Concessions: a boost for garden centres?

Appropriate partnerships can help drive footfall but golden rules must be followed, Neville Stein explains.

Image: Shutterstock
Image: Shutterstock

In an industry that is reliant on the weather for sales success, irregular and inclement weather can really take a toll on sales. Certainly over the past few years the weather pattern has had a major influence on the profitability of horticultural enterprises. No wonder then that increasingly growers and retailers alike are looking for ways to weatherproof their businesses.

As part of this move, garden centre catering has increased and many new product categories have been added to the traditional retail mix, resulting in horticulture become an increasingly diluted portion of the total business.

We have also witnessed the rise of concessions in both small independents and multiple retailers, a trend that has really established the garden centre as almost an "outdoor-department store" in the eyes of many consumers. So are concessions right for any business and how could they benefit yours?

Business benefits

Concessions are generally privately owned and operated businesses, usually trading under a licence or lease while occupying space in another larger business. They benefit this landlord businesses by providing rental income, by increasing the profile and diversity of the site and by increasing footfall.

The core garden centre business then has an increase in potential year-round sales. All that is really required is space that you either do not need or that returns very little benefit to your business through its current use.

The key, of course, lies in getting the right concession to benefit and not detract from your business, and to establish correct beneficial terms from the start. Garden centre owners usually seek to install concessions whose product mix is aligned to garden retail and where the garden centre owners lack the expertise.

Many owner/managers outsource areas such as pets, aquatics and garden machinery, for example, when they do not have a particular in-house expertise or lack the money and/or risk appetite to invest in these areas themselves.

Good concessions, however, do not always have to be ones that support and enhance traditional outdoor and gardening activity. Concessions that attract the wider leisure family market will generate more footfall, and that is why we have seen the growth of clothing concessions at many garden centres.

Choosing the right concession involves marrying the core values, character and style of your business with the potential needs and wants of your customers. But perhaps the essential question to ask yourself is: "Do I want these people as part of my business?"

The relationship with a concession owner is very important and they must have retailing standards to match your own because your reputation will suffer if they do not. They must also co-operate with you to build footfall and to maximise marketing and promotional opportunities.

Pitfalls and drawbacks do of course exist, one of which is if there is conflict with what you are selling. An occasional overlap of product could be easily resolved, but both sides need to respect each other's territory when it comes to merchandise and offering.

Aim for partnership

Essentially, to capitalise on concessions, garden centre operators must look for a partnership with the concession owner. If you go into it thinking that the only important thing is the rental income from selling the space, then problems will arise. Hold regular meetings with concession holders to engage in joint promotional activities.

Perhaps the biggest pitfall is in ignoring the legal aspects. These need thorough consideration and professional advice should be sought when drawing up either a proper tenancy agreement or a licence to occupy. Likewise you need to check whether you have planning consent for any concession that you are planning to bring on board.

So if you have the space and you want to drive footfall to your centre, then concessions could be just what you are looking for. Following these golden rules will help:

1. Make sure that potential concessions are reputable. Check customer and trade references.

2. Find a concession that suits you. How will it add value to your business? Does it offer your customers something that you cannot or do not want to do? Will it widen your appeal?

3. Be sure to seek legal advice and establish the relationship on an appropriate legal footing. Always take advice from someone who understands the legal complexities of concessions.

4. Check that you have planning consent for potential concessions. Clarify what you are prepared to do for the concession owner in advance of any agreement. Maybe you need to improve the infrastructure of your site. Clarify who will pay.

5. Embrace the partnership - communicate and co-operate. Hold regular meetings.

6. Make sure that the concession's product range does not compromise yours.

7. Do not put the concession in the wrong place. Concessions thrive on having a high footfall.

8. Seek out concessions that customers want to use on a regular basis, such as pet foods.

9. Make sure you are confident that a concession will match your own high standards of customer care and retail practices. Remember that if a concession provides poor customer care, consumers will tar you with the same brush.

10. Remember the reason why you have concessions - to drive footfall. It is not just about an easy rental income. Do not just see it as easy money but nurture the relationship to ensure that problems do not arise.

Neville Stein is managing director of business consultancy Ovation

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