Pricing Perceptions and Increasing Plant Value
The cost price to the consumer of plants is often unmatched with industry expectations given the cost of production, and most importantly the actual ‘value’ of the plant. Few consumers understand that plants grow at varying speeds and the requirements for cultivation may vary significantly. This lack of understanding, combined with varying retail experiences has the expected and natural effect of consumers buying based upon price alone. This makes for a volatile retail situation.
Back in the 1620/30s, Tulipa bulbs held more monetary value than any other commodity in the world. The record sale was in 1636 for a single bulb of 'Semper Augustus', a striped carmine and white variety, for between 5000 and 6000 florins (depending on the account you read), which equates to between $1.67 and $2 million. The actual price for this small bulb, thought to not even be of flowering size, was 4600 florins plus a coach and 2 dapple-grey horses.
Similarly today, there is a huge element of pride and awe that comes with a British person being able to grow a single lemon per year in their frost proof conservatory – there is significant value placed upon particular groups of plants. These two examples demonstrate that plants in other parts of the world are in fact valued. I can only envisage that it is our lack of history and the loss of information passed between generations, which accounts for the minimal value which we place on green life. This is changing with the ‘grow your own’ revolution, where functional (as opposed to sole ornamental) value is proving to be a driving force for this boom.
Retail Culture
The consumer’s perception of our industry is ultimately founded upon their experiences with all sorts of garden retailers. This might include premium independent garden centres, boutique nurseries, big box chain stores or plant discounters. In each of these groups, the methods of retailing will vary – ‘pile it high and sell it low’ or ‘quality over quantity’. Depending on the methods of retailing, a customer’s price expectation is often skewed by their individual experiences. We (the industry) provide customers with a choice of experiences; but is this to the overall detriment of this industries future? I don’t believe so. The consumer’s perception of price will forever be justified by your ability to market your business. That may mean the professional advice that you offer, the locally grown product, or the ‘environmentally friendly’ attributes to name just a few.
Mr David Daly (Conifer Gardens Nursery) stated to me recently that ‘it’s not the pot the customer is buying – it’s the plant’, and this rings true to my ears, as I am sure it does yours. The issue the industry has here is again with the ability to shift the customer’s paradigm – bringing ‘value’ back to the actual plant in the container being sold. I detailed in last months article the trend in Tasmania’s retail nurseries of containerising bare root stock (specifically roses) – this demonstrates a shift away from the value placed previously on a ‘bare twig’, but the proactive approach to maintain plant value and increase margins through containerisation.
One way to overcome this issue of plant value is by profiling plants and growers. A garden centre I once visited in the UK profiled the producer, placing a ‘locally grown by Mr Griggs’ sign next to stock with a full colour profile (photo included) of Mr Griggs’. This has benefits on multiple levels. It is a means of not only showing the consumer it is locally grown – but its about building positive relationships between you and other members of industry. Another step with this might be to profile the breeder (of a particular cultivar) – By educating the customer we will develop their knowledge, and barriers of price are broken down when the chain of production is understood. With this in mind, I encourage as many retailers to visit production nurseries as well.
Price Points on the Shop Floor
When it comes to the labelling of plants, keep it simple. Having too many price points can be confusing for the consumer, and as such continuity is essential. Without going into price points in too fine a detail, first look at the margins of each of your stock category groups. It is ok to make sacrifices in some category groups, while reaping healthy margins in others. Judgement is important when determining the price of a stock line, and having the right people in the roles is critical. Understanding stock quality by cultivar is also a rare talent. For example, being able to identify the difference between a Dianella tasmanica and other Dianella cultivars (that may or may not hold a PBR) that look the same, and are presented in the same pot size - again, it’s the plant that is being bought not the pot. There are many variables to understand, applying a general mark up does not work in our industry. These issues become even more prevalent when a barcode EPOS system is utilised on site.
When it comes to merchandising the plant, creating a setting which will present the plant at its best is also important in improving perceived value of the product.
You will have heard it before, ‘retail is detail’. It sounds corny, but there is a lot of value in what this statement is suggesting. Presentation and quality standards are everything in retail, from signage through to fixture – the staging of your stock will make a difference in how your plants are sold.
When it comes to signage, the smallest of signs (plant price labels) are just as important as the sign on at the front of the nursery that sells the name of your business. In my travels I see many variations from the poorly displayed price points (hand written on the side of pots with a chalk marker) to the premium (glossy printed labels with your nurseries logo and a clear price point). Hand written labels suggest cheap, while a printed label suggests a premium product. While there may be a cost involved here in improving the perception of value, you must invest in the outcomes you are aiming to achieve – a healthy margin (for the producer and retailer) from a quality plant.
Stock Quality and Accreditation
Maintaining stock quality in the retail setting is crucial. The Nursery Industry Accreditation Scheme Australia (NIASA) is the industries Best Management Practice programme, building the professional quality standards of producers. With 57 NIASA businesses across Victoria and growing, you are more than likely buying plants from these nurseries already. As stock quality from these nurseries is expectedly high, there is also an expectation from industry for you to maintain that quality while it sits in your sales area. The easiest way to keep on top of quality is paying close attention to your stock turns and margins.
Many retailers have a holding area for stock past its use by, however the accumulation of stock to the point that you have a ‘nursery’ in a nursery should be avoided. These holding areas are money pits (labour, time, water, fertiliser, space and money) as you are investing further inputs to reclaim that stock. More often than not, making the judgement call, cutting your losses and recording these for the future is a positive step forward.
Addressing and maintaining quality standards within your business will be the biggest step you can take in shifting the customer’s perception of the price which you have placed on the product. The Australian Garden Centre Accreditation Scheme (AGCAS) is an excellent development tool that may be utilised to improve your business operations as a means of improving overall stock quality and customer experience.
