We said, you said - Warehouse sends out a shock

Warehouse sends out a shock
There was a nasty shock for many companies in late January when the Warehouse announced it was cutting its 3000 supplier numbers by half.
Furthermore, those remaining were summoned to meetings, reported the NZ Herald, and asked to drop their prices by 10 percent, improve quality and delivery. The policy is also to be implemented in Australia.
One supplier said: It’s been put down as non-negotiable. We’ve been told we have to reply by March 1.” There is a lot of garden-related product sold through the Warehouse, greenlife included, so presumably many companies in our trade will be hurt. Said one commentator: There’s no way the nursery industry can sustain a 10 per cent price cut – margins are just too tight already. Will the other mass-marketers follow the Warehouse lead with their suppliers? One to do so almost immediately was stationery retailer Paper Plus, but another, Farmers said it would not. It seems unlikely however that any mass-marketer would be happy long-term with its suppliers selling to rivals at 10 percent less.
So, at a time when the nursery trade should be pushing for higher prices for its products, the price pressures look to be moving the other way.

You Said . . .

Isn’t it time the nursery industry grew up.
The Warehouse needs to make a decision as to whether it is commercially viable for them to stock garden products.
The contract growers for the Warehouse really do need to draw a line in the sand and say no to stupidity. If they don’t then this will affect everyone else.
I believe this is a ploy by Warehouse to try and make amends for the poor results that they are achieving for their Shareholders at the expense of our industry.
The nursery industry needs to focus more on positive marketing of quality stock rather than discount cut-throat operations.
To the Warehouse suppliers – DO NOT UNDERMINE OUR NURSERY INDUSTRY.

I would also like to add that it’s time that interested parties get together in a forum of some type and talk about where this industry is going. Possibly invite appropriate expert people and hammer out the issues of the day and come up with some basic strategies to get the nursery industry back on the right track. Maybe the appropriate associations can facilitate such an event.

It seems to me that TWH garden section, certainly in Wanganui, is full of poor quality plants as it is, perhaps because they don't know or care how to look after them?
Reducing grower margins must surely depress quality further. I believe they have a detrimental effect on the Nursery Industry as a whole and we would be far better off without them. I will never allow our plants to be sold there - it is a condition of supplying our seed to plant producers. Not the image we want at all. With luck this new call for cheaper product will be resisted and The Warehouse could stick to dealing in plastic plants and flowers, something, it seems to me to, that they are better suited to.

Terry Dowdeswell
Dowdeswell's Delphiniums Ltd

Hi
Prices must rise for the grower and I feel if they bow down to the large companies, ie the warehouse then we all suffer, ninety percent of the time our pricing is lower than the warehouse, As a wholesaler I would hope that we were. how can retailers compete with another 10% less that warehouse is demanding from their suppliers. If these growers can afford to drop prices any lower, who is it going to hurt.... retailers. and them selves

Christchurch Wholesale Plant Market

The warehouse pressure to lower prices to growers could present a dilemma - if you want to keep selling to the discount/hardware/supermarket retailers, ultimately making no money and or further reducing quality and range. The green industry is not serving itself well by supporting the continual down valuing of plants and associated products at this level.
The instant garden TV reality programs do you no service either except to expand market - but is the market discerning enough to know good
plant material from poor. If there are low margins then corners get cut, plants 'out there' do not survive and the market gets disillusioned
again. They already are disillusioned in thinking that fancy gardens/landscapes are easy and affordable. When is there going to be
honesty and we see review of the long term success of those weekend built show pieces. May be there is no examples to show.
My observation is there is a huge discrepancy in quality and prices and knowledgeable service. Rather than lowering wholesale prices to
discount outlets why not the retail plant markets retain quality and service and reduce their mark-ups so to claim back the market, out of
the ancillary product lines of discount/hardware/supermarket, - back to the specialists at the garden centre.
The wrong marketers are handling the products - maybe because the right marketers are to expensive and not particularly well organized to plan for their own future interests.

Chris Williams
Landscape Architects

Im not a grower, or a retailer anymore but feel that growers should bite the bullet stand together and refuse to discount, perhaps if the warehouse and other large corporations paid their staff higher wages their losses would be less, if they didn’t over order their bottom line would improve, when one walks through these premises and sees plants struggling to survive, due to overcrowding, and lack of water, and in general mismanagement, why should the growers sustain further losses when its really the mass merchandisers who need to “lift”their game.

Hello

Read your article with interest. Having been in the Nursery/Garden centre industry for 7 years now the confirmation that we are undervaluing plants/trees and the services we provide is hit home all the time by comments our customers make about the access they have to cheap plants and the proliferation of part time "markets" that do not have the overheads an established nursery incurs.
If The Warehouse are wanting to slash 10% off the purchase price of plants then they must perceive that the current margins are not strong enough and as far as I am concerned the sooner these "Big Players" get out of the garden centre market the better.
We do well selling our expertise as well as trees and plants and we focus on continually updating our knowledge so that customers leave the nursery having received the best advice and the best quality trees.
If growers valued their stock as much as we did they would be increasing prices, not decreasing them. We recently increased the price of our large "Readytree" grade trees with no adverse reaction. As explained previously, we provide a complete service, we don't just sell plants.

Regards

Mark Hutching

General Manager

I am an owner of an independent garden centre. We have as competition all of the big players in the garden industry. I include in this the supermarkets who have been increasing their interest in our industry recently. We are increasingly concerned about the discounts that these large retailers are obviously getting from the same people who supply us. Increasing numbers of customers are questioning us why are our prices sometimes as much as 80% higher than those at so and so. We explain it by way of buying power and economies of scale. We also point out that our point of difference is our service, wider range of products and product knowledge. The independents are disappearing steadily and with them the horticultural knowledge base,quality and range of product lines for sale. Who is to blame? The growers and suppliers of course and now they are having the squeeze put on them with little option but to comply because there is no-one else to sell to. They, as an industry, need to act now and in unison. The playing field needs to be evened up so that the remaining independent garden centres can survive. If they (suppliers) all stick together and tell the big boys no, this is the price then they will improve their margins, not find them eroded. What are the chances of that happening! I have no sympathy for them they have brought it on themselves. The public too has played a role and they too will get what they deserve, poorer quality plants and other products, a reduced product range, no-one who can answer their questions and eventually all at a higher price as competition is squeezed out, as it surely will be unless the industry acts now.

Its about time that the industry dropped the Warehouse, Supermarkets and big Garden Centre chains. The growers are having to sell at reduced prices, which makes life difficult for them. They could concentrate on Garden Centres only, where there is plant knowledge, and informed, information on chemical use. We are are sick of people buying plants from big stores and then turning up on our door step, because they are unable to get any advice on what to do with their purchase. Surely if plants were only available from Garden Centres that has to be a win, win situation. There would be no need for price cutting or contract growing. If the public want plants then they must go to where they are available. Try buying petrol from anything but a petrol station

As for Warehouse I am sorry I have a very large hate for the company it has never done the small business man in any town it has gone to any good and I am of the opinion that once they have their hooks into you ie the supplier they then screw the thumb screws tighter and tigher all the time and demanding cost cutting of products being sold to them and once you the supplier start supplying them and you can get into the situation that you cannot afford to not supply them as they have become a big part of your business and then they try their Gestapo tactics on you as what the Warehouse have done to their suppliers, and instead of supporting the suppliers they are killing you off.

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