February 2007 Big Grower

Understanding Big Box Consumers By Jim Barrett

The large home improvement retailers Home Depot, Lowe's and Menards are critical outlets for a major portion of the green industry's products. Growers are becoming more involved in these garden centers' retail activities and have a greater need to understand the retail customer.

Market Resource Associates, Minneapolis, Minn., conducted an extensive study of customers for these three retailers in 2006. The company talked to 2,002 individuals in 56 U.S. metropolitan markets. There were two requirements to participate in the survey: An individual must have been in at least two of the retailers and must have made a purchase in at least one of the stores within the past 12 months. Of 2,002 total participants, 1,733 made a purchase at Home Depot, 1,497 at Lowe's and 548 at Menards.

Surveying The Participants

Married individuals made up 76 percent of the participants and 59 percent were female. A vast majority were homeowners rather than renters. The overall entrance-to-purchase ratio was close to .90. Meaning that nearly nine out of 10 individuals who walked in a store made a purchase in the past 12 months. It does not mean they made a purchase 90 percent of the time they visited a store.

The participants were asked which products they purchased, and the items were grouped into 29 categories, such as power tools, outdoor furniture, lumber and bath accessories. Lawn and garden was the overall number-one category. Outdoor power tools and grills were separate categories and not included in lawn and garden. As shown in Figure 1, right, 41 percent of individuals who made purchases at Home Depot purchased lawn and garden products. For Lowe's, it was 38 percent. Meanwhile, only 32 percent of the Menards shoppers purchased lawn and garden, which was the number-three category at that retailer behind lighting and lumber.

The numbers show about 40 percent of big box home improvement shoppers make at least one lawn and garden purchase per year. That sounds good, doesn't it? However, it also means there are a large number of individuals already in the store that the industry is not reaching. And a large percentage of these shoppers are married females that own a home. This seems like an important pool of potential customers that we are not reaching with current methods of marketing and selling plants.

Consumers' Shopping Criteria

A valuable feature of the survey is data on the decision criteria that customers use in deciding where to shop. Participants were given 11 potential criteria for making a purchase and were asked the relative ç importance of each criterion. The most important criterion was that the store offers the best value and the least important was the product demonstrations and informational displays.

Participants then were asked to rate the three retailers on the 11 decision criteria. The retailers were all rated high in terms of offering good value, convenient location and having a good return policy, which were relatively important criteria for the shoppers. In the minds of customers, these are clear strengths for the big box retailers.

The participants considered knowledgeable personnel, offering useful help when needed, ease of finding things and "values me as a customer" as being relatively important (four of the top six) reasons for selecting where to make a purchase. Unfortunately, all three retailers were rated low for performance in these areas. Additionally, Home Depot was rated low for ease of checkout. Shoppers perceive these as weaknesses.

These weaknesses apply to the garden center and not just inside the stores. In the marketing world, these weaknesses would be considered important opportunities for improving customers' perception of a store or product.

More Strengths And Weaknesses

Some additional data analysis can be used to compare and identify strengths and weaknesses of the different retailers. Figure 2, page 17, shows how the participants rate the stores for two decision criteria. Figure 2 shows having knowledgeable personnel and easily finding desired products are both perceived weakness for all three stores. However, the results also show the averages for Home Depot and Menards are below the overall average for both criteria, while Lowe's is rated highest for both criteria.

The cluster analysis in Figure 3, page 20, shows another separation among the retailers. Lowe's is rated above average for efficiency of checkout process and "values me as a customer." Home Depot, on the other hand, is perceived to be the weakest for each criterion. Here, Menards is rated high for checkout efficiency but still scores below average for "values me as customer."

Garden Center Product Perception

How do the participants perceive the retailers' lawn and garden ç products? This is illustrated in Figure 4, left. Product quality is plotted with value for the money. Remember, getting value for the money spent was the number-one criterion for selecting a store. While the general rating of product quality is high, Lowe's is perceived as offering both better quality than average and better value. Home Depot is seen as having less-than-average quality and value.

The results from the big box survey indicate that Lowe's has a better image in consumers' minds compared to the other two home improvement retailers. This is true for the quality of the lawn and garden products and for several attributes customers consider important.

Providing Service

Growers are becoming more centrally involved in managing products and services in the garden center. As programs are put together for the big box garden centers, the weaknesses identified in this survey should be seriously considered. With each garden center, there is a store full of consumers who are looking for "service." Finding ways of providing that service and making shopping more rewarding so customers feel valued is critical as the industry goes forward. This will go a long way toward changing the perception of big box garden centers and lead to increased same-store sales.