Serving up success Listening to the speakers and attendees at this year's Seeley Conference, it was interesting to learn how people from different segments of the floriculture industry measure success. Of particular interest were the comments made by suppliers, including growers, who service big-box stores. The 18th annual Seeley Conference at Cornell University focused on Chasing Success in Challenging Times: Finding a Winning Strategy. Having heard some of the horror stories from suppliers that service big-box stores, many growers might consider it an oxymoron to use the words "success" and "big box stores" in the same sentence. Wal-Mart, the world's largest retailer, reported 2002 sales of over $246.5 billion, a 12.2-percent increase over 2001. Wal-Mart announced at its annual meeting that it expects to hire about 800,000 people over the next five years to accommodate its expansion plans. This year, Wal-Mart is spending $11 billion to build 45 million square feet of retail space. National Retail Federation reports that Wal-Mart had 2002 sales greater than its five biggest U.S. competitors combined. Home Depot, the world's largest home improvement retailer and second largest U.S. retailer, paled in comparison to Wal-Mart in terms of 2002 sales. Its sales were over $58 billion, an 8.8-percent increase over 2001. Home Depot, unlike its chief rival Lowe's, doesn't have as great an opportunity to expand with core stores because of its existing market saturation and greater number of outlets. However, Home Depot continues to grab more market share by identifying and diversifying into related specialty markets such as its Expo Design and Landscape Supply stores. Consumers are increasingly shopping at two or more outlets. Because consumers are shopping more broadly, retailers are seeking to be in multiple channels, i.e. Wal-Mart has Supercenters, Neighborhood Markets and Sam's Clubs. Retailers are trying to identify and focus on their top shoppers -- the ones who spend the most money in their stores. Retailers are also trying to determine who are the best suppliers to serve these shoppers. Meeting customers needs One grower pointed out that big-box stores are increasingly partnering with suppliers that meet their needs. These retailers realize it's expensive to work with too many suppliers and so they are seeking to establish more exclusive programs. Unlike other product categories in these stores, the greenhouse industry is a very fragmented supply base, the grower said. These stores are pushing for brand development, seeking exclusive brands and putting a new focus on national programs. A floral wholesaler who deals with big-box stores said selling to those companies exposed his staff to a corporate environment that brought a level of professionalism to his company that didn't exist before and raised his company's product quality. He said dealing with these stores forced him to know the cost of doing business. This is especially important, he said, because any surprises could have a major negative impact on a supplier. Service is a major issue, whether it's for big-box stores, specialty retailers or end consumers. Employee turnover costs for big-box stores are high. An economist reported that the annual cost of employee turnover exceeds annual industry profit by more than 40 percent. The stores lack the time and staff. This provides growers supplying these stores an opportunity to help them resolve this increasingly difficult challenge. The economist said we should expect more contraction of retailers to occur. The suppliers who survive will be those that have a clear understanding of their customers' challenges and the commitment to help them solve them. Send this article to a friend Enter your e-mail address: Enter your friend's e-mail address: Click the image below to send: © 2002 Branch-Smith Publishing