Don't Get Caught With Your Plants Down!
Plant for Profits Column, Leslie F. Halleck
Savvy Buying & Inventory Management Skills are Keys to Profitability
If you’re a garden center, plant shop, or any sort of plant seller that is struggling to thrive profitably the way you wish you could, it’s probably time to take a hard look at how you are, or aren’t, managing your buying and inventory.
If you press me to pinpoint only one area of weakness that primarily holds most garden centers and plant shops back in business it would be a lack of plant and product buying skills and inventory management. Sure, marketing is still a big problem for many horticulture businesses, which accounts for many struggles; and good buying and good marketing go hand in hand. But even good marketing can’t make up for bad buying and inventory management.
Spring is the time we make hay in this industry. Most plant retail businesses will operate in the black for say 4-6 months of the year with the rest of the year in the red or break even. As long as you know how to budget for that cycle successfully and profitably you may be doing just fine. Not to say we shouldn’t always be looking for ways to expand and extend every month of the year with meaningful profitability in mind. But that’s another column. The main point here is if you’re falling short of the right inventory levels and restocking rate during your make-hay months you are likely losing out on most if not all the profits you hope to pocket at the end of the year.
Look, garden center and plant shop work is hard and time consuming. Do you really want to work this hard for a small salary (or no salary) and a 5% net profit? Or maybe 1-3% net profit, which is where more shops than you might think actually end up on their P&L. The last place you want to be, of course, is in the red at the end of the year.
NO MA’AM. That's not good enough for me.
"The reality is most of you out there buying for plant retailers are working off instinct and feelings - often fear - versus data and analytical tools."
More often than not the garden centers and plant shops I walk into, or view on social media, have either excessively anemic inventory, or too much of certain inventory that’s clearly not selling. These days I’d say the former is a more common occurrence.
The reality is most of you out there buying for plant retailers are working off instinct and feelings - often fear - versus data and analytical tools. Most buyers or owners I’ve met (who are often sales people saddled with the extra job of “buyer” they’ve never been trained for) are terrified of getting stuck with too much inventory, or are falling victim to their own price-prejudice when deciding on the size of orders. This isn’t their fault. Fact of the matter is almost no one in the green industry has formal education and training on building a vendor network, budgeting and forecasting buying needs, using an open-to-buy, and coordinating all buying activities with a marketing plan.
Keys to savvy and profitable buying is having clear data on the inventory you have at any given time, setting specific revenue goals and margins for your departments and categories, and potentially working with an open-to-buy system to make better buys in live time and in future bookings. Understanding your real-time inventory velocity (inventory turns) in conjunction with your on-hand inventory, projected purchases and revenue goals, and GMROI is a must. Making buying decisions based on your actual budgets and live sales data helps take fear out of the decision making equation. Otherwise you’re likely never buying enough or restocking fast enough, or buying way too much at once without an advance marketing plan to get it sold.
The bottom line folks is that you can’t sell or generate revenue from what you don’t have. And when you don’t order or re-order fast enough you miss a lot of sales. If you haven’t yet thought about how to organize and manage your inventory budget for and forecast your buys using hard data, then now’s the time to think about getting cozy with the numbers.
As we head into spring this year, the last thing you want to do is get caught with your plants down!
If you'd like some guidance on buying and inventory management in your botanical business book an initial consultation HERE.
