Four Trends to Watch in 2013
Tom Smith, president of Four Star Greenhouse.
Four Star Greenhouse President Tom Smith shares the key trends he sees changing the industry in 2013.
The "Fiscal Cliff" crisis has been averted, we're midway into January, and the growing season is in full swing. This seemed to be the perfect time to ask Tom Smith, Four Star Greenhouse President, to gaze into his crystal ball and share his thoughts on trends we'll see in 2013.
Prediction 1: The economy
will start picking up
"I think a lot of people are tired of waiting and of the indecision on the economy. I think they are starting to open up their pocketbooks and saying they want to enjoy themselves," Tom notes. He pointed to growing sales of big-ticket items like homes and cars, as well as trends showing people are investing more in home renovations, as proof that consumer confidence is starting to improve.
"As an industry, we need to capitalize on this trend," he advises. "They will spend their money somewhere – in gardening or somewhere else – so if consumers can be successful at gardening, they are more likely to buy the brands with which they feel confident."
Take advantage of this trend, Smith says, and give home gardeners products that will help them succeed. "Branded plants will help consumers be successful, and they will come back and buy more in the future. Home gardeners understand this branding and they continue to seek out better performing plants."
Prediction 2: Information will rule
"Understanding your business is key to success in 2013," Smith predicts. "At Four Star, we're already using inventory and sales tracking scanning down to the variety and container size level in our production and it is giving us a tremendous amount of information. This gives us more confidence to plan for and produce plants that sell best, turn fastest and have the highest demand, so we are ready when our customers need them."
"Time and space are so valuable in retail, so the closer we can come to understanding exactly what retailers need and when they need it, the better we can provide for them."
Prediction 3: Expect higher costs for doing business
There's no free lunch and the growing costs for labor, health care, and other items will drive up the cost of doing business, Smith predicts. "For several years now, businesses in our industry have been squeezing hard to keep their costs down and many have run on thin margins compared to 10 years ago. I think something has to give and prices will start to rise this year. These businesses may not return to the margins of 10 years ago, but many are ready for an improvement in this and will raise prices."
The rise in costs will affect large and small companies. "You have to know and understand your business costs or it will get even harder to survive and thrive in 2013," he adds. "This can mean changing the way you have operated in the past and trying a new approach. Sometimes, higher input costs can also lead to higher profit margins based on an increased price point, compared to generic products."
Prediction 4: Strong marketing counts more than ever
"Marketing funds are limited, so every business needs to do whatever it can to position itself to attract more customers," Smith recommends. "I think the industry benefits from the huge marketing programs put on by the 'big box' stores, because those programs get the public excited about gardening and the growing season."
This gives all garden retailers a chance to position themselves as experts to attract interested customers, by carrying plants those customers want to buy. "People shop the brands they are familiar with, so if you only carry generic bedding plants, many consumers won't buy them. They want the better products," he explains.
There are many branded plants out there now, says Smith, and that's good. "More branded plants mean more consumer awareness of their options. People can start to see the consistency represented by different brands and that makes it easier for them to shop," he says. "They can see what each brand represents – a 'thrift' brand, a high-end brand, etc. – the good, better, and best of plants."
The power of branding will have more influence as more plant brands appear, and it will change buying behavior. A good example of brand power is with both beer and wine. "People want things cheap, but we don't want everything to be generic. There are a million labels at every price range, but most people are looking for something better than generic at an affordable price – a drink they value," he explains. "We're also influenced by industry marketing, which attracts certain types of customers to certain brands. When we visit a specialty wine or beer shop, we have experts there to help us find just what we want – much like a good garden retail center helps the customer find the plants they want."
"Take another example of how buyers rely on branding — the person just starting to play golf, he says. "The new golfer will probably go to a big box sports store for equipment, but as he or she gets more experienced, they will go to golf specialty stores, talk with the store's expert staff, and pay more for higher-end products that are created for better performance. The same thing is true for plants. As people become more knowledgeable and experienced, they seek out better brands."
"Generic never screams confidence," Smith adds.
What's your opinion? Have a thought about the 2013 outlook you'd like to share? If so, send it to info@PWfourstar.com.
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