February 2008 Big Grower

Cultivating a Niche By Jasmina Dolce

Founded in 1949 by Carl Loop, Florida-based Loop's Nursery has grown to 650,000 square feet between two Jacksonville locations. Being in the potted plant industry is not easy, and David Loop, Carl's son and current CEO, can attest to that. With market consolidation and big box competition, the potted plant industry has seen better days. So how has David Loop improved a business in a challenging market? By remaining optimistic and raising the bar for quality.

The biggest challenge for Loop's Nursery was developing from a small growing operation to the size it is today. Carl Loop started the growth simply by filling every order that came his way. David Loop tells us today that you just can't tell your customers no. And it's the high volume of requests that has led to Loop's continuous expansion. Their customers demand a high-quality product, and Loop's competition and a weak economy, the company has always delivered.

Slowly but Surely

Loop's Nursery was built by David Loop's father, whose uncle was in the landscaping business and grew woody ornamentals. Carl worked for his uncle during the summers and became interested in the business. With a degree in agriculture from the University of Florida, Carl launched his own retail business, where he grew crops such as azaleas and other shrubbery.

Florists began asking Carl if he could grow certain types of plants. He would then travel to south Florida, buy foliage and bring it back to Jacksonville to resell to the florists. Later, he started growing blooming-type crops, says Loop. And the business has slowly expanded.

In the early 1980s, Carl "became very active in agricultural associations, the Florida Farm Bureau in particular," says David Loop. He was promoted to president of the Farm Bureau, and David took over the nursery business in 1983.

"At the time we were still servicing mainly retail florists," Loop says. "We slowly evolved into servicing larger customers, such as grocery stores, and we've grown from there."

Working with Supermarkets

Today, Loop's Nursery caters mostly to supermarkets in Florida. Other customers include wholesalers, brokers and retail florists. The supermarkets include Publix and Harris Teeter as well as Fresh Market and Whole Foods.

Working with grocery chains has its own set of processes and challenges. There is typically no contract involved, says Loop. "They usually try to give me preliminary numbers of what their history is so that we can build it into production, but it's not really a contract," he says.

Essentially, Loop grows a product that must go through defined distribution channels. Everything is pot covered and UPCed, and then boxed. He has a large expense in boxes as opposed to those who may sell to a larger retailer, where product may be on carts.

Loop does not ship directly to the customers' stores. Instead, shipment is done through their warehouses. Deliveries are scheduled several times a week. "We've got supermarkets that will go to distribution twice a week," Loop explains. "We have some that are in our backyard that it's six days a week to the warehouses." He says it really depends on the time of year. During Christmas, he says deliveries might go every single day.

Managing inventory is not as tricky as it might seem when working with grocery chains. "Of course, we use historical data," says Loop. "We track how much of every item we sell weekly to a year." Loop also keeps track of customers; he forms production based on what certain customers purchase during a specified period. Holidays also play a role in managing inventory. During Christmas and Easter, customers submit orders and provide numbers for items needed. "With the vast majority, we know where it's going when it's planted," Loop says. "We always try to have enough to fill everybody's orders and some more."

Raising the Bar

Quality standards can be quite different when working with grocery chains, according to Loop. "I like that part because, as a whole, I think they're right in what they want," he adds. Competing with a cheaper product is not a problem for Loop. "You have to justify your price," he says. "And everybody says they have good quality."

Loop says he's been able to stay in the game through reputation, longevity and a history of applying his product. "And with intangibles of service, being dependable and meeting all kinds of demands," they've been able to differentiate themselves, he says.

Something Loop has been working hard on more recently is the postharvest of his crops. He wants to make sure the product they have and how they're growing them encourages good postharvest and consumer satisfaction. "We're beginning to do more and more of our own testing to see how things hold up and see where challenges are, so we can improve the shelf life and postharvest of our own product," he explains.

Loop's biggest concern never changes. He remains focused on the consumers and creating a product that will keep them satisfied. "The main thing is making the consumer want to buy it the next time," he says. "We don't want to hook them once and make them unhappy."

Growers catering to this type of segment may also be concerned with big box competition. With supercenters like Wal-Mart offering similar product at a cheaper price, how can growers like Loop compete? According to Loop, there has been a shift in consumer preference, and customers are worrying less about what the big boxes have. "We want to make sure [product] looks good and is reasonably priced, and our customers will buy it," he says. Loop is not so worried that his product may be $3 or $4 higher than what is being sold at the big boxes.

Loop's customers, he says, are beginning to realize that if they have a really good product, their customers are going to buy it. "And instead of dumbing down their product, they need to actually make their product better," he says. As a matter of fact, his customers are talking more about raising the bar and less about hitting the price point.

The Potential of Potted Plants

Although the potted plant industry has had its ups and downs, the Loops still went forward with the change from bedding plants to potted plants in the 1980s. "We couldn't compete in that market," Loop says. "And that really wasn't our forte anyway. We're set up more for potted plants." It took some time, but Loop was able to combat the obstacles and grow his business.

To do this, Loop says he had to look at his product mix and figure out what products worked for him consistently. Today, Loop's No. 1 crop is mums because it's a year-round program in Florida. Others include begonias, Gerber daisies, mini roses and azaleas. Seasonally, Loop's grows crops such as paperwhites, amaryllis and cyclamen. Bulb crops, such as tulips and hydrangea, begin in January. Through the spring and fall, crops include Easter lilies and even some Asiatic lilies. And, of course, poinsettias are grown for the Christmas season.

Identifying new varieties has recently become another concern for Loop. But he's been working with his customers to determine which direction to take. "I think it's a two-way street," he says. "They come to us, and we also take any new ideas we may have to them."

Adding new products can be extremely difficult, but Loop remains optimistic. "I think potted plants have tremendous potential," he says. "And we still have only scratched the surface." He knows Loop's has a long way to go to get where it needs to be, but that's a challenge he looks forward to every day. "It's a product that everybody loves. We've got to get it out there and get it shown right." It's the unlimited potential that keeps him active in the business.

Continuous Expansion

With unlimited potential comes expansion. While the business was still young, Loop's added about one acre every two years. In the last four years, it has been adding about an acre every year, according to Loop.

The main challenge in this industry, according to Loop, is operating with enough profit margin to make expansion possible. "As a niche in the industry, we're poised to really start growing because there has been a lot of consolidation," he says. Because of this, there have been a lot fewer small to mid-size growers in the potted-plant industry.

Retail florists don't sell potted plants like they used to, Loop says, and a lot of the growers who once supplied them are no longer around — but the demand for the product is still there. Loop plans on continuing to grow and expand his business in order to meet this demand.

"You can't tell them no," Loop says. Loop's has grown because the customers have asked, and they've seen the opportunities. "We can't stagnate and say we're not going to grow any more than this." For Loop, it's hard to stay still, which is why he is focused on continuing to evolve his business.

One difficulty that goes along with expansion is finding personnel to keep up with the growth. "The fun part is growing the flowers; the hard part is managing it all," he says. No matter the industry, getting from small to big is going to bring challenges, especially when it comes to labor. "You go through the growing pains of doing more than you're capable of doing and getting people in place to do it," he says.

And now that Loop's has grown, he says it's much easier to manage. "When we were more of a mid-size grower, that was probably the hardest phase because we really weren't big enough to have some of the staff that we needed," he shares. As his company matures, David Loop is ready to take on new challenges with new product and new expansion.