Inside the Box: Pay By Scan - Will it Last?

May 23, 2007 - 07:42

I wish I had a quarter for every time someone has asked me about pay by scan (PBS). When growers get together, the conversation seems to turn to the topic, with very predictable comments:

1. Hate it. These people feel forced into PBS, worry about making ends meet and may be actively looking for new customers.
2. Unsure about it. This group is willing to try PBS if they can get paid to take the risk, but they are not really happy about doing so.
3. Holding out. These folks think PBS is only temporary. If they can hold out for a year or so, something else will come along or growers will start revolting.
I have also heard comments suggesting PBS will bankrupt some growers, leaving fewer competitors in the market. That really scares me. But I am even more concerned that I have not heard very many people say they love PBS and can’t wait to see how much product they can sell. I haven’t heard people excited about controlling their own destinies. Who’s out there saying, “Bring on the customers”?’

 

Get Used To It

I have been servicing large retailers for years, and they provide challenges and opportunities. Let’s face the facts — we control the product and mix. With some limitations, we control table space, end caps and aprons. In some areas of the country we even control watering and maintenance. Yes, we have to get someone else to open the gates and doors on the garden center, and we have to have a cashier all the time. But the rest is up to us.

Ladies and gentlemen, the answer is, “Yes!” PBS will last. In fact, it will be expanded to additional categories — shrubs, trees and houseplants to name just a few.

 

Manage The Situation

The real question is not whether PBS will last, but how growers can make money and control risk while maximizing opportunities.

1. Know and manage your cost of operation, production and sales. I still think most growers do not have a handle on the true costs of operation. You no longer have the option of guessing. Establish guidelines and measure along the way.
2. Ship only the best product you can. That means you will have to throw marginal product away at the greenhouse. Why pay freight and fill your selling space with low-quality product? Is that really how to get consumers?
3. Set a realistic retail shrink goal and measure it. If shrink is too high, check your quality and make sure it is on track. If shrink is too low, you left opportunity at the greenhouse.
4. Understand retail inventory turns and sales per square foot. The quickest way to do so is to have a discussion with your buyer; he or she will be impressed you asked.
5. Hire good merchandisers with keen eyes for display. Face it, most of us are growers — a.k.a. farmers. We think we know something about merchandising but not really. Never, never, never forget: This is an impulse business. You have to give customers something to buy. If you fill your space with $1.89 packs, that’s all you will sell.
6. Work with your retailers to understand price opportunities. It is your responsibility to show buyers where the market is and where it could be. PBS is here to stay. Let’s grab the racks and sell some product. Get smart and take advantage of the opportunities.

About The Author

Dave Edenfield is president of Visions Group LLC, a solutions group providing marketing, management and production assistance to the green industry. He can be reached at (440) 319-2458 or dave@visionsgroupllc.com.

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