May 2024 - 27

MANAGEMENT
At the end of the day, the carrying cost of the
nonperishable inventory negatively affects the garden
center profitability. Can you be profitable and sell more
nonperishable product lines? Yes! But you cannot treat
nonperishables different than perishables.
All of your inventory should be treated the same as
Ready to take your garden center's
profitability to new heights?
Tim Quebedeaux will be kicking off day two of The
Garden Center Show in Rosemont, Illinois, on Aug. 7
with his keynote: " Want More Profit? You need to know
what to measure ... KPIs. " Then, join Tim later in the
day for a more in-depth look at nonperishable product
lines and how to ensure that their place in your garden
center is a profitable one.
FIND OUT MORE
and register for FREE at
gardencentershow.com,
or scan the QR code!
longer than the perishable products, so they did! And this
was to the detriment of their profitability.
Nonperishable Products and Profitability
The problem is profitability of perishable products
carry the garden center's bottom line despite the lesser
profitability tendency of nonperishables. Part of being a
profitable retailer is to bring in inventory, and - within
the shortest time frame - you then sell the product with a
margin high enough to pay your bills and have profit left to
pay taxes and keep business, well, in business!
Perishable products such as annuals, perennials, shrubs,
trees and tropicals all lead to shorter shelf life and higher
inventory " turns. " Inventory turns are one of the KPIs I
measure with my clients to grade them on their inventory
performance. It is measured by calculating your annual cost of
goods sold (COGS) and dividing it by your average inventory.
Most of the time, a larger amount of average inventory
will slow a garden center's inventory turns. When
comparing perishable versus nonperishable products, you
will typically see a larger amount of average inventory
compared to COGS for nonperishable products.
your garden center - seasonal. The ebb and flow of
our seasonal business should extend all the way down
to inventory levels as well, for both perishable and
nonperishable inventory. Is it easy? No! It goes against
what a lot of us learned growing up in retail: You cannot
sell what you don't have. But you will pay for what you
don't sell. That lesson is what we are all trying to learn. The
recession from 2008 to 2013 caused a lot of garden centers
to go out of business because all of their cash flow was tied
up in the cost of inventory that was not turning, leading to
less margin dollars to pay expenses.
So, who are you as a garden center? What Is your
product mix? Is it a profitable mix?
Numbers Matter
The Garden Center Group measures their revenue
product mix in their Annual P&L Study (with reports from
more than 85 garden centers throughout the country). In
2022, we see The Garden Center Group is annuals (15%),
shrubs (15%), perennials (10.9%), landscape non-plant
(9.2%) and trees (8.9%).
Perishables are more profitable because of their forced
efficiency. Nonperishables belong in a garden center, not
as a weight to profitability but as a complement to your
perishable products. Nowhere does it say they should be
less profitable. They tend to act against your profitability
because of their innate property of a longer shelf life.
In The Garden Center Group Annual P&L Study, the
" Best of the Best " group with 20% profitability, shows a
76% to 24% perishable to nonperishable mix, while the
total group at 10.4% profitability shows a 66% to 34%
mix. Both are above the profitability goal of 10%, but
at twice the profitability, the Best of the Best group is
maximizing their revenue product mix to generate more
margin dollars, pay more bills and have more profit on the
bottom line.
How do you do this at your garden center? Measure
your KPIs! Know where your revenue product mix stands,
then start measuring more of your KPIs, such as inventory
turns and GMROII. Once you can measure, you can begin
to target your time to becoming more profitable in all
categories, perishable and nonperishable.
Tim Quebedeaux is owner of RetailKPI and worked in garden
centers for more than 20 years before joining The Garden
Center Group as a service provider. As such, he manages the
Weekly Department Review Report, which tracks the weekly
sales of participating group centers in 25 categories, and the
group's Annual P&L Study, the most comprehensive profit and
loss study of its kind.
LGRMAG.COM | 27
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May 2024

Table of Contents for the Digital Edition of May 2024
