant third-party consultant from IBM to conduct and moderate the session. During his presentation, he shared the experience of working at IBM during a difficult transition when the company had to change and had no money. He spoke of the three boxes that we live our business lives in: The first box is where we live almost every minute, operating the company to stay in business and on budget. This occupies between 95% and 105% of our time. The third box is where we imagine the future we would like to have, what we would like to be and look like five and ten years down the road. The hardest box to live in, though, is the second box. That is the box that includes the plans and action steps we must take to get to box No. 3.
Andy Buyting wants to franchise the Green Village and Garden Center model, and he decided that the action step for him to take was to write a book sharing his methods with the retail world. I went out and bought the book, despite not being a retailer. After all, isn’t it worth $20 to fast track yourself to mastering the second box like Andy did? For the price of the book and the time invested, you may find yourself well on your way to your third box.
Dishonest Behavior - 2007
Our youngest just turned 15 and wanted a Nintendo Wii for her birthday present. She and my wife were unsuccessful after looking for her future Wii at Toys "R" Us and Best Buy. The salesperson at Best Buy told my wife that when they run an advertisement, the product sells out as quickly as it’s shipped in. While a little disappointed, my daughter was willing to wait until another store had a shipment.
I told my wife that I hoped someone other than Circuit City would have the Wii first. Many years ago I had an uncomfortable experience with one of their stores. They had advertised a particular model of video camera and offered a free tripod and camera case with the purchase. Circuit City also made a lot of noise about how they had a “low-price guarantee” on the camera. I purchased the camera and watched as the salesman put in quite a high price for the “free” tripod and camera case and then discounted the camera to get to the advertised total-package price. This would insure they indeed would not be undersold—but the only way I was getting that low price was by buying these high-priced, supposedly “free” items. A perfect example of false advertising.
For years, I avoided shopping at Circuit City, but Sunday came and sure enough the Wii was on sale there. I drove to the nearest store before it opened, stood in line to get a ticket to buy the machine, and then stood in another line to make the purchase. The salesman behind the counter didn't start selling the product immediately, though. For about five minutes, the young man lectured us assembling customers that the reason we were standing in line for this product was not because it was so popular that Nintendo could not make them fast enough but because the machines overheat and self-destruct. The only way to be safe from this nearly inevitable loss of playtime was to buy the $59 Circuit City extended warranty.
Consumer Reports magazine reveals to us that extended warranties on electronics such as the Wii are very profitable for the retailers but a really bad deal for the consumer; I have to say I am more inclined to believe Consumer Reports than the Circuit City employee making the pitch. However, several people in the line were instantly worried and made calls on cell phones to consult parties at home. Fear was in the air.
When finally I reached the front of the line and exchanged my ticket for a smallish white box containing the object of my daughter’s desire, the salesman asked if I'd be purchasing the extended warranty. I said no.
He said, “Are you sure about that?”
I replied in a less-than-friendly tone, “I am sure that I am sure.”
He snorted in disapproval. I left the store with the desired product feeling a little unclean and happy to be out of there.
At home, I went straight to the computer and googled ‘overheating Wii.’ On the Wii forum, there was much discussion about this topic and it became clear that it wasn't a significant problem. I wasn't surprised; the salesman had lied. When I googled Circuit City, though, there was an article from WashingtonPost.com from March 29, 2007 reporting that the company fired 3,400 employees who were “overpaid” to replace them with people willing to work for less.
What would it take for me to go back into that same chain? I’m not sure I'll ever find out. We, as a culture, despise dishonesty. In my direct experience of 30-plus years, in which I have fouled up orders on occasion and disappointed customers, if you tell the truth, own up to your errors, and apologize, customers may remain angry but they don’t hate you. If you lie to them, they never forget it and they hate you. Nobody wants to do business with people who lie for their own benefit.
How do you build trust? Tell the truth even when it may hurt you. It isn't the easiest thing to do but it's always the right thing to do. Yes, there are rare occasions when telling the truth is cruel and hurtful to someone else; that’s not what I'm talking about here. Telling the truth can be painful in the short-term. Lying destroys your soul long-term.
I told my wife that I hoped someone other than Circuit City would have the Wii first. Many years ago I had an uncomfortable experience with one of their stores. They had advertised a particular model of video camera and offered a free tripod and camera case with the purchase. Circuit City also made a lot of noise about how they had a “low-price guarantee” on the camera. I purchased the camera and watched as the salesman put in quite a high price for the “free” tripod and camera case and then discounted the camera to get to the advertised total-package price. This would insure they indeed would not be undersold—but the only way I was getting that low price was by buying these high-priced, supposedly “free” items. A perfect example of false advertising.
For years, I avoided shopping at Circuit City, but Sunday came and sure enough the Wii was on sale there. I drove to the nearest store before it opened, stood in line to get a ticket to buy the machine, and then stood in another line to make the purchase. The salesman behind the counter didn't start selling the product immediately, though. For about five minutes, the young man lectured us assembling customers that the reason we were standing in line for this product was not because it was so popular that Nintendo could not make them fast enough but because the machines overheat and self-destruct. The only way to be safe from this nearly inevitable loss of playtime was to buy the $59 Circuit City extended warranty.
Consumer Reports magazine reveals to us that extended warranties on electronics such as the Wii are very profitable for the retailers but a really bad deal for the consumer; I have to say I am more inclined to believe Consumer Reports than the Circuit City employee making the pitch. However, several people in the line were instantly worried and made calls on cell phones to consult parties at home. Fear was in the air.
When finally I reached the front of the line and exchanged my ticket for a smallish white box containing the object of my daughter’s desire, the salesman asked if I'd be purchasing the extended warranty. I said no.
He said, “Are you sure about that?”
I replied in a less-than-friendly tone, “I am sure that I am sure.”
He snorted in disapproval. I left the store with the desired product feeling a little unclean and happy to be out of there.
At home, I went straight to the computer and googled ‘overheating Wii.’ On the Wii forum, there was much discussion about this topic and it became clear that it wasn't a significant problem. I wasn't surprised; the salesman had lied. When I googled Circuit City, though, there was an article from WashingtonPost.com from March 29, 2007 reporting that the company fired 3,400 employees who were “overpaid” to replace them with people willing to work for less.
What would it take for me to go back into that same chain? I’m not sure I'll ever find out. We, as a culture, despise dishonesty. In my direct experience of 30-plus years, in which I have fouled up orders on occasion and disappointed customers, if you tell the truth, own up to your errors, and apologize, customers may remain angry but they don’t hate you. If you lie to them, they never forget it and they hate you. Nobody wants to do business with people who lie for their own benefit.
How do you build trust? Tell the truth even when it may hurt you. It isn't the easiest thing to do but it's always the right thing to do. Yes, there are rare occasions when telling the truth is cruel and hurtful to someone else; that’s not what I'm talking about here. Telling the truth can be painful in the short-term. Lying destroys your soul long-term.
Got Web? - 2007
The OFA Short Course has come and gone yet again. The highlight of the show for me was Green Profit's Consumer Buzz Live. Bill Calkins led the show with a panel of eight Generation-X consumers. This group was wide ranging in its attitudes about gardening and its approach to it. There was one thing, though, that all of them agreed on: they do everything on the web.
I grew up in the generation before cell phones and personal computers. I still view these things as conveniences: nice to have but not crucial. It isn't so uncommon for me to forget my cell phone at home for a day. The web is not my very first choice for information; although, with good search tools it probably should be. Members of Gen-X on the panel said they turn first (and almost exclusively) to the web to get information about companies and products. Not one person said anything contrary to mark his or herself as anything other than computer-dependent. Not a single dissenting voice. That is statistically powerful.
So why have I not done the right web thing yet with my own company? Our current web page is badly out of date. Well, the reason is that it costs money and takes time, and I know I won’t feel the benefit immediately. That looks pretty bad in writing but it's the truth.
Since Virginia joined our staff, she has been pushing for a web site overhaul (to match our new company name, logo design, and more). Right after getting from OFA, I told Virginia about this panel and how it was time to do something. Virginia said she was glad because she had just signed an expensive contract for a complete web makeover. Okay, okay, boss me around. After all, she is right, as confirmed by all eight panelists at the Short Course.
We all talk about getting the next generation interested in our products or our stores, and they're telling us what the starting point is. We must communicate the way our customers want be communicated to or they won't bother.
The other main message from the panel was about sustainability. They all said they would pay 20% more for stuff that was organic or earth friendly or sustainable. Again, no dissent. We're the original green industry, but even British Petroleum has redesigned their logo to look like a flower.
Read the last line again. What are we doing individually to promote the earth benefits of our products? Ball Horticultural is out in front on this issue. You may be of a generation that really doesn't like the constant stream of eco-babble, but it's here to stay. It gets under my skin that oil companies are promoting themselves as green while we stand around with our hands in our pockets wondering why there isn't enough demand for our flowers.
There have been a number of collective efforts in years past to promote the health benefits of plants. They've failed over time due to lack of support from the grower community. If we don't come together, then we must individually carry the message to the consumer that we are THE green guys. And, of course, we need to be green. This is fundamental to the future success of our industry.
One other session at Ohio got my attention. There was a town hall meeting with a group of growers talking about current topics. The rules of the meeting stated that none of the participants could be directly quoted. So instead, I asked the participant where he got the information he shared, and that's what I'll write up: Kip Creel of the Standpoint Group (www.standpointgroup.com) did a study of affluent Gen-X consumer attitudes about gardening. One interview summed up the groups attitude. A female corporate attorney driving a BMW was asked what gardening meant to her. The response was, “Going to Calloway's and buying a finished arranged container garden, taking it home, putting it on the deck and inviting friends over for cocktails on the deck." She was interested in the outcome or product, not the process of gardening. This is great news for our industry if we take advantage of the new generation of buyers and their attitudes. I learned a lot in Ohio. Did you go?
I grew up in the generation before cell phones and personal computers. I still view these things as conveniences: nice to have but not crucial. It isn't so uncommon for me to forget my cell phone at home for a day. The web is not my very first choice for information; although, with good search tools it probably should be. Members of Gen-X on the panel said they turn first (and almost exclusively) to the web to get information about companies and products. Not one person said anything contrary to mark his or herself as anything other than computer-dependent. Not a single dissenting voice. That is statistically powerful.
So why have I not done the right web thing yet with my own company? Our current web page is badly out of date. Well, the reason is that it costs money and takes time, and I know I won’t feel the benefit immediately. That looks pretty bad in writing but it's the truth.
Since Virginia joined our staff, she has been pushing for a web site overhaul (to match our new company name, logo design, and more). Right after getting from OFA, I told Virginia about this panel and how it was time to do something. Virginia said she was glad because she had just signed an expensive contract for a complete web makeover. Okay, okay, boss me around. After all, she is right, as confirmed by all eight panelists at the Short Course.
We all talk about getting the next generation interested in our products or our stores, and they're telling us what the starting point is. We must communicate the way our customers want be communicated to or they won't bother.
The other main message from the panel was about sustainability. They all said they would pay 20% more for stuff that was organic or earth friendly or sustainable. Again, no dissent. We're the original green industry, but even British Petroleum has redesigned their logo to look like a flower.
Read the last line again. What are we doing individually to promote the earth benefits of our products? Ball Horticultural is out in front on this issue. You may be of a generation that really doesn't like the constant stream of eco-babble, but it's here to stay. It gets under my skin that oil companies are promoting themselves as green while we stand around with our hands in our pockets wondering why there isn't enough demand for our flowers.
There have been a number of collective efforts in years past to promote the health benefits of plants. They've failed over time due to lack of support from the grower community. If we don't come together, then we must individually carry the message to the consumer that we are THE green guys. And, of course, we need to be green. This is fundamental to the future success of our industry.
One other session at Ohio got my attention. There was a town hall meeting with a group of growers talking about current topics. The rules of the meeting stated that none of the participants could be directly quoted. So instead, I asked the participant where he got the information he shared, and that's what I'll write up: Kip Creel of the Standpoint Group (www.standpointgroup.com) did a study of affluent Gen-X consumer attitudes about gardening. One interview summed up the groups attitude. A female corporate attorney driving a BMW was asked what gardening meant to her. The response was, “Going to Calloway's and buying a finished arranged container garden, taking it home, putting it on the deck and inviting friends over for cocktails on the deck." She was interested in the outcome or product, not the process of gardening. This is great news for our industry if we take advantage of the new generation of buyers and their attitudes. I learned a lot in Ohio. Did you go?
Flip the Switch - 2007
I am in the Sydney airport waiting for a flight to Cairns. I was supposed to be there last night but the flight from Honolulu on Quantas was delayed. To be honest, I could have made the connection but the flight to Cairns was over-booked anyway so the Sydney ground staff took the decision that everyone with that connection would stay the night in Sydney. They gave me a taxi voucher and a hotel for the night and booked me on the first flight in the morning. Unfortunately, because of the way I planned the trip, I'll now have three hours in Cairns instead of a full day. I must take responsibility for such tight scheduling even though if it'd worked it would've been very efficient. Quantas took responsibility for their late arrival and did all they could to make the situation less painful.
Prior to arriving in Australia, I was in Hawaii for a few days visiting orchid nurseries. About three blocks from the hotel was a strip of different fast food places. The one that caught my eye was the take-out sushi place, and I walked in to place an order. It was about 7:15 p.m. As I walked in, the man behind the counter said, "We’re closing early."
I looked at the sign stating hours of operation from 12 p.m. to 8 p.m. I pointed to it and said, "Then you need to change your sign.”
He replied, “No, I can do anything I want.” I told him he was absolutely right and thanked him for correcting me. It was of those moments in business when you find bottom.
Leaving the store and perusing the other offerings, I saw the same man turn away two other would-be customers. It was surreal. In my younger days, I would have had sharp words for the operator; with age, I have learned that adding a negative to a negative situation does nothing good. The sushi shop operator chose to act the way he did and there was really nothing I could do about it. This is not an uncommon attitude in what I like to call “the Hawaiian islands of entitlement.”
The week before this trip, I was coming home from Super Floral and sat next to a remarkable woman named Suzanne. She was reading a book called Flipping the Switch. We had a good conversation and I learned that this high-powered executive is married to a pastor, Chris, and on some of their vacations they went to extremely poor places to work with and help the very poorest of the poor. They chose to spend their personal time in this way. Over the past weekend I wrote a column for Floriculture International just about Suzanne and Chris and “cause marketing.” I did not remember the name of Suzanne’s husband or the name of the book so I e-mailed Suzanne Sunday morning to ask for these details and permission to use them. Suzanne e-mailed me a few minutes later with the details and, in the e-mail, copied the author of the book. A couple hours later, I got an e-mail from the book’s author, John Miller.
I was more than impressed that these strangers were so responsive on a Sunday. I bought a copy of Flipping the Switch on my way to the airport and read it on the way here, to Australia. The sub-title is "Unleash the Power of Personal Accountability." The concept is quite simple: You cannot change others but you can change yourself. By acting in a manner that takes personal responsibility for making the world, your organization, and your family better, the world gets better for you and those around you. People who already take personal responsibility want to get better at it. They in turn contribute more and are more successful in their own lives. Miller chooses to help other people succeed in their lives. He's also aware that most people read the book and say, “my boss or my coworkers should read this book.” They miss the point.
I saw people making so many very different choices on this trip—the airline deciding how to handle the over-booking, the sushi restaurant operator deciding to turn away business—and I see the power of Miller’s message. He’s right that I cannot change those other people, but I will make the choice to take personal responsibility. What’s your choice?
Prior to arriving in Australia, I was in Hawaii for a few days visiting orchid nurseries. About three blocks from the hotel was a strip of different fast food places. The one that caught my eye was the take-out sushi place, and I walked in to place an order. It was about 7:15 p.m. As I walked in, the man behind the counter said, "We’re closing early."
I looked at the sign stating hours of operation from 12 p.m. to 8 p.m. I pointed to it and said, "Then you need to change your sign.”
He replied, “No, I can do anything I want.” I told him he was absolutely right and thanked him for correcting me. It was of those moments in business when you find bottom.
Leaving the store and perusing the other offerings, I saw the same man turn away two other would-be customers. It was surreal. In my younger days, I would have had sharp words for the operator; with age, I have learned that adding a negative to a negative situation does nothing good. The sushi shop operator chose to act the way he did and there was really nothing I could do about it. This is not an uncommon attitude in what I like to call “the Hawaiian islands of entitlement.”
The week before this trip, I was coming home from Super Floral and sat next to a remarkable woman named Suzanne. She was reading a book called Flipping the Switch. We had a good conversation and I learned that this high-powered executive is married to a pastor, Chris, and on some of their vacations they went to extremely poor places to work with and help the very poorest of the poor. They chose to spend their personal time in this way. Over the past weekend I wrote a column for Floriculture International just about Suzanne and Chris and “cause marketing.” I did not remember the name of Suzanne’s husband or the name of the book so I e-mailed Suzanne Sunday morning to ask for these details and permission to use them. Suzanne e-mailed me a few minutes later with the details and, in the e-mail, copied the author of the book. A couple hours later, I got an e-mail from the book’s author, John Miller.
I was more than impressed that these strangers were so responsive on a Sunday. I bought a copy of Flipping the Switch on my way to the airport and read it on the way here, to Australia. The sub-title is "Unleash the Power of Personal Accountability." The concept is quite simple: You cannot change others but you can change yourself. By acting in a manner that takes personal responsibility for making the world, your organization, and your family better, the world gets better for you and those around you. People who already take personal responsibility want to get better at it. They in turn contribute more and are more successful in their own lives. Miller chooses to help other people succeed in their lives. He's also aware that most people read the book and say, “my boss or my coworkers should read this book.” They miss the point.
I saw people making so many very different choices on this trip—the airline deciding how to handle the over-booking, the sushi restaurant operator deciding to turn away business—and I see the power of Miller’s message. He’s right that I cannot change those other people, but I will make the choice to take personal responsibility. What’s your choice?
Markets and Madness - 2007
July means that it's time for the OFA Short Course. I was planning to go as a visitor when I got a call from someone at OFA inviting me to be on a panel for a town hall session.
The topic was “Are We Cultivating Our Own Extinction?” and the description goes on at some length to bemoan the fact that we're a very competitive industry and that competition is hurting us. The description ends with the statement “Stop the insanity!!!!” Wow, lots of exclamation points. Somebody feels very strongly about this topic.
Since I have what will probably be the exact opposite opinion of the creator of the panel topic, I thought it'd be good to put my two cents in print before the program. My fellow panelists will have ample time to prepare their positions and skewer my main arguments.
This is a topic I’ve written about before, specifically when I was taking economics a couple of years ago. I was introduced to some unpleasant rules that govern our economy. The first states that competition is the basic regulatory force in pure capitalism. Sounds simple and not at all unpleasant. The bad part comes in microeconomics. The rule here is that in a perfectly competitive market, prices for goods fall to the marginal cost of production or the actual total cost of production. Selling for the actual total cost of production is better than the marginal cost of production because you get some return on capital. Are we a perfectly competitively market? Well, a perfectly competitive market is defined as a large number of producers in a market with a large number of buyers. It also requires that the producers sell products generic enough that one supplier’s product can be substituted with another. Does any of this sound familiar? It sounds very familiar to me. I am in a niche market that has now become close to perfectly competitive.
Based on these rules, most companies are breaking even. I really don't see any alternative to this fundamental reality. The market is an invisible force that doesn't care if you're sick or have a hurricane destroy your business. The market adjusts to supply and demand quickly and efficiently without individuals being able to control its course. This isn't necessarily fun for the people who have to compete inside the market space, especially when things go a bit wrong.
Retailers and suppliers live under the same tyranny of a freely competitive market. There are many things that businesses can do to make profits. They can differentiate their product offering to make it more attractive to consumers. They can increase the utility of a product to the consumer without greatly increasing costs of production. Consumers will always buy what they believe gives the best value for the money spent. Sometimes the plant sitting on the bench for an extra week is enough to make the value greater without incurring substantial additional costs.
It's also possible to take the path of being more efficient than the average producer. Under the Dutch auction model, where all plants are sold on the clock for more or less the same price, the producer with the lowest average cost of production earns the profit. I am seeing more and more Dutch producers following the American model of product differentiation and direct marketing to retailers as a path to greater profits. I think this is happening because anyone can invest in more efficient production over time while product differentiation requires a higher order of skill to achieve.
The above strategies describe how to be a more effective competitor. Being a less effective competitor equals lower profit or even real money losses. I don't think the market is insane; the market is completely unemotional. The market, like gravity, never sleeps. Unlike gravity, the market does change as consumers change their view of utility. Effective competitors identify and respond to consumers quickly and adjust their product offering accordingly. Someone once told me the definition of insanity was doing the same thing over and over again and expecting a different result. So really, what is the insanity that needs to be stopped (!!!!)? Well, I can tell you it’s not the competition in our industry.
The topic was “Are We Cultivating Our Own Extinction?” and the description goes on at some length to bemoan the fact that we're a very competitive industry and that competition is hurting us. The description ends with the statement “Stop the insanity!!!!” Wow, lots of exclamation points. Somebody feels very strongly about this topic.
Since I have what will probably be the exact opposite opinion of the creator of the panel topic, I thought it'd be good to put my two cents in print before the program. My fellow panelists will have ample time to prepare their positions and skewer my main arguments.
This is a topic I’ve written about before, specifically when I was taking economics a couple of years ago. I was introduced to some unpleasant rules that govern our economy. The first states that competition is the basic regulatory force in pure capitalism. Sounds simple and not at all unpleasant. The bad part comes in microeconomics. The rule here is that in a perfectly competitive market, prices for goods fall to the marginal cost of production or the actual total cost of production. Selling for the actual total cost of production is better than the marginal cost of production because you get some return on capital. Are we a perfectly competitively market? Well, a perfectly competitive market is defined as a large number of producers in a market with a large number of buyers. It also requires that the producers sell products generic enough that one supplier’s product can be substituted with another. Does any of this sound familiar? It sounds very familiar to me. I am in a niche market that has now become close to perfectly competitive.
Based on these rules, most companies are breaking even. I really don't see any alternative to this fundamental reality. The market is an invisible force that doesn't care if you're sick or have a hurricane destroy your business. The market adjusts to supply and demand quickly and efficiently without individuals being able to control its course. This isn't necessarily fun for the people who have to compete inside the market space, especially when things go a bit wrong.
Retailers and suppliers live under the same tyranny of a freely competitive market. There are many things that businesses can do to make profits. They can differentiate their product offering to make it more attractive to consumers. They can increase the utility of a product to the consumer without greatly increasing costs of production. Consumers will always buy what they believe gives the best value for the money spent. Sometimes the plant sitting on the bench for an extra week is enough to make the value greater without incurring substantial additional costs.
It's also possible to take the path of being more efficient than the average producer. Under the Dutch auction model, where all plants are sold on the clock for more or less the same price, the producer with the lowest average cost of production earns the profit. I am seeing more and more Dutch producers following the American model of product differentiation and direct marketing to retailers as a path to greater profits. I think this is happening because anyone can invest in more efficient production over time while product differentiation requires a higher order of skill to achieve.
The above strategies describe how to be a more effective competitor. Being a less effective competitor equals lower profit or even real money losses. I don't think the market is insane; the market is completely unemotional. The market, like gravity, never sleeps. Unlike gravity, the market does change as consumers change their view of utility. Effective competitors identify and respond to consumers quickly and adjust their product offering accordingly. Someone once told me the definition of insanity was doing the same thing over and over again and expecting a different result. So really, what is the insanity that needs to be stopped (!!!!)? Well, I can tell you it’s not the competition in our industry.
International Travel Times Two - 2007
I am in my hotel room in Bangkok waiting for my friend and supplier to pick me up for the day’s activity. We will be visiting a number of different orchid and foliage nurseries during my four days in Thailand. This is the middle stop after eleven days in China and Hong Kong and before three days in Holland. Add in the four travel days and I’m away from home for 22 days during a very busy shipping season. This is about the average amount of time it takes to go around the world and be effective. How does it make sense to spend so much time traveling when there’s so much productive work to be done at home?
For a change, I’m not making the trip alone. There’s a bright young woman right out of university who has joined the company and in her first seven months this will be her second trip around the world. It’s quite nice to have her along as I easily get confused about which direction to go in the enormous trade fair halls. More importantly, she does the hard work of follow up: ordering products, tracking containers and communicating with loads of suppliers. I am quite good at getting on and off airplanes but not so good at doing all of the detail work that makes the travel more effective. Thankfully, it won’t be long before I do not have to go on these trips at all, as she can do it herself.
What always seems to happen is that I learn more about things that I did not intend to learn about than things that I set out to learn. On the first part of this trip, I was in the bar of the Kowloon Hotel for happy hour and struck up a conversation with someone from Great Britain who manages celebrity garden products. Over the next several days in Hong Kong and China, we were able to meet and trade valuable information on suppliers from different countries. Each of us has spent years doing something similar but with different results. Sharing our knowledge helped both of us a great deal. And all it took was one of us reaching out to say hello to a stranger and engaging in conversation.
Upon my arrival in Bangkok, I was pleasantly surprised to find that accompanying my long-time supplier (who was picking us up from the airport) was a new grower friend of mine from Australia. As it turns out, Barry came to Bangkok at the same time I did. The last time I saw Barry was in Taiwan for the Taiwan Orchid Show last month. I may see him in Australia next month. We spent the day visiting nurseries and comparing information from our experiences. I am quite interested in understanding how the cash-and-carry wholesale system works in Australia and he is interested in learning anything about orchids.
In two days we are off to Holland. I cannot predict what will come of it. We have a full schedule and I hope it’s as productive as the rest of the trip.
When we plan this sort of trip we’re targeting new information about certain products and suppliers and trying to find new and interesting items to offer our customers. The most valuable thing we end up finding though, is interesting people with whom we can share knowledge and mutually multiply our efforts. It’s impossible for one person to do what several people can. People from different parts of the world offer a completely different perception of the shared experience.
Not all of the people I meet are about the business. Last night, coming back late, I ran into Jim in the hotel lobby. The last time I saw Jim was three years ago in the same hotel. This was our third meeting. Jim is a fine man who has lived full his last 70 years. Having migrated from Scotland to Australia as a young man, he has seen quite a bit of the world. I was tired and wanted to go to bed when we ran into one another, but Jim was going to be leaving the next day—I could not miss another conversation, maybe my last, with Jim.
For a change, I’m not making the trip alone. There’s a bright young woman right out of university who has joined the company and in her first seven months this will be her second trip around the world. It’s quite nice to have her along as I easily get confused about which direction to go in the enormous trade fair halls. More importantly, she does the hard work of follow up: ordering products, tracking containers and communicating with loads of suppliers. I am quite good at getting on and off airplanes but not so good at doing all of the detail work that makes the travel more effective. Thankfully, it won’t be long before I do not have to go on these trips at all, as she can do it herself.
What always seems to happen is that I learn more about things that I did not intend to learn about than things that I set out to learn. On the first part of this trip, I was in the bar of the Kowloon Hotel for happy hour and struck up a conversation with someone from Great Britain who manages celebrity garden products. Over the next several days in Hong Kong and China, we were able to meet and trade valuable information on suppliers from different countries. Each of us has spent years doing something similar but with different results. Sharing our knowledge helped both of us a great deal. And all it took was one of us reaching out to say hello to a stranger and engaging in conversation.
Upon my arrival in Bangkok, I was pleasantly surprised to find that accompanying my long-time supplier (who was picking us up from the airport) was a new grower friend of mine from Australia. As it turns out, Barry came to Bangkok at the same time I did. The last time I saw Barry was in Taiwan for the Taiwan Orchid Show last month. I may see him in Australia next month. We spent the day visiting nurseries and comparing information from our experiences. I am quite interested in understanding how the cash-and-carry wholesale system works in Australia and he is interested in learning anything about orchids.
In two days we are off to Holland. I cannot predict what will come of it. We have a full schedule and I hope it’s as productive as the rest of the trip.
When we plan this sort of trip we’re targeting new information about certain products and suppliers and trying to find new and interesting items to offer our customers. The most valuable thing we end up finding though, is interesting people with whom we can share knowledge and mutually multiply our efforts. It’s impossible for one person to do what several people can. People from different parts of the world offer a completely different perception of the shared experience.
Not all of the people I meet are about the business. Last night, coming back late, I ran into Jim in the hotel lobby. The last time I saw Jim was three years ago in the same hotel. This was our third meeting. Jim is a fine man who has lived full his last 70 years. Having migrated from Scotland to Australia as a young man, he has seen quite a bit of the world. I was tired and wanted to go to bed when we ran into one another, but Jim was going to be leaving the next day—I could not miss another conversation, maybe my last, with Jim.
Confidential Flowers - 2007
A friend of mine bought me a signed copy of the new book, Flower Confidential, by Amy Stewart. I’d heard some talk about it from others in the industry who’d already read it, so I was prepared for the worst—that isn’t quite what I encountered.
Much like The Orchid Thief, the book is a lovely account of an outsider’s view of our industry. More importantly, it’s the view of a wealthy urban San Franciscan journalist. Now, the writer may argue with this “wealthy” characterization, but I could have just as easily made the argument that she’s ultra rich, as are all of the people reading this column. That’d be a relative term, not to other Americans or Europeans, but to the people in Third World countries who appear in the book. Ms. Stewart’s encounter with the rose production industry in Ecuador makes me think that this is her first encounter with Third World poverty.
I see this book as: “wealthy journalist meets world and finds it wanting.” The discovery of real entrenched poverty on such a wide scale is always a shock the first time around. It does not seem fair that we have so much and they have so little. Dear Ms. Stewart: The world is not fair. I am sorry this upsets your delicate sensibilities. Your unhappiness with the state of Third World workers is an indication of your high moral and ethical standards based on your upbringing and culture. I wish we could make everyone in the world as rich as we are right away, but we can’t. The best we can do is to help provide them with some sort of ladder that can, over time, improve their quality of life. Doing that within the constraints of an open world market is not so easy.
Ms. Stewart's second shock was to discover that artificial chemicals are used in the production of flowers. Zero tolerance from the USDA is something offshore producers have to live with. They must kill everything. Would we want the USDA to act any differently? No, I don’t think so.
I was pleased to see that a domestic producer was sort of the hero of the book. Lane has worked long and hard to achieve what his company has and he deserves great credit. The idea of biological controls is relatively young as a greenhouse science and the execution of this science requires a high level of training and expertise. This is why these best practices are going to happen in rich countries with well-educated populations first. We also have more capital to make the necessary investments in things like water catch and reuse systems. My company has invested huge amounts of money into these systems but not everyone can afford to. It’s difficult for us to impose our expensive solutions on people who don’t have the money. Ms. Stewart is completely right when she quotes best-practices growers saying these new systems usually result in higher quality at lower cost, but you have to know a lot to make them work.
Anna Ball wrote about the sustainability imperative in the January issue of Grower Talks. I kept thinking about what Anna said while reading Flower Confidential. It’s the direction all of us must go in as an industry, voluntarily or forced. Better to get way ahead of regulation than behind.
Perhaps I’m reacting a little emotionally to the criticisms of the flower industry because I sense the emotional bias in the words of Ms. Stewart. She may not always be right about the facts of the safety of traditional production. This can irritate professionals who know they’re doing things right even if it doesn’t quite meet Ms. Stewart’s elevated standards. On the other hand, her opinions are important because she’s our customer and we must please her. She represents a large and growing portion of the market that cares about where and how things are made.
We are the original green industry. It makes sense that we get even greener. While we’re converting all that CO\sub2\ to cellulose, we should be doing it in a more sustainable way. We can go beyond a zero footprint to a net positive effect on the planet if we’re willing to think and work hard enough. Amy Stewart did us a favor reminding us of this.
Much like The Orchid Thief, the book is a lovely account of an outsider’s view of our industry. More importantly, it’s the view of a wealthy urban San Franciscan journalist. Now, the writer may argue with this “wealthy” characterization, but I could have just as easily made the argument that she’s ultra rich, as are all of the people reading this column. That’d be a relative term, not to other Americans or Europeans, but to the people in Third World countries who appear in the book. Ms. Stewart’s encounter with the rose production industry in Ecuador makes me think that this is her first encounter with Third World poverty.
I see this book as: “wealthy journalist meets world and finds it wanting.” The discovery of real entrenched poverty on such a wide scale is always a shock the first time around. It does not seem fair that we have so much and they have so little. Dear Ms. Stewart: The world is not fair. I am sorry this upsets your delicate sensibilities. Your unhappiness with the state of Third World workers is an indication of your high moral and ethical standards based on your upbringing and culture. I wish we could make everyone in the world as rich as we are right away, but we can’t. The best we can do is to help provide them with some sort of ladder that can, over time, improve their quality of life. Doing that within the constraints of an open world market is not so easy.
Ms. Stewart's second shock was to discover that artificial chemicals are used in the production of flowers. Zero tolerance from the USDA is something offshore producers have to live with. They must kill everything. Would we want the USDA to act any differently? No, I don’t think so.
I was pleased to see that a domestic producer was sort of the hero of the book. Lane has worked long and hard to achieve what his company has and he deserves great credit. The idea of biological controls is relatively young as a greenhouse science and the execution of this science requires a high level of training and expertise. This is why these best practices are going to happen in rich countries with well-educated populations first. We also have more capital to make the necessary investments in things like water catch and reuse systems. My company has invested huge amounts of money into these systems but not everyone can afford to. It’s difficult for us to impose our expensive solutions on people who don’t have the money. Ms. Stewart is completely right when she quotes best-practices growers saying these new systems usually result in higher quality at lower cost, but you have to know a lot to make them work.
Anna Ball wrote about the sustainability imperative in the January issue of Grower Talks. I kept thinking about what Anna said while reading Flower Confidential. It’s the direction all of us must go in as an industry, voluntarily or forced. Better to get way ahead of regulation than behind.
Perhaps I’m reacting a little emotionally to the criticisms of the flower industry because I sense the emotional bias in the words of Ms. Stewart. She may not always be right about the facts of the safety of traditional production. This can irritate professionals who know they’re doing things right even if it doesn’t quite meet Ms. Stewart’s elevated standards. On the other hand, her opinions are important because she’s our customer and we must please her. She represents a large and growing portion of the market that cares about where and how things are made.
We are the original green industry. It makes sense that we get even greener. While we’re converting all that CO\sub2\ to cellulose, we should be doing it in a more sustainable way. We can go beyond a zero footprint to a net positive effect on the planet if we’re willing to think and work hard enough. Amy Stewart did us a favor reminding us of this.
No Show - 2007
Many have read in my previous columns about my company’s commitment to enhance and upgrade our plants, taking them beyond the plant business. We presented a whole bunch of new products at TPIE. We bought all kinds of different design stuff from our local wholesale florist.
Two weeks later, we were shipping a big order of garden arrangements to a major retailer and one of our growing staff stuck three pieces of red sparkly ting ting in a garden. The ting ting greatly improved the appearance of the gardens. We were fortunate that our wholesale florist had ten thousand of these things in stock and we could buy them right away. I realized we would probably not be so lucky next time we needed volume like that.
I had noticed in the “calendar of events” section of one of the trade magazines that the Wholesale Florists and Florists Supplier Association (WF&FSA) trade show is coming up in a little while in Phoenix. This seemed like a good opportunity to meet some importers as well as see the possibilities for decorations. There is no question that we will use huge volumes of this kind of stuff in the future. I went to the Web site and discovered that I had to be pre-approved by staff in order to go buy stuff. I filled out the application and followed up with a phone call the next day because I was concerned that the airfares would go up while waiting for my approval. To my surprise, I got the following from WF&FSA:
“I am sorry that I can not approve your request to attend the WF&FSA Floral Expo as a wholesaler. We recognize you as a grower and therefore a supplier. We have had several suppliers define themselves as wholesalers to attend as wholesalers and have denied all their requests.
The Board of Directors will be addressing our policies in coming meetings, and hopefully we will be able to make the proper adjustments in the future.
I am sorry for the inconvenience.
I recognize your position and importance in the industry, but my hands are tied.”
Well, that's that. No show for Kerry. I am puzzled about whom they are trying to protect. Is there fear that I will roam the aisles trying to sell my plants to the assembled wholesale florists? Puuleeeze, give me a break. Not even worth commenting on. Are they trying to protect my local wholesale guy from me going around him? For medium volumes, it is more convenient and cost effective to deal with a local guy. For very large quantities, I am going to want to deal with the importer even if the local guy gets a little bite on the deal. And as for being a wholesaler … it would be kind of hard for me to sell my production retail. I even operate two cash and carry outlets that serve florists and interior designers in the south and central Florida area. Very wholesale.
So, in their great wisdom, whom did the organization protect? They protected their exhibitor members from getting my business. I am not sure how exactly that helps them. Years ago I had experience with WF&FSA when they and FMA did shows together. The shows were much bigger then. Judging from their letter, they have had several requests from growers to go to the show. I am not surprised that more growers are interested in adding value to the stuff the produce, yet none are allowed to buy from the WF&FSA exhibitors.
I guess I should just forget about all this crazy upgrade stuff and write letters to wholesale florists asking them to buy my stuff. Um, no, that’s not going to happen. I already do a considerable amount of importing from China of containers and pots. This just means a couple more days of looking at shows in China, sourcing the stuff I would’ve gotten at the WF&FSA show. Now I will be forced to import far in excess of my own needs because a forty-foot container holds so much. That means I will have to sell into the market in order to justify the volume required to import. I guess I will be a supplier after all.
While attending the show, maybe some of the WF&FSA members should take a side trip to California’s La Brea Tar Pits, where they can inhale deeply and think about their future.
Two weeks later, we were shipping a big order of garden arrangements to a major retailer and one of our growing staff stuck three pieces of red sparkly ting ting in a garden. The ting ting greatly improved the appearance of the gardens. We were fortunate that our wholesale florist had ten thousand of these things in stock and we could buy them right away. I realized we would probably not be so lucky next time we needed volume like that.
I had noticed in the “calendar of events” section of one of the trade magazines that the Wholesale Florists and Florists Supplier Association (WF&FSA) trade show is coming up in a little while in Phoenix. This seemed like a good opportunity to meet some importers as well as see the possibilities for decorations. There is no question that we will use huge volumes of this kind of stuff in the future. I went to the Web site and discovered that I had to be pre-approved by staff in order to go buy stuff. I filled out the application and followed up with a phone call the next day because I was concerned that the airfares would go up while waiting for my approval. To my surprise, I got the following from WF&FSA:
“I am sorry that I can not approve your request to attend the WF&FSA Floral Expo as a wholesaler. We recognize you as a grower and therefore a supplier. We have had several suppliers define themselves as wholesalers to attend as wholesalers and have denied all their requests.
The Board of Directors will be addressing our policies in coming meetings, and hopefully we will be able to make the proper adjustments in the future.
I am sorry for the inconvenience.
I recognize your position and importance in the industry, but my hands are tied.”
Well, that's that. No show for Kerry. I am puzzled about whom they are trying to protect. Is there fear that I will roam the aisles trying to sell my plants to the assembled wholesale florists? Puuleeeze, give me a break. Not even worth commenting on. Are they trying to protect my local wholesale guy from me going around him? For medium volumes, it is more convenient and cost effective to deal with a local guy. For very large quantities, I am going to want to deal with the importer even if the local guy gets a little bite on the deal. And as for being a wholesaler … it would be kind of hard for me to sell my production retail. I even operate two cash and carry outlets that serve florists and interior designers in the south and central Florida area. Very wholesale.
So, in their great wisdom, whom did the organization protect? They protected their exhibitor members from getting my business. I am not sure how exactly that helps them. Years ago I had experience with WF&FSA when they and FMA did shows together. The shows were much bigger then. Judging from their letter, they have had several requests from growers to go to the show. I am not surprised that more growers are interested in adding value to the stuff the produce, yet none are allowed to buy from the WF&FSA exhibitors.
I guess I should just forget about all this crazy upgrade stuff and write letters to wholesale florists asking them to buy my stuff. Um, no, that’s not going to happen. I already do a considerable amount of importing from China of containers and pots. This just means a couple more days of looking at shows in China, sourcing the stuff I would’ve gotten at the WF&FSA show. Now I will be forced to import far in excess of my own needs because a forty-foot container holds so much. That means I will have to sell into the market in order to justify the volume required to import. I guess I will be a supplier after all.
While attending the show, maybe some of the WF&FSA members should take a side trip to California’s La Brea Tar Pits, where they can inhale deeply and think about their future.
Warm Winter - 2007
We’ve had a strangely warm winter here in Florida. Practically no heating bill compared to the nightmare of last year. The experts say our winter “roast” is due to the El Niño effect, which comes around every 10 to 12 years. Weather maps show a jet stream high over the midsection of our country keeping cold air west and north, far away from Florida and all of the East Coast. Meanwhile, extraordinary freezing is wreaking havoc on parts of California citrus and produce production. I certainly won’t complain, though, since the El Niño effect is said to have caused our very inactive hurricane season this year.
Mid to late January means the Tropical Plant Industry Exhibition (TPIE) in Ft Lauderdale. People from around the world come to this show partly because it’s in Ft. Lauderdale in January. The weather is beautiful. Still, sweating outside at night in January seems, well, unnatural. There are so many shows overlapping in January—how can buyers choose? Aside from weather in Ft. Lauderdale being a big draw, yachts line the docks and canals behind hotels. Walking on these docks make you feel like you’re so close to astonishing wealth—and you are. So much concentrated wealth floating, tethered, waiting to cast off and move on.
Is this amazing display of wealth rare? Not really. We’re a very rich nation with people of all income levels. Wealth is now common. Recent statistics show that the top 20% of wage earners collect 50% of the income and hold 84% of the wealth in this country. Twenty percent may not seem like such a big number until you consider the population of the U.S. is now north of 300 million people. That means there are 60 million very affluent people in our country. What a market. Sixty million rich people to sell stuff to. That’s three times the total population of Australia or Canada, including their poor people.
With this mind, why is it that growers and retailers are obsessed with the lowest possible price points? Most of us believe the cheapest goods win the order and sell at retail. I didn’t notice any bargain brand yachts docked in Ft. Lauderdale. Maybe the owners switched labels on the boats so they wouldn’t be embarrassed among their peers … maybe not. Some of these big boats had plants visible from the outside on their decks and in their salons. Do you think the yacht owners docked at Marina Del Wal-Mart and then ran in to pick up some great plants for the boat? I don’t think so either.
The most under-served segment of our market has been for many years, and remains, this affluent market. There must be a good reason for this. I suppose growing and selling very average product is just easier to do than creating compelling décor or fashion. The poor take what they can get while the affluent are more demanding. My company has been working on more upscale products for some time and it’s true: It’s a lot of work to put together something that people would agree rises to the level of home fashion. Difficult or not, this is where the affluent are going to spend their money. Relative satisfaction is the choice available to the affluent. Competition for this market is so keen that products need to go beyond relative satisfaction to compelling value. That can be hard and risky. Perhaps that’s why most of us sink to the lowest common denominator.
At TPIE, my company showed many new home décor and home fashion products for the first time. This was the result of a great many miles traveled, expenses incurred and designer time applied. One of my fellow growers, upon seeing all this variety arrayed in our stand, said to me, “Kerry, you have too much time on your hands.” Having just worked seven days a week for the last three weeks to help pull this all together, I was not amused. I replied, “No, I just work a lot harder than you do. This stuff doesn’t happen by itself.”
If the idea of extra work to serve the affluent market bothers you, remember: You can just keep on doing that same old thing—you can always blame Wal-Mart.
Mid to late January means the Tropical Plant Industry Exhibition (TPIE) in Ft Lauderdale. People from around the world come to this show partly because it’s in Ft. Lauderdale in January. The weather is beautiful. Still, sweating outside at night in January seems, well, unnatural. There are so many shows overlapping in January—how can buyers choose? Aside from weather in Ft. Lauderdale being a big draw, yachts line the docks and canals behind hotels. Walking on these docks make you feel like you’re so close to astonishing wealth—and you are. So much concentrated wealth floating, tethered, waiting to cast off and move on.
Is this amazing display of wealth rare? Not really. We’re a very rich nation with people of all income levels. Wealth is now common. Recent statistics show that the top 20% of wage earners collect 50% of the income and hold 84% of the wealth in this country. Twenty percent may not seem like such a big number until you consider the population of the U.S. is now north of 300 million people. That means there are 60 million very affluent people in our country. What a market. Sixty million rich people to sell stuff to. That’s three times the total population of Australia or Canada, including their poor people.
With this mind, why is it that growers and retailers are obsessed with the lowest possible price points? Most of us believe the cheapest goods win the order and sell at retail. I didn’t notice any bargain brand yachts docked in Ft. Lauderdale. Maybe the owners switched labels on the boats so they wouldn’t be embarrassed among their peers … maybe not. Some of these big boats had plants visible from the outside on their decks and in their salons. Do you think the yacht owners docked at Marina Del Wal-Mart and then ran in to pick up some great plants for the boat? I don’t think so either.
The most under-served segment of our market has been for many years, and remains, this affluent market. There must be a good reason for this. I suppose growing and selling very average product is just easier to do than creating compelling décor or fashion. The poor take what they can get while the affluent are more demanding. My company has been working on more upscale products for some time and it’s true: It’s a lot of work to put together something that people would agree rises to the level of home fashion. Difficult or not, this is where the affluent are going to spend their money. Relative satisfaction is the choice available to the affluent. Competition for this market is so keen that products need to go beyond relative satisfaction to compelling value. That can be hard and risky. Perhaps that’s why most of us sink to the lowest common denominator.
At TPIE, my company showed many new home décor and home fashion products for the first time. This was the result of a great many miles traveled, expenses incurred and designer time applied. One of my fellow growers, upon seeing all this variety arrayed in our stand, said to me, “Kerry, you have too much time on your hands.” Having just worked seven days a week for the last three weeks to help pull this all together, I was not amused. I replied, “No, I just work a lot harder than you do. This stuff doesn’t happen by itself.”
If the idea of extra work to serve the affluent market bothers you, remember: You can just keep on doing that same old thing—you can always blame Wal-Mart.
Waiting for a Root Canal - 2007
Yesterday was my first trip to an oral surgeon for a root canal. Never having had the experience before, I only could anticipate the event based on the stigmas of fear and loathing that are associated with it. Ringing in my ears were phrases such as, “the only thing worse is a root canal,” “that was almost as painful as a root canal.” Really, when you get down to it, it’s a fear of pain. Anticipated pain is often worse than actual pain. I just wanted to get it over with.
The office was running behind due to someone else’s troublesome teeth. This gave me the opportunity to enjoy an extra hour of anticipation. I’d forgotten my reading glasses so reading the available magazines was out of the question. There was, however, a TIME Magazine with a “Year in Pictures” section. After looking at the TIME’s Year in Pictures (all pictures of global carnage and despair), my mood had not improved. Since I was alone in the waiting room, I picked up Vogue to look at the pictures—looking at Vogue seemed un-masculine and I was a little afraid of being caught in the act. Then again, the glossy magazine was filled with beautiful women wearing beautiful clothes. Suddenly it didn’t seem so bad to spend a little time with Vogue.
I’ve written many times in this publication that we aren’t in the plant business but in the home décor and gift business. I’ve recently made the decision to try to elevate our products to something I’m calling “home fashion.” The difference between home décor and home fashion will be the amount of intellectual property that comes from expert design. Vogue is all about fashion. Hundreds of pages of advertising are aimed at the fashion-buying public. Each designer label has a presence in its pages (which are frequently numerous). The advertisements announce new designs with the hope that consumers will like what they see and purchase it.
Every few months these companies have to completely change their offerings in order to keep customer interested and buying. Enormous effort goes into initial design, promotion, and manufacturing all on speculation that the designer has anticipated the needs and desires of the market well enough to at least break even—hopefully, they’ll make a profit. When all the stars line up, a success produces millions in profit. But then there’s the next season to prepare for. Endless cycles of relentless innovation characterize the fashion industry. Clothes weren’t the only thing promoted in Vogue. Fragrances with stunningly beautiful packaging populated many pages. What can you do to design an increasingly attractive little bottle? A great deal apparently. I’m certain the bottle often costs more to make than its contents.
Does this remind you of our industry? Um, well, no. Can we change and start to compete in the larger fashion world? The difficult word is change. Humans don’t like change even if it’s for the better. Humans fear change to an unreasonable degree. We’re comfortable with what we know. Change can cause pain, and we fear pain more than we realize. Even small changes can throw an organization into spasms of self-inflicted agony. Most of the pain is caused by the struggle between the need for change and the powerful resistance to change. This is the old absolute force meets absolute resistance condition. People in-between feel like they’re being crushed to death. Companies unable to change will find themselves serving fewer and smaller markets. This includes retailers and growers. Companies that embrace rapid changes that serve the market better will get more business.
All of the changes I’m talking about are risk intensive. It’s the same in every industry. For Purina, the big question is, “Will the dogs eat the food?” In floral, it’s, “Will people buy the product and then be satisfied with the experience enough to buy again?” We know product introduction, especially with a fashion component, is very risky. Business is risky. That’s why we can make a profit or a loss depending on how we manage risk.
Avoiding inevitable change is like postponing a root canal. The pain will not go away, it will only get worse. The alternative to taking any risk is a slow and painful deterioration.
The office was running behind due to someone else’s troublesome teeth. This gave me the opportunity to enjoy an extra hour of anticipation. I’d forgotten my reading glasses so reading the available magazines was out of the question. There was, however, a TIME Magazine with a “Year in Pictures” section. After looking at the TIME’s Year in Pictures (all pictures of global carnage and despair), my mood had not improved. Since I was alone in the waiting room, I picked up Vogue to look at the pictures—looking at Vogue seemed un-masculine and I was a little afraid of being caught in the act. Then again, the glossy magazine was filled with beautiful women wearing beautiful clothes. Suddenly it didn’t seem so bad to spend a little time with Vogue.
I’ve written many times in this publication that we aren’t in the plant business but in the home décor and gift business. I’ve recently made the decision to try to elevate our products to something I’m calling “home fashion.” The difference between home décor and home fashion will be the amount of intellectual property that comes from expert design. Vogue is all about fashion. Hundreds of pages of advertising are aimed at the fashion-buying public. Each designer label has a presence in its pages (which are frequently numerous). The advertisements announce new designs with the hope that consumers will like what they see and purchase it.
Every few months these companies have to completely change their offerings in order to keep customer interested and buying. Enormous effort goes into initial design, promotion, and manufacturing all on speculation that the designer has anticipated the needs and desires of the market well enough to at least break even—hopefully, they’ll make a profit. When all the stars line up, a success produces millions in profit. But then there’s the next season to prepare for. Endless cycles of relentless innovation characterize the fashion industry. Clothes weren’t the only thing promoted in Vogue. Fragrances with stunningly beautiful packaging populated many pages. What can you do to design an increasingly attractive little bottle? A great deal apparently. I’m certain the bottle often costs more to make than its contents.
Does this remind you of our industry? Um, well, no. Can we change and start to compete in the larger fashion world? The difficult word is change. Humans don’t like change even if it’s for the better. Humans fear change to an unreasonable degree. We’re comfortable with what we know. Change can cause pain, and we fear pain more than we realize. Even small changes can throw an organization into spasms of self-inflicted agony. Most of the pain is caused by the struggle between the need for change and the powerful resistance to change. This is the old absolute force meets absolute resistance condition. People in-between feel like they’re being crushed to death. Companies unable to change will find themselves serving fewer and smaller markets. This includes retailers and growers. Companies that embrace rapid changes that serve the market better will get more business.
All of the changes I’m talking about are risk intensive. It’s the same in every industry. For Purina, the big question is, “Will the dogs eat the food?” In floral, it’s, “Will people buy the product and then be satisfied with the experience enough to buy again?” We know product introduction, especially with a fashion component, is very risky. Business is risky. That’s why we can make a profit or a loss depending on how we manage risk.
Avoiding inevitable change is like postponing a root canal. The pain will not go away, it will only get worse. The alternative to taking any risk is a slow and painful deterioration.
Tropical Breeze - 2007
January is winter in most parts of the country, but for us in South Florida, it’s the best time of year. With our average daytime temperatures in the mid 70s and night temperatures in the mid 60s, our climate here resembles certain parts of coastal California in the summer, minus the high taxes.
We Floridians live in a kind of winter paradise for tropical plants. Temperatures can dip below freezing, but that doesn’t happen so often. Weather in January is usually dry and cool. It’s truly the perfect climate for a tropical plant show. Fortunately, we have the Tropical Plant Industry Exhibition (TPIE) in Fort Lauderdale January 18-20. It’s an event far enough from Valentine’s Day for non-Floridians to make a quick dash to Florida, look around the neighborhood at what’s really in the greenhouses, and get back home in time to shovel the snow out of their driveways.
The theme for the show this year is “fresh attitudes”—sort of reminds me of the years I was active in the produce association. While we don’t have to worry about making our booths match the theme, it’s certainly a good idea to start out the year with a fresh attitude. A whole new spring is just around the corner. We’ll either make a good profit or do just enough to cover our costs, depending on our attitude going into the major selling season. One option is to take the approach that we’re going to do the same thing as we’ve always done and see how it goes—if you’ve always been wildly successful with that strategy, then please continue.
Most people don’t have that success, yet they do the same old thing year after year. My friend and consultant, Randy Whitesides, says the definition of insane is doing the same thing over and over again and expecting a different result. I guess there’s a lot of insanity out there.
It’s risky to say “today I will try something new or do something different.” If we repeat past efforts and they fail, we can’t really be blamed. Nothing changed, except the market. So maybe the answer is to try a bunch of different things at once and see which ones work. Good ideas are often proven wrong but far more are never even tried. Things that don’t work are easily discarded and successes repeated. The market is in constant change as consumers change their minds about what they want—we just have to try and figure out what that is.
Some things don’t change. People always want good value for money. People want to be successful with the products they buy. That means the plants shouldn’t die right away and the flowers should last a respectable amount of time.
Outside of the basics, consumers are used to getting a little more for their money from consumer goods every year, and every year our industry falls a bit further behind. We say consumers should love our products because they’re naturally beautiful and make people feel good. The working definition of should is “ought to,” but not necessarily “will.” IPods make people, especially young people, feel good AND they deliver much more value every year. Now, I’m not trying to say we need to beat iPods in the consumer market … we do, however, need to change with the market and figure out what’s going on.
Consumers want change but not too much. That’s one of the tricky parts of new product design. Retailers want new product all the time, with one caveat—it must sell well. The risk falls to the producers of consumer goods. It’d be much easier if we just competed with other floral goods producers. Yes, we do compete a bit with iPods (my kids would say it isn’t so because plants aren’t essential whereas iPods are). But still, most of our target market group makes a choice. Fortunately, there’s plenty of space for us in the consumer world. We have lots of opportunity for creativity and risk.
I hope to see you in Fort Lauderdale in January with a fresh attitude and an open mind to new product ideas.
We Floridians live in a kind of winter paradise for tropical plants. Temperatures can dip below freezing, but that doesn’t happen so often. Weather in January is usually dry and cool. It’s truly the perfect climate for a tropical plant show. Fortunately, we have the Tropical Plant Industry Exhibition (TPIE) in Fort Lauderdale January 18-20. It’s an event far enough from Valentine’s Day for non-Floridians to make a quick dash to Florida, look around the neighborhood at what’s really in the greenhouses, and get back home in time to shovel the snow out of their driveways.
The theme for the show this year is “fresh attitudes”—sort of reminds me of the years I was active in the produce association. While we don’t have to worry about making our booths match the theme, it’s certainly a good idea to start out the year with a fresh attitude. A whole new spring is just around the corner. We’ll either make a good profit or do just enough to cover our costs, depending on our attitude going into the major selling season. One option is to take the approach that we’re going to do the same thing as we’ve always done and see how it goes—if you’ve always been wildly successful with that strategy, then please continue.
Most people don’t have that success, yet they do the same old thing year after year. My friend and consultant, Randy Whitesides, says the definition of insane is doing the same thing over and over again and expecting a different result. I guess there’s a lot of insanity out there.
It’s risky to say “today I will try something new or do something different.” If we repeat past efforts and they fail, we can’t really be blamed. Nothing changed, except the market. So maybe the answer is to try a bunch of different things at once and see which ones work. Good ideas are often proven wrong but far more are never even tried. Things that don’t work are easily discarded and successes repeated. The market is in constant change as consumers change their minds about what they want—we just have to try and figure out what that is.
Some things don’t change. People always want good value for money. People want to be successful with the products they buy. That means the plants shouldn’t die right away and the flowers should last a respectable amount of time.
Outside of the basics, consumers are used to getting a little more for their money from consumer goods every year, and every year our industry falls a bit further behind. We say consumers should love our products because they’re naturally beautiful and make people feel good. The working definition of should is “ought to,” but not necessarily “will.” IPods make people, especially young people, feel good AND they deliver much more value every year. Now, I’m not trying to say we need to beat iPods in the consumer market … we do, however, need to change with the market and figure out what’s going on.
Consumers want change but not too much. That’s one of the tricky parts of new product design. Retailers want new product all the time, with one caveat—it must sell well. The risk falls to the producers of consumer goods. It’d be much easier if we just competed with other floral goods producers. Yes, we do compete a bit with iPods (my kids would say it isn’t so because plants aren’t essential whereas iPods are). But still, most of our target market group makes a choice. Fortunately, there’s plenty of space for us in the consumer world. We have lots of opportunity for creativity and risk.
I hope to see you in Fort Lauderdale in January with a fresh attitude and an open mind to new product ideas.
Friday, September 12, 2008
Creative Destruction - Jan. 2008
I just finished Alan Greenspan’s new book, The Age of Turbulence. The first two-thirds can be tough sledding, as Greenspan writes the way he talks. There was some interesting economic history with a little “inside” stuff to make it a little more readable. The last third, in which he gives his opinion on the US and the global economy of recent past and anticipated future, is quite interesting.
Greenspan refers to economist Joseph Schumpeter, who coined the term“creative destruction.” The concept behind the term is simple: In a capitalist system, things are ever-changing, with the new and improved replacing the old. Capital will always seek the most efficient use or return on investment.
I Googled “creative destruction” and got a segment of the original publication from 1942. Schumpeter states, “This process of creative destruction is the essential fact about capitalism.” Later, Schumpeter uses the words “perennial gale of creative destruction.” All of us in business live the words of Joseph Schumpeter every day. There’s no denying the simple and powerful truth of his idea. Of course, when you’re struggling to survive, none of this seems a bit creative.
Our industry got some bad news recently with the announcement that one our best young plant growers, Glass Corner Greenhouses, was halting operations because it couldn’t make ends meet. In the same week, one of the country’s great independent garden center chains, Pike Family Nursery, announced that it would seek protection under Chapter 11 bankruptcy. The Pike situation is in no way related to the process of “creative destruction”; its struggle was caused by natural disaster, drought. I’m certain there are scores of businesses going through the same or worse as this terrible drought continues in the Southeast. Natural disaster causes huge amounts of destruction, both of the wealth and property sort, without any sort of creative upside.
We’ve chosen an industry that’s vulnerable to both natural disasters and creative destruction. With so much risk all the time, we should be a very profitable industry. Unfortunately, we also have an almost perfectly competitive industry. Perfectly competitive industries are characterized by large numbers of sellers, with no one seller having enough market clout to affect prices upward. The number of buyers has been going down and consolidating into a few large chains. We also compete with every other consumer product, including all those cheap imports from China, looking to capture the disposable income of the American consumer.
Since competition is inevitable, we must think about how each of us will survive or thrive in our businesses. There’s no one answer to the question of how to compete effectively. Some compete by being the low-cost producer, while others stake out the high end of the market with lots of service. Some companies develop a very high level of expertise in a narrow range of goods of which they can dominate the production.
In his book, Greenspan says that the economy can only grow at a rate of 3% sustained over time, although invention and science are advancing much more rapidly. His explanation for this is that humans, whose brains have not changed significantly since the times of ancient Greece, are just not smart enough to take advantage of all the invention around us. This, coming from one the smartest guys around, was a little hard to read. It may be true, but I hope not. Even if it is true, that means to effectively compete, you need to improve your product, your operation or yourself at a rate greater than 3% each year. If you improve things 5%a year, then in 10 years, thanks to compounding, you’ll be more than 20% ahead of your average competitors. We all know that self-improvement is a good thing, but it may be a requirement for economic survival.
The good news is there are tons of ways to engage in self-improvement. Community colleges are a great place to take courses, for example. Self-improvement won’t happen by itself; and it may not ensure we survive a natural disaster, but it should serve to make us more competitive in normal times.
Greenspan refers to economist Joseph Schumpeter, who coined the term“creative destruction.” The concept behind the term is simple: In a capitalist system, things are ever-changing, with the new and improved replacing the old. Capital will always seek the most efficient use or return on investment.
I Googled “creative destruction” and got a segment of the original publication from 1942. Schumpeter states, “This process of creative destruction is the essential fact about capitalism.” Later, Schumpeter uses the words “perennial gale of creative destruction.” All of us in business live the words of Joseph Schumpeter every day. There’s no denying the simple and powerful truth of his idea. Of course, when you’re struggling to survive, none of this seems a bit creative.
Our industry got some bad news recently with the announcement that one our best young plant growers, Glass Corner Greenhouses, was halting operations because it couldn’t make ends meet. In the same week, one of the country’s great independent garden center chains, Pike Family Nursery, announced that it would seek protection under Chapter 11 bankruptcy. The Pike situation is in no way related to the process of “creative destruction”; its struggle was caused by natural disaster, drought. I’m certain there are scores of businesses going through the same or worse as this terrible drought continues in the Southeast. Natural disaster causes huge amounts of destruction, both of the wealth and property sort, without any sort of creative upside.
We’ve chosen an industry that’s vulnerable to both natural disasters and creative destruction. With so much risk all the time, we should be a very profitable industry. Unfortunately, we also have an almost perfectly competitive industry. Perfectly competitive industries are characterized by large numbers of sellers, with no one seller having enough market clout to affect prices upward. The number of buyers has been going down and consolidating into a few large chains. We also compete with every other consumer product, including all those cheap imports from China, looking to capture the disposable income of the American consumer.
Since competition is inevitable, we must think about how each of us will survive or thrive in our businesses. There’s no one answer to the question of how to compete effectively. Some compete by being the low-cost producer, while others stake out the high end of the market with lots of service. Some companies develop a very high level of expertise in a narrow range of goods of which they can dominate the production.
In his book, Greenspan says that the economy can only grow at a rate of 3% sustained over time, although invention and science are advancing much more rapidly. His explanation for this is that humans, whose brains have not changed significantly since the times of ancient Greece, are just not smart enough to take advantage of all the invention around us. This, coming from one the smartest guys around, was a little hard to read. It may be true, but I hope not. Even if it is true, that means to effectively compete, you need to improve your product, your operation or yourself at a rate greater than 3% each year. If you improve things 5%a year, then in 10 years, thanks to compounding, you’ll be more than 20% ahead of your average competitors. We all know that self-improvement is a good thing, but it may be a requirement for economic survival.
The good news is there are tons of ways to engage in self-improvement. Community colleges are a great place to take courses, for example. Self-improvement won’t happen by itself; and it may not ensure we survive a natural disaster, but it should serve to make us more competitive in normal times.
Insanely Cool - Feb. 2008
I like to go into the local Apple store the day after Thanksgiving. It’s the only day of the year that the store has a big sale on standard Apple products. Not everything is reduced, but there’s enough stuff to make it fun to look. My kids all got new iPods for Christmas last year, so I was under strict instructions from my wife to not buy anything. We have two kids in college right now and are feeling a bit poorer than usual, so my wife has declared this Christmas gift free. (Okay, not totally gift free but not the usual indulgence I like so much.) Luckily, it’s completely free to look at the cool stuff in the stores.
I’ve been going through the sale advertisements in the newspaper looking for some compelling stuff that will overcome my wife’s temporary Grinchness. I’m waiting for the moment when I can say, “Look at this. How can we NOT buy this for one of the kids?” The inspiration has not come. The memory sticks and cards get bigger, but how many and what capacity do you really need? I didn’t even get up early the day after Thanksgiving to get bargains this year. Somehow, I felt un-American to not partake in this great tradition.
Major American retailers have trained millions of shoppers to wait for the big discounts—the trick is that once they have the shopper in their stores, the shoppers will buy other stuff that isn’t on sale. Though sometimes, the people who get up early to be at the store at 5 a.m. just want the really good deal and nothing else. It seems the retailers are getting the behavior they reward. People always respond to the reward systems that are in place in the market or in the organization where they work. In this case, if you are patient and buy at the right time, you get rewarded with good deals.
Is there any way to get out of the trap of only selling stuff at the lowest possible retail price? Looking at the number of bargains in the newspaper that arrives on Thanksgiving morning would make a typical consumer think that he or she should wait for the big sale as a rule. One company, though, does not seem to need so many sales: Apple.
The products from Apple are so compelling that they only go on sale one day a year and even then, only a few items at very little discount. Years ago, Steve Jobs said that Apple needed to create and sell “insanely cool” stuff. They have achieved that goal and, as a consequence, the price they sell at is fixed at a high profit margin.
It is that simple: Create insanely cool or otherwise compelling products and the consumer will pay the price asked without hesitation. I know that seems easy to say and pretty hard to do. But is it? Customers want high relative value for their money. An iPhone with its bright screen and smooth surface is way out there in terms of value for money because there’s nothing like it available. But still, it must compete with every other consumer product available. Can you tell I really want one of those toys?
We don’t sell high-tech gadgets, but we do sell beautiful living plants and flowers. Our plants are really beautiful if they’re grown to full glory, packaged and delivered well, and displayed and maintained well at retail. Failure to execute any of these steps results in product that’s far from a compelling value to the end customer.
It’s much easier to blame “the market” for our own failings. We should look in a mirror and accept responsibility for the failure of our products or stores. Yes, a local event can have profound effect on sales, like the major drought in the Southeast. But those are exceptions. Most of the time, the failure to execute all of the boring details leads to low product quality. Doing the extra work to make the product right every time isn’t nearly as exciting as dreaming up the next idea, but we still have to do it.
We need to constantly remind ourselves that we, too, can have insanely cool products if we put a little more effort into them.
I’ve been going through the sale advertisements in the newspaper looking for some compelling stuff that will overcome my wife’s temporary Grinchness. I’m waiting for the moment when I can say, “Look at this. How can we NOT buy this for one of the kids?” The inspiration has not come. The memory sticks and cards get bigger, but how many and what capacity do you really need? I didn’t even get up early the day after Thanksgiving to get bargains this year. Somehow, I felt un-American to not partake in this great tradition.
Major American retailers have trained millions of shoppers to wait for the big discounts—the trick is that once they have the shopper in their stores, the shoppers will buy other stuff that isn’t on sale. Though sometimes, the people who get up early to be at the store at 5 a.m. just want the really good deal and nothing else. It seems the retailers are getting the behavior they reward. People always respond to the reward systems that are in place in the market or in the organization where they work. In this case, if you are patient and buy at the right time, you get rewarded with good deals.
Is there any way to get out of the trap of only selling stuff at the lowest possible retail price? Looking at the number of bargains in the newspaper that arrives on Thanksgiving morning would make a typical consumer think that he or she should wait for the big sale as a rule. One company, though, does not seem to need so many sales: Apple.
The products from Apple are so compelling that they only go on sale one day a year and even then, only a few items at very little discount. Years ago, Steve Jobs said that Apple needed to create and sell “insanely cool” stuff. They have achieved that goal and, as a consequence, the price they sell at is fixed at a high profit margin.
It is that simple: Create insanely cool or otherwise compelling products and the consumer will pay the price asked without hesitation. I know that seems easy to say and pretty hard to do. But is it? Customers want high relative value for their money. An iPhone with its bright screen and smooth surface is way out there in terms of value for money because there’s nothing like it available. But still, it must compete with every other consumer product available. Can you tell I really want one of those toys?
We don’t sell high-tech gadgets, but we do sell beautiful living plants and flowers. Our plants are really beautiful if they’re grown to full glory, packaged and delivered well, and displayed and maintained well at retail. Failure to execute any of these steps results in product that’s far from a compelling value to the end customer.
It’s much easier to blame “the market” for our own failings. We should look in a mirror and accept responsibility for the failure of our products or stores. Yes, a local event can have profound effect on sales, like the major drought in the Southeast. But those are exceptions. Most of the time, the failure to execute all of the boring details leads to low product quality. Doing the extra work to make the product right every time isn’t nearly as exciting as dreaming up the next idea, but we still have to do it.
We need to constantly remind ourselves that we, too, can have insanely cool products if we put a little more effort into them.
Kitchen Nightmares - March 2008
Like millions of people, I love the new generation of cooking shows. An entertainment form, pioneered by the great Julia Child and furthered by Martha Stewart, has developed into a whole network dedicated to food entertainment: Food Network. BBC America and Fine Living also have their share of celebrity chefs.
One of my favorite cooking shows is called “Kitchen Nightmares.” It’s on BBC America, starring Chef Gordon Ramsay. The premise of the show is that Chef Ramsay takes a failing restaurant, analyzes it, and tries to save it from insolvency. By the time Chef Ramsay arrives with camera crew and some money to spend on rehabilitating the restaurant, the owners are deep in debt and usually about to lose their business and home. In return for money and advice, the struggling restaurateurs must agree that their failures be available for broadcast on national television.
We all know that good television these days is often made up of real lives, drama and devastation. Why is it that we seem to take so much interest, dare I say pleasure, in the pain and failure of others? I think it’s because most of us know that “there, but for the grace of God, go I.” We have all had enough tragedy in or near our own lives to empathize with other desperate people, such as those on reality TV. We want them to receive redemption as an example of hope for us all.
The problem in these restaurants is always the same: bad management. Most often the business is failing because the owner operator is unable to see his or her own faulty management practices. Sometimes it’s irresponsible hired management. One common mistake of bad management is an overly complicated menu that’s expensive and difficult to execute. I was surprised to see how often this is a problem. Chef Ramsay proves that most people want simple food executed extremely well. Haute cuisine should be left to the few Michelinrated restaurants with highly trained chefs on staff.
The next most common problem is customers waiting far too long for their ordered food. This is usually caused by the very complicated nature and wide variety of the items on the menu. Delays cause confusion and upset that, in turn, cause more delays. Customers don’t come back. They don’t buy again. The restaurant closes.
What’s interesting is that the business operators on these shows seem to accept change only when they have a financial gun to their heads. The numbers show that often, even in the face of certain failure, people will not change what they are doing in order to improve and survive. Restaurants as a business have a higher failure rate than most small businesses. New research seems to indicate the three-year failure rate at about 61%. This explains why people frequently have to put up their homes as collateral to get a loan from a bank. When their business fails, they lose their homes to the bank to pay off the bad loan. It is possible to start a restaurant without a huge amount of capital, putting the dream within reach for many people.
I have been most impressed by how intensely hard and long chefs and restaurant operators work. I like to cook as a hobby but can’t imagine trying to prepare and serve more than 100 dinners in a five-hour service. This continuous hard labor clearly wears on the people involved. I can only imagine the psychological pressure the creeping financial ruin brings up for these operators.
I’ve learned a lot of things from Chef Ramsay, many which are applicable to any industry: Work a little harder than you have to. Customers are impatient. Make sure you can produce what you offer. Try to keep products simple enough that you can deliver them consistently. Don’t try to sell customers stuff they don’t want for more than they want to pay. The world does not care if you have personal problems or even tragedy; they just want good stuff. You always have too many competitors. Know what you are good at and not good at. Let people who are better than you at certain things do their jobs without interference from you. All people want to be treated well. Oh yeah, and never own a restaurant.
One of my favorite cooking shows is called “Kitchen Nightmares.” It’s on BBC America, starring Chef Gordon Ramsay. The premise of the show is that Chef Ramsay takes a failing restaurant, analyzes it, and tries to save it from insolvency. By the time Chef Ramsay arrives with camera crew and some money to spend on rehabilitating the restaurant, the owners are deep in debt and usually about to lose their business and home. In return for money and advice, the struggling restaurateurs must agree that their failures be available for broadcast on national television.
We all know that good television these days is often made up of real lives, drama and devastation. Why is it that we seem to take so much interest, dare I say pleasure, in the pain and failure of others? I think it’s because most of us know that “there, but for the grace of God, go I.” We have all had enough tragedy in or near our own lives to empathize with other desperate people, such as those on reality TV. We want them to receive redemption as an example of hope for us all.
The problem in these restaurants is always the same: bad management. Most often the business is failing because the owner operator is unable to see his or her own faulty management practices. Sometimes it’s irresponsible hired management. One common mistake of bad management is an overly complicated menu that’s expensive and difficult to execute. I was surprised to see how often this is a problem. Chef Ramsay proves that most people want simple food executed extremely well. Haute cuisine should be left to the few Michelinrated restaurants with highly trained chefs on staff.
The next most common problem is customers waiting far too long for their ordered food. This is usually caused by the very complicated nature and wide variety of the items on the menu. Delays cause confusion and upset that, in turn, cause more delays. Customers don’t come back. They don’t buy again. The restaurant closes.
What’s interesting is that the business operators on these shows seem to accept change only when they have a financial gun to their heads. The numbers show that often, even in the face of certain failure, people will not change what they are doing in order to improve and survive. Restaurants as a business have a higher failure rate than most small businesses. New research seems to indicate the three-year failure rate at about 61%. This explains why people frequently have to put up their homes as collateral to get a loan from a bank. When their business fails, they lose their homes to the bank to pay off the bad loan. It is possible to start a restaurant without a huge amount of capital, putting the dream within reach for many people.
I have been most impressed by how intensely hard and long chefs and restaurant operators work. I like to cook as a hobby but can’t imagine trying to prepare and serve more than 100 dinners in a five-hour service. This continuous hard labor clearly wears on the people involved. I can only imagine the psychological pressure the creeping financial ruin brings up for these operators.
I’ve learned a lot of things from Chef Ramsay, many which are applicable to any industry: Work a little harder than you have to. Customers are impatient. Make sure you can produce what you offer. Try to keep products simple enough that you can deliver them consistently. Don’t try to sell customers stuff they don’t want for more than they want to pay. The world does not care if you have personal problems or even tragedy; they just want good stuff. You always have too many competitors. Know what you are good at and not good at. Let people who are better than you at certain things do their jobs without interference from you. All people want to be treated well. Oh yeah, and never own a restaurant.
Aspirations - April 2008
We humans are an aspiring species. It’s unlikely that you’d be able to find someone who says, “I would like a demotion” or “I want to have less money than I have now.” We all want to be better off. Many of us dream unreasonable dreams of great fame and wealth, but that’s all those are: dreams. Normal, daily aspirations are far more attainable. We want to be thinner, healthier and more fashionable. Millions of magazines filled with images of beautiful people cater to this fundamental human desire.
Charles Revson, the founder of Revlon, was quoted as saying, “In the factory we make cosmetics; in the store we sell hope.” Hope for what? A better quality of life, whatever that means to the individual buyer. We, too, can be part of this world with our products, if we try. Plants and flowers always appear on the sets of movies and high-quality television shows. They’re also prominent in print media. All sorts of companies associate themselves with plants and flowers. We are the original green industry—even oil companies try to borrow our green cloak.
So what do we do to engage that great aspiring population out there? Well, if you think blowmolded dirty black pots are fashionable, then you might just want to stick with what you already have. But for the rest of us: So far we’ve done very little to capitalize on, or further encourage, the emotional connection people naturally have with the beautiful living things we produce and retail. Our products are less beautiful when packaged and presented poorly because they give the end consumer the impression of low quality and low value. Perfume is always packaged beautifully. Most industries spend a lot of time and energy on how their products look by taking particular care in the products’ packaging and shelf display.
Most consumer products companies would never allow less-than-great-looking products to sit on the shelf, much less allow their premiere items to sit next to their less-than-great-looking items, yet this is how most floral product ends up being displayed at retail. This is not entirely the fault of the retailer, but there is much that can be improved ... like, take the dead stuff off the shelf. Growers also need to understand the environment their product goes into. A store shelf isn’t nearly as good as a greenhouse; most plants won’t thrive in a retail situation.
We must rethink our own attitudes towards our products. Mostly, plants and flowers have been treated as commodities. And as soon as something is a commodity, it’s simply a race to the bottom: who can provide the lowest price for the minimum-acceptable quality? The great fashion brands spend millions of dollars to remind consumers that their product is something special. Full-page ads in consumer magazines show beautiful models in exotic locations wearing these brands, reminding consumers that they could, just by purchasing the branded item, be part of the glamour portrayed in the picture. A fantasy, you say? Yes, but a harmless one. Making a woman feel good because of the purse she carries is no sin. It’s probably an act of goodwill: helping people feel better about themselves.
My son, now 18 and away at university, is quite loyal to certain fashion brands that appeal to his peers. I don’t quite understand what exactly drives his decisions about brands, but I do know that brands are a powerful motivator. A brand allows him to differentiate himself from other (older) generations and identify with his peers. Every generation wants to make its own statement. Some fashion labels come and go but the great ones endure. They endure because of continuous reinvention and continuous reinvestment in the brand identity. Consumers are attracted to that. As an industry, we hardly try at all. Who aspires to buy OUR stuff? There are some efforts that have been successful in their own way, such as Proven Winners. The tricky part will be to maintain quality with growth. Still, I wouldn’t call them an aspiring brand. It’s more of a simplifying, “we tell you what is good” brand. We need to do more and go further. We need to be in the fashion space.
Or, maybe I’m just talking to myself.
Charles Revson, the founder of Revlon, was quoted as saying, “In the factory we make cosmetics; in the store we sell hope.” Hope for what? A better quality of life, whatever that means to the individual buyer. We, too, can be part of this world with our products, if we try. Plants and flowers always appear on the sets of movies and high-quality television shows. They’re also prominent in print media. All sorts of companies associate themselves with plants and flowers. We are the original green industry—even oil companies try to borrow our green cloak.
So what do we do to engage that great aspiring population out there? Well, if you think blowmolded dirty black pots are fashionable, then you might just want to stick with what you already have. But for the rest of us: So far we’ve done very little to capitalize on, or further encourage, the emotional connection people naturally have with the beautiful living things we produce and retail. Our products are less beautiful when packaged and presented poorly because they give the end consumer the impression of low quality and low value. Perfume is always packaged beautifully. Most industries spend a lot of time and energy on how their products look by taking particular care in the products’ packaging and shelf display.
Most consumer products companies would never allow less-than-great-looking products to sit on the shelf, much less allow their premiere items to sit next to their less-than-great-looking items, yet this is how most floral product ends up being displayed at retail. This is not entirely the fault of the retailer, but there is much that can be improved ... like, take the dead stuff off the shelf. Growers also need to understand the environment their product goes into. A store shelf isn’t nearly as good as a greenhouse; most plants won’t thrive in a retail situation.
We must rethink our own attitudes towards our products. Mostly, plants and flowers have been treated as commodities. And as soon as something is a commodity, it’s simply a race to the bottom: who can provide the lowest price for the minimum-acceptable quality? The great fashion brands spend millions of dollars to remind consumers that their product is something special. Full-page ads in consumer magazines show beautiful models in exotic locations wearing these brands, reminding consumers that they could, just by purchasing the branded item, be part of the glamour portrayed in the picture. A fantasy, you say? Yes, but a harmless one. Making a woman feel good because of the purse she carries is no sin. It’s probably an act of goodwill: helping people feel better about themselves.
My son, now 18 and away at university, is quite loyal to certain fashion brands that appeal to his peers. I don’t quite understand what exactly drives his decisions about brands, but I do know that brands are a powerful motivator. A brand allows him to differentiate himself from other (older) generations and identify with his peers. Every generation wants to make its own statement. Some fashion labels come and go but the great ones endure. They endure because of continuous reinvention and continuous reinvestment in the brand identity. Consumers are attracted to that. As an industry, we hardly try at all. Who aspires to buy OUR stuff? There are some efforts that have been successful in their own way, such as Proven Winners. The tricky part will be to maintain quality with growth. Still, I wouldn’t call them an aspiring brand. It’s more of a simplifying, “we tell you what is good” brand. We need to do more and go further. We need to be in the fashion space.
Or, maybe I’m just talking to myself.
Competing Opinions - May 2008
People hate change. They resist it with every fiber of their being. I just finished another audio book dealing with management issues. This book was written by the famed Gary Hamel. Perhaps you remember that Hamel, along with C. K. Prahalad, wrote the milestone book, Competing for the Future. His new book, though, will not become so well read or trusted. (I should preface any further writing by saying that Gary Hamel is a famous international business school educator and consultant and I am not; however, I’m still entitled to my opinion.)
Mr. Hamel is on a noble mission to fundamentally revolutionize management in all of its current structural forms. The main enemy is the autocratic top-down system developed to manage large groups of people for a common purpose. Mr. Hamel states that these structures have outlived their usefulness, and no less than a complete rethinking of organizational structure must occur to take us to a better future. He gives examples of exceptional innovators as companies that are today showing us the way forward. Google was the only company profiled that I hadn’t already read about numerous times.
Mr. Hamel loves this freewheeling organization. At Google, ideas are posted to an internal web site and everyone is free to argue the merit of each presented idea. Ultimately, the best ideas float, or buzz, to the top.
Google is fun to read about and easy to admire. The question is: Are they in any way analogous to the rest of the world? Google started its public life with billions of dollars cash in the bank. They currently exceed $1 million in revenue per employee. Oh, and they only hire the top 1%of people graduating from the most elite institutions, giving them a workforce of driven and brilliant people. Other than that, they’re just like the rest of us.
Mr. Hamel is a big believer in democratic work-places. He uses elected officials as an example of people who are forced to face their “most ardent detractors” regularly. So far so good, but nowhere does Mr. Hamel assert that the outcomes of the democratic process would yield a similar good business outcome—and that is where his metaphor falls apart. In defense of Mr. Hamel’s democratic inclinations, I’d have to agree that more collaboration across ranks to solve problems and make decisions is very good stuff. I recognize that strict top-down decision making cheats the company out of the input of many talented people. All of us are always smarter than any of us. That said, decisions have to be made and people making them have to be held accountable for the decision. It’s hard to hold a very large group accountable for anything.
The greatest point of disagreement I have with Mr. Hamel is on his views on change. To paraphrase him, “Many say that people don’t like change. I disagree; people like change and they like a challenge.” Earth to Mr. Hamel! The air must be quite thin in that ivory tower you live in! Can you give us the location of the parallel universe that informed you that “people like change”? My greatest management challenge for my entire career has been and continues to be getting people to tolerate, let alone embrace, change. People hate change. They resist it with every fiber of their being. The exception to this rule is the very young. They have done nothing but change continuously from birth. Problem is, they have no power in organizations dominated by “experienced “managers and set-in-stone attitudes.
Overall, the book has the feel of something written by a rich and famous business consultant who needed to get another book out the door. If you want a really instructive piece on the future of management, I’d suggest anything by Peter Drucker or, better yet, Charles Handy. Handy’s book, The Age of Paradox, is full of insight into the future of work and management and gives very usable guidance.
Mr. Hamel is dismissive of the old form of management designed to maximize efficiency. My experience in the real world is that if you can master these old fundamentals of management, you’re probably in really good shape as a business. Or maybe I just have low aspirations.
Mr. Hamel is on a noble mission to fundamentally revolutionize management in all of its current structural forms. The main enemy is the autocratic top-down system developed to manage large groups of people for a common purpose. Mr. Hamel states that these structures have outlived their usefulness, and no less than a complete rethinking of organizational structure must occur to take us to a better future. He gives examples of exceptional innovators as companies that are today showing us the way forward. Google was the only company profiled that I hadn’t already read about numerous times.
Mr. Hamel loves this freewheeling organization. At Google, ideas are posted to an internal web site and everyone is free to argue the merit of each presented idea. Ultimately, the best ideas float, or buzz, to the top.
Google is fun to read about and easy to admire. The question is: Are they in any way analogous to the rest of the world? Google started its public life with billions of dollars cash in the bank. They currently exceed $1 million in revenue per employee. Oh, and they only hire the top 1%of people graduating from the most elite institutions, giving them a workforce of driven and brilliant people. Other than that, they’re just like the rest of us.
Mr. Hamel is a big believer in democratic work-places. He uses elected officials as an example of people who are forced to face their “most ardent detractors” regularly. So far so good, but nowhere does Mr. Hamel assert that the outcomes of the democratic process would yield a similar good business outcome—and that is where his metaphor falls apart. In defense of Mr. Hamel’s democratic inclinations, I’d have to agree that more collaboration across ranks to solve problems and make decisions is very good stuff. I recognize that strict top-down decision making cheats the company out of the input of many talented people. All of us are always smarter than any of us. That said, decisions have to be made and people making them have to be held accountable for the decision. It’s hard to hold a very large group accountable for anything.
The greatest point of disagreement I have with Mr. Hamel is on his views on change. To paraphrase him, “Many say that people don’t like change. I disagree; people like change and they like a challenge.” Earth to Mr. Hamel! The air must be quite thin in that ivory tower you live in! Can you give us the location of the parallel universe that informed you that “people like change”? My greatest management challenge for my entire career has been and continues to be getting people to tolerate, let alone embrace, change. People hate change. They resist it with every fiber of their being. The exception to this rule is the very young. They have done nothing but change continuously from birth. Problem is, they have no power in organizations dominated by “experienced “managers and set-in-stone attitudes.
Overall, the book has the feel of something written by a rich and famous business consultant who needed to get another book out the door. If you want a really instructive piece on the future of management, I’d suggest anything by Peter Drucker or, better yet, Charles Handy. Handy’s book, The Age of Paradox, is full of insight into the future of work and management and gives very usable guidance.
Mr. Hamel is dismissive of the old form of management designed to maximize efficiency. My experience in the real world is that if you can master these old fundamentals of management, you’re probably in really good shape as a business. Or maybe I just have low aspirations.
Thursday, September 11, 2008
Economic Fears - June 2008
Feeling a little uneasy? How about a lot uneasy? Yeah, me too. Have you tried to get a loan from a bank lately? They’re running scared. Banks will not lend to one another even overnight because they’re afraid they won’t get paid back. This seems crazy to me but that is what’s going on.
So why are we, and the whole economy, affected by big financial institutions making bad mortgage loans? Because the global financial system is based on trust, and these guys did something dishonest, selling bad credit as good, and that makes the world financial system stop. Nobody can trust another. Fear becomes a stronger emotion than greed. According to a survey of banks done by the Federal Reserve, 75% to 85% of bankers expect that in the coming year, the quality of their loan portfolios will deteriorate. That is, borrowers will get weaker and have a hard time paying back their loans. In anticipation of this, banks are making it harder to borrow money and charging higher spreads over their cost of funds.
Sound like a kind of self-enforcing spiral? Additionally, by raising prices for credit, they hope to recoup some of the massive losses incurred from their shady behavior. So if you find the interest rate on your credit card just went up or the bank has told you that at renewal time rates will go up, you can feel better knowing that you’re paying for their mistakes. Construction is in the sewer. Projects are being completed with no plan for additional projects. It’s almost certain that millions of people will lose their jobs, especially those in the building trades. What will landscape people who have depended on new construction do?
There are not many good choices for that segment of the working population. Our only option is to get yet more efficient and productive. We have no choice. Consumers are paying much more for basic necessities than even one year ago. Food and gas prices are way up. People are not earning more, though, so a larger portion of their income goes towards these basics. We, in our industry, produce non-essential luxury goods. In order to compete with all of the other non-essential products being offered, we have to increasingly deliver more value.
If you feel like you’ve already done all you can in this area, I suggest having someone from outside the business take a look around. Fresh eyes always have an easier time finding opportunities for improvement. Every little thing you can do to add value and trim costs will be of great benefit when this market turns around. The good news is that this situation is temporary. Markets always overreact because they are governed by human emotion. How long it will take to correct is anybody’s guess. Right now, fear is stronger than greed … but just wait a while and greed will come roaring back, strong as ever. So what to do? This is not my first time down this path. I think the right thing to do is be brave and thoughtful. Do not fall prey to fear but be mindful that others around you will. This is a time to be fact-based and to try hard to suspend emotion. Your sales are what they are, and your overhead must not exceed sales.
Overheads must be adjusted to match income through whatever means necessary. If you do not currently produce a forward-looking budget that you can compare against the present, it is time to start. More good news is that people who have money still have money and they are the great majority of our market. But their expectations for value go up when they, too, feel the cold grip of financial fear. Luckily, our products make people feel good. We need to remind them what great pleasure they get from this inexpensive indulgence.
A little point of purchase could go a long way—imagination and innovation are your lowcost friends in these choppy markets. Humans are so creative, especially when we need to be. People love our products when produced and marketed well. In the past, we’ve had the luxury of not worrying about our creative marketing. Maybe the market will push us all to improve on this front—and that, there, is the silver lining.
So why are we, and the whole economy, affected by big financial institutions making bad mortgage loans? Because the global financial system is based on trust, and these guys did something dishonest, selling bad credit as good, and that makes the world financial system stop. Nobody can trust another. Fear becomes a stronger emotion than greed. According to a survey of banks done by the Federal Reserve, 75% to 85% of bankers expect that in the coming year, the quality of their loan portfolios will deteriorate. That is, borrowers will get weaker and have a hard time paying back their loans. In anticipation of this, banks are making it harder to borrow money and charging higher spreads over their cost of funds.
Sound like a kind of self-enforcing spiral? Additionally, by raising prices for credit, they hope to recoup some of the massive losses incurred from their shady behavior. So if you find the interest rate on your credit card just went up or the bank has told you that at renewal time rates will go up, you can feel better knowing that you’re paying for their mistakes. Construction is in the sewer. Projects are being completed with no plan for additional projects. It’s almost certain that millions of people will lose their jobs, especially those in the building trades. What will landscape people who have depended on new construction do?
There are not many good choices for that segment of the working population. Our only option is to get yet more efficient and productive. We have no choice. Consumers are paying much more for basic necessities than even one year ago. Food and gas prices are way up. People are not earning more, though, so a larger portion of their income goes towards these basics. We, in our industry, produce non-essential luxury goods. In order to compete with all of the other non-essential products being offered, we have to increasingly deliver more value.
If you feel like you’ve already done all you can in this area, I suggest having someone from outside the business take a look around. Fresh eyes always have an easier time finding opportunities for improvement. Every little thing you can do to add value and trim costs will be of great benefit when this market turns around. The good news is that this situation is temporary. Markets always overreact because they are governed by human emotion. How long it will take to correct is anybody’s guess. Right now, fear is stronger than greed … but just wait a while and greed will come roaring back, strong as ever. So what to do? This is not my first time down this path. I think the right thing to do is be brave and thoughtful. Do not fall prey to fear but be mindful that others around you will. This is a time to be fact-based and to try hard to suspend emotion. Your sales are what they are, and your overhead must not exceed sales.
Overheads must be adjusted to match income through whatever means necessary. If you do not currently produce a forward-looking budget that you can compare against the present, it is time to start. More good news is that people who have money still have money and they are the great majority of our market. But their expectations for value go up when they, too, feel the cold grip of financial fear. Luckily, our products make people feel good. We need to remind them what great pleasure they get from this inexpensive indulgence.
A little point of purchase could go a long way—imagination and innovation are your lowcost friends in these choppy markets. Humans are so creative, especially when we need to be. People love our products when produced and marketed well. In the past, we’ve had the luxury of not worrying about our creative marketing. Maybe the market will push us all to improve on this front—and that, there, is the silver lining.
A Dinner Guest's Lesson - July 2008
Last weekend my good friend Joe and his wife came to dinner. It was the best of both worlds: my house—so I did not have to drive—and Joe’s cooking. Joe and his wife brought along another couple that we hadn’t met before. Betty is a busy dermatologist and her husband, Bill, is a fine art photographer.
We have a small Koi pond in the entryway. Betty and Bill also have some Koi that are new to them. Betty spotted the fish food and asked where she could buy the product online. My wife said it was available at all the big chain pet places in town. That would not do, as Betty did not have time to go to stores. In fact, going to a store was not an option that Betty would consider.
This seemed kind of extreme to me, but with a busy medical practice and two young daughters, money was not a limiting factor but time was. More people fall into this category every day. The people who can most afford to purchase our floral products have the least time to shop for them. What can we do for these people?
Floral products have a different set of delivery issues than books or fish food. Shipping for most high value products is a relatively small part of the cost of the final delivered product. (Though, if we want something delivered as a gift, we’re often happy to pay a premium for the service and a big premium for a solid guarantee of a perfect gift. Why else would we pay so much for pears from Harry & David that someone else is going to eat?) For self-consumption, most of us don’t like to pay a huge delivery premium. Conveniently, so many of the things we used to go to the store for are now just a few clicks away. I asked Virginia what she buys online. She said shoes, contact lenses, event tickets and photographs, for starters. The last one she had to explain to me: She uploads the digital pictures to one of several services, selects what she wants printed and how, and then chooses whether to pick them up locally or have them mailed. This all saves her a lot of time.
Are fast flowers the answer? I used to wonder why grocery stores are laid out the way they are until I was told by our retired vice president of sales, Ted Campbell, that the design assured that most customers would have to go through the entire store in order to buy all of the products they usually came to buy. I thought it would be a great idea to have lunches right at the front of the store next to the express checkout for people like me to pop in, grab and go. I don’t want to walk to the back of the store or wait for something to be made to order. If I don’t bring lunch to work, I don’t have lunch. Even though I pass plenty of places where I could buy stuff to bring in, I won’t take the time necessary to stop and wait.
I’m not a doctor getting paid by visit, procedure or fee for service, and still I resent the time it takes to get a sandwich. So how does the doctor feel? Like Betty said, shopping isn’t an option. This must represent a huge opportunity of which someone could take advantage.
Maybe some of the floral section should be placed near the ready-to-eat meals. Maybe garden centers should advertise flowers and plants in a hurry, if that’s what the customer wants. Maybe we should offer the choice of fast flowers or slow flowers. Come on in and have a chat or grab and go; it’s your choice.
Sound silly? Well, I’m struggling here trying to figure out how to serve these high-income customers who have no time. If all their discretionary spending is being done on the Internet, I’m pretty sure little of my stuff is in their homes.
How about flowers and plants delivered on a regular schedule to their homes? Yeah, I know nobody wants to take that on. Maybe make a deal with the local florist that’s used to delivering locally. Maybe the stuff can be set aside for quick pickup by the customer. Have their credit card on file so there is no need to stop and pay.
Time is precious to this group and they guard it well. We must find new and different ways to give them products they want without taking away time. The companies that figure out how to do this are going to take market share.
We have a small Koi pond in the entryway. Betty and Bill also have some Koi that are new to them. Betty spotted the fish food and asked where she could buy the product online. My wife said it was available at all the big chain pet places in town. That would not do, as Betty did not have time to go to stores. In fact, going to a store was not an option that Betty would consider.
This seemed kind of extreme to me, but with a busy medical practice and two young daughters, money was not a limiting factor but time was. More people fall into this category every day. The people who can most afford to purchase our floral products have the least time to shop for them. What can we do for these people?
Floral products have a different set of delivery issues than books or fish food. Shipping for most high value products is a relatively small part of the cost of the final delivered product. (Though, if we want something delivered as a gift, we’re often happy to pay a premium for the service and a big premium for a solid guarantee of a perfect gift. Why else would we pay so much for pears from Harry & David that someone else is going to eat?) For self-consumption, most of us don’t like to pay a huge delivery premium. Conveniently, so many of the things we used to go to the store for are now just a few clicks away. I asked Virginia what she buys online. She said shoes, contact lenses, event tickets and photographs, for starters. The last one she had to explain to me: She uploads the digital pictures to one of several services, selects what she wants printed and how, and then chooses whether to pick them up locally or have them mailed. This all saves her a lot of time.
Are fast flowers the answer? I used to wonder why grocery stores are laid out the way they are until I was told by our retired vice president of sales, Ted Campbell, that the design assured that most customers would have to go through the entire store in order to buy all of the products they usually came to buy. I thought it would be a great idea to have lunches right at the front of the store next to the express checkout for people like me to pop in, grab and go. I don’t want to walk to the back of the store or wait for something to be made to order. If I don’t bring lunch to work, I don’t have lunch. Even though I pass plenty of places where I could buy stuff to bring in, I won’t take the time necessary to stop and wait.
I’m not a doctor getting paid by visit, procedure or fee for service, and still I resent the time it takes to get a sandwich. So how does the doctor feel? Like Betty said, shopping isn’t an option. This must represent a huge opportunity of which someone could take advantage.
Maybe some of the floral section should be placed near the ready-to-eat meals. Maybe garden centers should advertise flowers and plants in a hurry, if that’s what the customer wants. Maybe we should offer the choice of fast flowers or slow flowers. Come on in and have a chat or grab and go; it’s your choice.
Sound silly? Well, I’m struggling here trying to figure out how to serve these high-income customers who have no time. If all their discretionary spending is being done on the Internet, I’m pretty sure little of my stuff is in their homes.
How about flowers and plants delivered on a regular schedule to their homes? Yeah, I know nobody wants to take that on. Maybe make a deal with the local florist that’s used to delivering locally. Maybe the stuff can be set aside for quick pickup by the customer. Have their credit card on file so there is no need to stop and pay.
Time is precious to this group and they guard it well. We must find new and different ways to give them products they want without taking away time. The companies that figure out how to do this are going to take market share.
Choices - Aug 2008
The numbers are in: The domestic economy is slowing down. Exports are up, but unless you’re in the export business, that doesn’t help you. Floral and plant sales are soft. There is now more supply than demand for many of the floral offerings at retail and wholesale.
It could just be that the higher cost of gas and food has made people think twice about buying those luxury floral goods. Certainly, if it comes to putting food on the table or buying flowers, the choice is simple. But the population that’s sailing that close to the wind is not a significant portion of floral buyers. They’re making other choices, such as what kind of shoes they can afford to buy their children.
Something else is going on. I’ve heard that one of the first businesses to suffer during slow economic times is the highend restaurant. This seems a bit strange, as the group that enjoys an expensive meal is the least affected by this kind of economy. Perhaps it’s psychological? Every purchase decision is made on a judgment of utility: How much pleasure do I get from the good meal vs. the cost of the meal?
In the case of fine dining, utility is measured by relative pleasure derived from the experience. Even a slight shift in the mass psychology of the affluent can have great effect on total group behavior. I know I have a sense of great concern about the future. Will things get worse before they get better? The uncertainty causes us to act more cautiously and conserve what income we have. Will this behavior have a big effect on floral sales? What can we do about it? We have long held the belief that recessions are good for our industry because people stay home more and buy a few plants to feel better (utility). Is that still true? Was it ever true? I don’t know the answer to either of these questions.
I do know that things change constantly. I do know that I derive more utility from my iPod Nano than almost anything I own. I can download books and magazines and podcasts to listen to while driving to and from work or walking on a treadmill. If the device were to break, I would replace it immediately. A few years ago, I didn’t have the choice of buying this device. Times change, products change.
As an industry, how much have we changed? I see incremental changes, with a little better product here and little better signage there, but nothing that would grab the general consumers’ attention. We must find better offerings to win back this market. Consumers want to feel good about what they buy. Sustainability is a growing piece of the package, but it’s still only a piece. Nobody is going to buy floral products that look lousy just because they make a green claim. The stuff we sell must have a compelling value proposition. Flowers and plants that last longer and require less care would be a good start.
And from there we must do more. Our products must become more beautiful and eye-catching than anything we’ve done before. Choosing to do the same old thing is a plan to fail. Everyone in the value chain, from grower to retailer, must pursue this change aggressively and take a few risks along the way. Some failure is inevitable—we won’t achieve our shared goal of increased consumer spending on floral without passing through some product failure from time to time.
We’re also going to have to become more efficient at every level. High volume at low margin is the new world we all live in. If you have a different situation from this, just wait … competitors will make sure your margins get compressed. It doesn’t matter if you’re a retailer or a producer; the same laws of economics apply.
Creativity is the only solution. Consumers are fragmented in their tastes, wants and needs. Mass-produced, “single look” products are yesterday’s strategy. Fortunately for us, humans are a creative species. We just need to allow a little more of this creativity on the shelves to see how consumers react. With renewed effort, we will find great offerings for our consumers, and they in turn will fall back.
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