Business Briefing: New landscape, new rules -- Part 1

In the first of a series of three articles, Leslie Kossoff looks at how smaller business can compete with the big players.

Dobbies, the Garden Centre Group, B&Q, ASDA, Lidl — are you beginning to see a pattern emerging here? Is something new going on?

Like every industry, horticulture has been changing. However, over the past few years the changes have been faster and larger than in preceding decades. Grower or retailer, ornamentals or edibles, it's a different marketplace than before.

Over the next few articles I am going to take you through the changes and how you can win from them — because you can. The problem right now is that too many of you are getting in your own way. It's time to stop doing that.

The new landscape

The history of the industry is that, particularly on the garden retail side, it was made up of independent local businesses where the owners still knew pretty much every customer's name. They certainly knew every employee's name.

Not any more. Sure, the family-owned small retailers still exist and will continue to do so. But among the mid-sized retailers there has been growth so that what used to be relatively large but still manageable single sites have become, in some cases, mini-chains.

But what that has also meant is that throughout your history as an industry you have not put yourselves into a strong enough position — whether as customer or supplier — to fight your side. That has to change because the big boys are in the market now and they simply don't operate to the same rules as their smaller counterparts.

While to listen to them it all sounds just like what the smaller providers are and have been saying for years — customer service, value, great products — they don't have the same goals. They can't. They've got shareholders. It's a different game for them.

Just because until now the focus has been ornamental, don't think for a minute that this isn't also about edibles, because it is. Add in Tesco, Sainsbury's and Morrisons and you've got the same challenges as the ornamentals. In fact, in most cases, from the same guys.

For those in the public sector, you are impacted by this just as much as your private sector brethren. Only in your case, the big boys are in Whitehall making centralised decisions, not understanding what you offer or who your market really is.

What do you do? You deal with this new landscape. You don't rail. You don't whinge.

It is as it is. This means that everyone has to change their game using a very simple, two-step process. The first step is to accept what is. The next step is to determine what you want.

Only then do you decide what actions you are going to take. Once you do, be straight, be consistent and be just as ruthless and directed as they are — because you can.

Accepting the facts

Over the past few months there has been a number of fascinating comment threads on the HW website dealing with the changes that no-one likes. Things just aren't the way they were. The big boys are doing things that are impacting the littler guys and there's a lot of unhappiness over it.

The comments are well intentioned but won't achieve your goals. While the talkers are talking, the big boys are getting on with whatever they wanted to do anyway. Let's take a look — and learn.

Fact one: big boys make bad calls too

The best place to start is B&Q's decision to extend its payment cycle to suppliers to 90 days. If you've been reading my blog posts and comments, you'll know that this is one that from my perspective is a mistake on B&Q's part. I understand it, but that doesn't make it any less of a mistake.

For the growers who are dealing with the company, B&Q's decision to treat all suppliers the same doesn't take into account little details — like you can't afford to wait 90 days for payment or that what you provide is not only a just-in-time product but has a very short shelf-life for them to turnaround to their customers. The latter, of course, means that B&Q is making its money off of you almost immediately while you are still watching the clock tick while waiting for its 90-day horizon to expire.

Trade bodies and grower representatives have been on its case about changing the policy — I say bravo for this lobbying. B&Q has made statements all about suppliers and support and standardised company policy. Things may change or they may not. At the moment though, they are what they are — 90 days.

What that means for you is that you have other decisions to make, like whether you can afford to continue supplying to B&Q or any other store with a 90-day payment policy. Or how do you stop being held hostage by one customer?

Fact two: big boys are great teachers

While we're here let's take a look at another store and what it is doing — Dobbies and its allotments, which those of you who have written into the comments have consistently referred to as Dobbies/Tesco.

First, my advice is to get over it. Tesco entered the market. It's in now and it's going to stay. If you want to be smart, watch and learn, because as far as I'm concerned its idea to get planning permission to add allotments at its centres is absolutely brilliant. There isn't a lose to be seen, unless you're not learning from Dobbies/Tesco and doing what they do.

Think about it. We know that there is a grave shortage of allotments around the country. We also know that there are waiting lists that are thousands of people strong who are awaiting whatever is available.

We know that allotments are money-makers — both in terms of the space and the opportunity to sell everything from seed to every piece of equipment from gardening gloves to sheds that new or old gardeners require.

Put that together with the grow-your-own trend that is here — and will stay. We've got an economy that, even after it begins to visibly turn around, will still cause a long-term personal recovery period. And I'm not talking financially — although that, of course, plays in. I'm talking psychologically.

This economic downturn has had a psychological effect on the population that is unlike any of its predecessors — not post-war, not the strikes — because this one didn't make sense. This one was created completely outside anyone's knowledge or control (at least outside the financial services industry) without any apparent external indicators. Everything was fine and, suddenly, everything was gone.

As a result, you've got people who either had a predisposition toward gardening or have built a new disposition to protecting their income who have discovered the joys of growing and picking their own food. All Dobbies did was look at what was happening and figure out the opportunity.

For everyone who has been railing about the unfairness of it all, get over it. If you have got a garden retail centre and you are not doing the same thing as them, then you are missing out on an opportunity and as good as ceding the field to your competition.

Why, after all, would any customer come to you if they can have a one-stop-shopping experience — allotment and all — at Dobbies? They won't. See it for what it is — an opportunity that you can replicate for your own customers.

Fact three: small is the new big

And, finally, allow me to congratulate Wyevale on its decision to change the name of its garden centres. It knows exactly what it is doing because small is the new big. Local is everything.

Recently, Starbucks announced that it is creating new coffee houses without the Starbucks name. If it's on 52nd Street, it may be called "The 52nd Street Cafe" and it won't have a Starbucks logo anywhere in sight. Why? Because it has realised that "local" means a lot more to people now than a "trusted brand" did before.

What this also does is allow Starbucks to build as many shops as it wants in a particular area without being accused of overtaking the market — or risk cannibalising its own market share. After all, for customers who prefer "local", they'll go to the 52nd Street Cafe and think the world of it, never knowing that it was a Starbucks. Neither should they, because it doesn't matter.

It's the same for Wyevale. Sometimes the idea of "local" makes everything seem all the more intimate, trustworthy, customer-focused and "on your side".

Sound familiar? If you're running your business correctly, it should sound like you. Wyevale, as a brand, cannot compete with Dobbies, ASDA or B&Q. But it can use its scale — and all the economies that exist as a result — and build seemingly "local" garden centres that just happen to be named for the particular area in which they reside.

They're trying to look like you. Only you're not getting it that that's a win. You're so used to looking like you that you've forgotten the brand value in being the local, trusted provider of all things horticultural.

Why do you think farmers' markets work? Sure it's the idea of reducing carbon footprints and saving the environment. But way more than that, it's the feeling that people get going to a "local" farmers' market (not realising that, in many cases, the farmers are driving their lorries amazing numbers of miles to be part of these babies) and buying local from someone in their area — putting a face to a product. Even better, having the farmers' market named for the local area.

In this case, Wyevale, just like Starbucks, took what it knows about what people want — local, trustworthiness, a sense of connection — and created it, just as though it was you. But it's not. It still has those wonderful economies of scale that help its bottom line, but it also has a lot less "personal touch" with its customers, suppliers or employees than you do.

That gives you an advantage — grower or retailer, ornamentals or edibles. The more you present your offering as local — in everything from the way you work with your customers to your packaging and distribution channels — the more the public will be interested in what you have to offer.

The nice thing is, in most cases, you really are local and that gives you an insider's view that the big boys will never achieve — even if they're working with the same information as you.

Trifurcation and what comes next

For the purposes of this article, the focus has been on what the big boys have been doing and what the mediumand small-sized businesses need to know and can learn from them.

We've also established that you are not helpless in their wake. You both can do and are doing things that already make a difference - to them and to you, depending on which side of the customer/supplier equation you reside.

However, this is just the beginning. Once you see the bigger picture you can start making decisions about what you want, and that's next.


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