Thinking inside the box and IGCs

When it comes to working with the big-box stores and independent garden centers (IGCs), growers need to be concerned with the following from a business standpoint: plant selection, wholesale price, distribution, merchandising, and plant tags. But perhaps the most important concern is ensuring your business relationships don’t become one-sided.

“I’ve learned over the years there’s no need to win,” says Gary Mangum, CEO of Elkridge, Md.-based Bell Nursery (www.bellnursery.com). “Working to make a relationship mutually beneficial is not only possible, but is clearly the best use of everyone’s resources in order to ensure long-term viability.”

Mangum and his team have been supplying Home Depot stores with annuals and other live plants for more than 20 years. Today, 100 percent of Bell Nursery’s business is with Home Depot stores.

Bell relies on its Grower Network – 35 family-owned farms that invested in greenhouses and began growing flowers for Bell as the company expanded and required additional growing space.

The Network consists of 75 acres of greenhouse production and 50 acres of company-owned greenhouse production.

Unlike some grower-retailer relationships, Bell Nursery has complete control of its product until it reaches the hands of the consumer. “At Bell, we believe that merchandising is key to top-line growth and bottom line protection,” says Mangum. “The investment is substantial and we sell more as a result.”

To this end, Bell hires more than 900 seasonal garden center workers to service its Home Depot affiliates.
 

Prefers IGC partners

For many growers, it’s the personal connection that trumps the bottom line and IGCs are their preferred partners. Jonathon Cude at Sedan Floral (www.sedanfloral.com) in Sedan, Kan., says that while good connections can be made with big-box retailers, he still feels more comfortable with the IGCs, which he refers to as “family.”

Perhaps Sedan’s cozy relationship with IGCs goes back to the company’s roots. In 1948, Jim and Eileen Cude bought a small floral shop in the small town of Sedan. With little more than a vision they turned the business into one of the largest greenhouse operations in the Midwest.

“I am happier working with many customers rather than one,” explains Cude. “I prefer to not have all my eggs in one basket. We get to see a broad spectrum of how the market behaves with the IGC’s and that helps us to make changes that keep our business relevant.”

Having it both ways

Miami-based Costa Farms (www.costafarms.com) works with big-box stores and IGCs. However, company president Jose “Joche” Smith has found that keeping the two separate works best.

While Costa Farms’ high volume of sales to the big-box stores makes for a profitable business model, Smith quickly cautions that it takes a great deal of due diligence to understand and provide what the big-box stores are looking for.

“The biggest thing is understanding what’s most important for them,” says Smith. “Big-box stores have a lot of buying power and a lot of weight. You have to distinguish yourself from the competition so you can negotiate a better price,” he advises. “The plants can’t become a commodity.”

Smith says you can stand apart from the competition by providing other services to retailers, and focusing on product development, marketing, and point-of-purchase materials.

Costa Farms is interested in merchandising as well. It regularly negotiates with the various big-box stores they service—Walmart, Home Depot, Lowes—as to the extent of the merchandising Costa Farms will. This ranges from none at all to full service merchandising, much like Bell Nursery does with Home Depot.
 

Keys to success remain clear

Although the debate over big-box versus IGC is still heated at times, selling to the big-box stores has had a positive effect on the industry as a whole, says Mangum.

“I think the big-box stores are good for the independents because they have exposed a lot of gardeners to their products. It’s possible that some of these folks will later buy some of the products made popular by the big-box stores at a local IGC.”

What it really comes down to is this: in today’s market growers need to supply what the customer wants, where they want it.

“To survive in this industry you have to be good on a variety of fronts: quality, pricing, and services,” says Ed Overdevest, president of Overdevest Nurseries in Bridgeton, N.J.

“Profit margin is thin all the way around,” says Overdevest. “It’s just the nature of today’s economy. Mass merchants are raising the bar price-wise and their level of merchandising,” meaning IGCs have to stay sharp to keep up with big-box competitors.

Overdevest adds that his company has chosen not to get involved with merchandising part of the business. Instead, it leaves such efforts to the garden centers.
 

Bottom line: it’s about the relationships

Whether you’re selling to the big-box stores or the independent garden centers, iit really comes down to the relationships you and your staffs are building with your customers.

“I think the most important thing about any business relationship is to operate with integrity,” says Mangum. “People don’t always appreciate complete candor, but the reality is it’s the best way to operate. If a business can be counted on consistently to operate to the very best of its ability I think there’s a good chance for mutually beneficial and prosperous long-term relationships.”

Neil Moran is a horticulturist and freelance writer based in Sault Ste. Marie, Mich.