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042 Gpn0910 Pohmer FINAL.Indd POHMER ON... Twent y Years and Counting By Stan Pohmer That’s a long time in an industry as dynamic as ours — but there are big movements and trends that bear mentioning hen Tim Hodson, editorial director Before Home Depot and Lowe’s dominated the home- of GPN, asked me recap the last 20 improvement channel, smaller regional chains prolifer- years of the fl oriculture industry ated, purchasing their fl oriculture products from local in celebration of the magazine’s growers. When these regional chains left the market, W20th anniversary, the request sounded fairly these regional growers needed to fi nd a home for their straightforward and easy to fulfi ll. But as I started to production, which led them to make some hard deci- mull over the last 20 years and all of the challenges sions: get larger to accommodate the supply needs of the and changes that our industry has gone through, I larger (and growing) home improvement and discount was amazed at the signifi cant transformation, not chains; expand their customer bases to enter the inde- only of the infrastructure of our industry but also pendently owned garden center channel; change their the way end consumers view and use our products. business models to become grower/retailers; or cease Th ough many of these changes have been created to exist altogether. How signifi cant was the number of by the constantly evolving market dynamics of regional home improvement chains that closed their The changes we’ll have relationships and expectations between growers and doors during the ’90s and the fi rst decade of the 21st retailers, the most signifi cant have been dictated by century? Let’s take a stroll down Memory Lane (and I’m to make and the rate at the constantly evolving demands of the real customer sure I’ve missed quite a few): we all share: consumers. Like it or not, we’ve had • Grossman’s which we’ll have to make to learn that consumers drive our businesses and • Kmart’s Builders Square and Hechinger chains decisions; those who have applied this lesson have • Builders Emporium them will both challenge survived and thrived. Th ose who did not are either • Coast to Coast struggling or out of business. • Eagle Hardware us and make us better and Yes, life — and our business models — was far sim- • Ernst pler 20 years ago. Breeders worked with growers to • Handy Andy stronger as an industry. determine what products to produce. Growers grew • Handy City them and sold them to retailers. And retailers made • Home Base them available for consumers to buy. Th ere wasn’t a lot • National Lumber of interaction between breeders and retailers, or growers • Rickel with consumers. We operated largely on a “If we grow • Pergament Home Centers it, it will sell” mentality; we were a production-driven • Yardbirds industry, not a consumer-driven one. Fighting, biting • Scotty’s and scratching, we’ve evolved — to some, it’s been a rev- And while Kmart slowed their expansion and ulti- olution — and continue to evolve into more collabora- mately ran into major fi nancial trouble, Wal-Mart and tive, more interconnected businesses, all driven by the Target continued to expand, especially with Wal-Mart realization that no matter where you are in the demand growing its Supercenter strategy to become the largest chain (what 20 years ago we called the “supply chain”), food retailer in the United States within 15 years of its we all share the consumer. inception. Some chains were acquired by these growing Looking back at the trends that have aff ected the fl o- national discounters, but others simply ceased to exist: riculture industry, the following have created the greatest TG&Y, Caldor, Ames, Bradlees, G.C. Murphy, Gemco, amount of change, whether positive and negative: Con- FedMart, Gold Circle, Richway. Remember any of solidation; data collection and application, demand-chain those names? collaboration; and marketing approaches. Th en there were the visions to build national chains of independent garden centers that could more eff ectively Consolidation combat the growing infl uence of the home improve- Let’s take a look fi rst at consolidation, which I consider ment and discount chains. Some of these no longer to be the single most impactful trend that aff ected our exist; others are a shell of their former selves. Anyone industry over the past 20 years. Consolidation can stem remember Sunbelt Nurseries, Frank’s (which acquired from a number of diff erent factors, from the interests of Flower Time) or Pike? outside investors, to retailers or growers simply unable to One unique initiative was an attempted rollup on an compete with the larger players and remain fi nancially entire channel, from grower to retailer. Th is was U.S.A. solvent, to a changing distribution strategy. Floral Products, modeled after a rollup of the fragmented 42 | gpn | SEPTEMBER 2010 POHMER ON... offi ce-supply industry. Some big idea them to acquire domestic and South were purchased on a cash/stock basis. nies, but some simply ceased to exist. guys convinced Wall Street inves- American growers, importers, whole- When this eff ort failed, some of the (Note: If anyone wants to learn how tors to front some major cash (IPO) salers and retail fl orists. Some of the original owners were able to buy not to do a rollup, this would be a that would allow them to verticalize initial companies that were acquired their individual companies back, and great case study to read!) the retail fl orist channel, enabling were paid 100 percent cash, but most some were acquired by other compa- As the home improvement and discount chains continued to grow, they wanted to reduce the number of suppliers they did business with to achieve more consistency, negotiating power and centralized control of their businesses. Some growers were able to expand their geographic reach organically, but many had either to acquire other growers in markets they couldn’t serve, or develop rela- tionships with other growers who could produce for them on a contract basis (some of these contract growers were prior suppliers to the chains but were eliminated during the supplier consolidation program). At the same time the big box vendor consolidation program was being initiated, the investment com- munity was taking an interest in growers. Th ey saw opportunity in consolidating our highly fragmented production and distribution; they liked our industry growth trends and consumer demographics that pointed toward continued growth; they saw the opportunity to cash out within three to fi ve years. Growers saw this as an opportunity to liq- uefy the fi nancial and sweat equity they had built, and to acquire grower relationships with shared customers, allowing accelerated growth. Th e Make sure your problem with all this is that the inves- tors were risk averse and had a hard plants shape up time accepting a bad year because of weather or other factors out of their direct control. Th e parent growers before they quickly learned that it was more dif- fi cult to manage multiple geographic ship out. markets that didn’t necessarily share seasonality, product types/varieties, and marketing/merchandising pro- grams. Some of the grower/investor relationships included: • Color Spot/Pacifi Corp, Heller Excellence in PGR Technology Investments (Fuji Bank), KCSN Acquisition Corp Today, ornamental buyers expect their plants to arrive in great shape. That’s why (Kohlberg & Co.) more and more top growers are turning to PGRs from Fine Americas. With proven • Sunrise Growers/Fremont active ingredients, advanced formulations and uncompromising quality control, Fine Group • Powell Farms/Weiss, Peck & PGRs bring out the best in your plants. Plus, these cost-effective products are backed Greer by ongoing university research and top-notch technical support. For the distributor • Tuttles Nursery nearest you, visit www.Äne-americas.com or call (888) 474-3463 toll free. • Hines Horticulture/Interna- tional Garden Products Some of these growers have gone Always read and follow label directions before use. Abide®, Citadel®, Configure®, Concise®, Dazide®, out of business, some have been Florgib®, Fresco® and Piccolo® are registered trademarks of Fine Agrochemicals, Ltd. Dazide® is a registered acquired by other producers and trademark of Find Holdings, Ltd. Cycocel®, Sumagic®, B-Nine®, ProGibb®, Fascination® and Bonzi® are registered others have survived a number of trademarks of their respective manufacturers. © 2010 Fine Americas, Inc. investment permutations and con- tinue to exist. Write in 131 POHMER ON... Th e mass-marketer expansion took Stan Pohmer is president of its toll on the locally owned garden My mantra for the next 20 years? Learn, think and do! Pohmer Consulting Group in center channel, as many couldn’t Minnetonka, Minn. He can be compete on the top and bottom lines. reached at spohmer@pohmer- As some left the industry, it created a laboration, VMI and PBS, suppliers As our industry addresses the consulting.com or 952.545.7943. void for their suppliers. One alterna- received payment only for product challenge of changing consumer tive for these smaller growers was to that was rung up/scanned through demographics, we’re learning to open up their own retail garden cen- the register, and any shrink was tailor our marketing approaches to ters and become wholesaler/retailers. their responsibility. Inventory selec- the diff erent demographic segments. Th is trend has continued to grow tion and levels were recommended While baby boomers are still our core and thrive. and controlled by producers within customers, we recognize the need to Shape up your plants guidelines established jointly with better reach and develop relation- with these Fine PGRs Data Collection the retailer.
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