Monday, August 22, 2011

The Ideas Lowe’s Is Stealing From Independent Garden Centers

The headlines from last week’s Lowe’s second quarter earnings call were all about the numbers – seven stores closing, average ticket declining 0.9%. But in that call, Lowe’s also outlined some steps it will take to rebound from a rough quarter. And some of it may sound familiar to you.

Lowe’s Robert Gfeller, executive vice president of merchandising, reported during the call that Lowe’s will take the following steps to turn things around and present value to its customers.

1.    Product differentiation. Lowe’s says it’s looking for vendors of all sizes, especially those who provide high-tech products for the home improvement industry.

2.    Solutions-based merchandising. Gfeller says stores will bring the components of projects together in vignettes to help the customer visualize the end product (a modernized bathroom), not each step of the project (vanity, mirror, faucets, fixtures, etc.) Gfeller says this new display methodology is being tested in one store, and reallocating store space and making room for these presentations has paid off. Customers found it easier to find what they’re looking for and to understand product value.

3.    Going local, which Lowe’s is calling Integrated Planning and Execution. Gfeller said Lowe’s wants to ensure “the right product is in the right market in the right quantity,” and take a comprehensive view of customer needs.

Does any of this sound familiar? Of course it does. These are the same things garden centers have been talking about for years. If you’re already two steps ahead of Lowe’s on these points, good for you. Being agile, offering solutions rather than tools, unique products – these are all traditionally the purview of the IGC versus the box stores. If the box stores are going to take on your sweet spot, how will independent garden centers stay two steps ahead?

Now, here’s another thing Gfeller said: “Customers have learned to wait on the next big deal because they know that if they wait long enough, they can get a lower price than the Everyday Low Price.” Lowe’s will compete with other boxes on price by matching it - offer comparative pricing on commodity items. They call them “high-velocity” items.

Items 1, 2 and 3 above seem to involve a lot of time and cost to the retailer. How will they pay for it if they continue to lower prices?


Anonymous said...

Let Lowes and other boxes sell plants as commodities. The more they cheapen branded items like PW, the more of a unique position this puts IGS in to add value to products and sell a more upscale product. Let the boxes wallow in the commodities. Also is it worth to hire more knowledgeable sales people if they are selling commodities. It would not be worth it for a supermarket to hire someone to sell sugar, unless it was a unique type of sugar, not just some commodity.

Sara Tambascio said...

So here's a question - what are the varieties or genera out there that should be the focus for IGCs? What are the non-commodity items?

Laine said...

How about providing a subscribe option like the one for comments. I like to use Firefox Live bookmarks and don't want emails of your blog.

Sara Tambascio said...

Hey Laine...this work? My RSS link was broken. Thanks for the heads up.

Laine said...

Thanks Sara. Took me awhile to see the orange RSS symbol on the options page but I found it and now have your blog with Firefox's live bookmarks.

Laine said...

I just learned about a new systemic pesticide in tablet form for repelling deer and other animal pests called Repellex. It puts capsicum into the plant so all parts are hot. I can't find any information on the potential harm to bees and other pollinators and to birds trying to eat fruits. It seems that these animals might be repelled by the hot taste too. Can you look into this? I wrote an Amazon review asking the same questions so if it is published maybe we can learn some more--someone might respond. Thanks.

Anonymous said...

I don't think I have been this offended in quite some time especially from an industry post. As an employee of a contract Lowe's grower I am disgusted by your title of 'stealing ideas' from the IGS. There is so much tension already between large and small. Specifically the Top 100 growers, which your employer's site ranks each year and IGS. Why you would post such a critical article about Lowe's when your own employer ranks and celebrates their growers constantly? There is nothing wrong with EITHER. Many large growers come from hard working families just like IGS. Just because Lowe's is taking a different approach to how they run their business should be a testament to the fact they aren't stuck in their ways and are willing to experiment to see what consumer need and that the larger growers are willing to innovate and change with them.

Sara Tambascio said...

You're right -- we do serve both large and small growers through Greenhouse Grower, but we also serve the independent garden centers through our Today's Garden Center magazine. Both IGCs and box stores have their places in this market. There's nothing wrong with any retailer doing what they need to do, but when the boxes start looking more like IGCs, the IGCs are going to have to find something new to differentiate themselves. It really should serve to keep the IGCs on their toes and create an even better experience than they deliver now.