Follow the money – diversify

by | Jul 23, 2016 | Features | 0 comments

Garden centre design and business consultant Paul Pleydell argues that to thrive going forward, garden centres may need to diversify further

Whether you love it or hate it, the internet won?t go away ? and more importantly, neither will online retailing. The upshot is that as competition grows, trading online won?t get any easier, and neither will running a garden centre. What?s the way forward?

I?ve helped in the strategic development of numerous garden centres, and each time I follow a simple process.
This involves ascertaining where the business is at the current time, where it needs to be, and how it?s going to get to that place. Or, to put it another way, working out what success would look like for the garden centre.

The starting point for this is to understand how a garden centre is currently performing ? not from an operational viewpoint, but in terms of ?nancial return for ?your efforts. This is done by assessing the physical area allocated to each product department, identifying the turnover achieved by each department and then doing some simple maths to see how much turnover every square metre of ?oor area delivers. We call this the sales performance, which is measured in turnover per metre squared (?/m2). So what can this information tell us? Knowing that your house plant area delivers ?680/m2 won?t really help unless you know what others are doing and what the industry trends are. Having this knowledge will allow you to assess opportunity for growth from the existing set up, and allow changes to be made to the product area and retail detail to improve performance.

Into the stratosphere

Over recent years trends in sales performance have revealed some interesting patterns and one trend in particular. Starting with the lowest turnover, outdoor plants and landscape materials are usually around ?250/m2, while moving up we get to indoor gardening products which are in most cases between ?500/m2 and ?1,000/m2.

Heading further into the stratosphere, we get to giftware and caf? areas, which are between ?1,000/m2 and ?2,000/m2, followed by pets and pet supplies. Reaching the very top, at ?3,000/m2 we ?nd food halls and farm shops, with butchers at ?6,000/m2.

Interestingly, these ?gures consistently follow strong national trends with only limited regional variations. We maintain and constantly update our data to enable us to benchmark businesses against good practice.

Although the ?tting out of different departments can vary, if we work on the premise that a garden centre costs a ?xed amount to build and consider the departments with the highest sales performances, why would garden centres stock anything other than food?

This must be considered a careful balancing act.

Make sure each department occupies the right space, in the right location, with the right product mix, all built around a carefully planned customer ? ow which will lead customers through all of the major product departments. It is not just food that people want from garden centres ? everything must work in relation to each other.

Global economy

What is clear from the ?gures above is that no matter how much we love gardening, there are other product departments that will generate more turnover.

But what about margin? The difference in sales performance between, for example, seeds and bulbs and giftware, is so large that even with a difference in margin, the return for every square metre of ?oor is still better.

Over recent years our industry has been squeezed by the state of the global economy, and also by a series of poor trading seasons, resulting from the unpredictable nature of the British climate. This has put pressure on garden centres and made us all look more closely at what we sell and how we sell it.

Common sense has led many garden centres to develop their product mix, either through the introduction of new departments or by changing the balance of their existing ones. Not surprisingly, we are seeing more giftware, more food halls and farm shops and recently, more butchers. The retail mix is adjusting to optimise the ? nancial return. I call this ?following the money?.

Extreme care

Alongside this trend in changing the product mix, as a company we also see ? and encourage ? the trend for ?new faces?. In other words, persuading people who don?t necessarily see themselves as gardeners (or garden centre customers) to visit garden centres for different reasons. This is partly fuelled by the changing product emphasis in many garden centres, but also by the additions of new facilities.

Our current designs include vet practices, indoor play barns, hair and beauty?salons, dog grooming, event spaces, as well as a much wider variety of caf? and restaurant offers.

To take just one example, one of the best of these is play barns. While they must be handled with extreme care, they are capable of delivering good turnover and, if well managed, a very high net trading pro?t, well in excess of ?gures we see for both catering and retail. They?re invariably busy on wet days as well as weekdays, and if positioned correctly can signi?cantly uplift ?off peak? sales in garden centres.

Play barn butchers?

So, is my prediction for the future a play barn selling meat? Certainly not ? and this is where it gets tricky. If you?re not careful, ?following the money? can certainly increase your turnover, but at the same time it can erode ? or perhaps more accurately, sideline ? your gardening offer.

That said, it is clearly no longer enough to be just a garden centre. Rather, it?s ?time to know what type of garden centre you need to be and ensure this pervades all aspects of the business. We are fortunate that our industry is made up of small chains and independent businesses, as this allows us to be light on our feet and makes us able to change quickly. Garden centres are very well placed to respond to the markets we operate in and the needs of our customers.

CONTACT
Paul Pleydell is director of Pleydell Smithyman, a specialist design and business consultancy which provides advice on business strategy, retail concepts and site layout. paul@pleydellsmithyman.co.uk www.pleydellsmithyman.co.uk

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