 In our June cover story Mike Kunce, CEO of Armstrong Garden Centers (California) described the acquisition of Pike Nurseries (Georgia)—which resulted in the nation’s largest chain of independent garden centers. This month we learn how the combined company handles current logistics and its plans for the future...Thoughts on marketing strategy… “We’re basically doing the same thing for both the Pike and Armstrong markets: It ranges from Facebook and Twitter—to more traditional radio, TV, newspaper and direct mail,” Kunce said. “We’re also doing billboards in the North Carolina area—for our Charlotte store, and in Atlanta. “There is one big difference though: Due to California being such a large market with a high population, for dollars spent we get a much greater return on marketing in Charlotte/Atlanta than we do in California.” Kunce also set up a frequent shopper reward program (the Play in the Dirt Club) for both garden center markets. “That has gone over very well in Atlanta, and it’s also done well in California,” he said. “But, again, the numbers show more response from the customers here than in California. “E-mail marketing has been by far the most successful for us. We’ve taken both companies in a short period of time and developed an e-mail marketing list of over 100,000 here in Atlanta and California. It has the biggest growth potential in marketing to our customers.” Growing and plant material Mike Kunce: “In California we have our Armstrong Growers operation, which produces about 90 percent of the annuals and perennials we sell. We don’t have a facility in Georgia. But it’s a possibility in the future. “The drought that Georgia faced back in 2008 could be the very thing that forces us into establishing a growing facility here. The drought, and also the economy and construction downturn, has put a real strain on the growers. Finding good, quality growers who are able to supply material in a timely manner—that is a concern we have today.” Alan Holcombe, Pike Nurseries’ executive vice president: “We might be getting to the point where we’re almost forced to do some growing just to have the quality and selection we want, because of the lack of certain growers in the area due to the drought and the economy.” Kunce: “As an estimate, it takes about 12 growers here in the Southeast to give the breadth of product that Armstrong Growers supplies to Armstrong Garden Centers in California.” Holcombe: “The biggest void and challenge—with Carolina Nurseries being gone—are the perennials. That’s the one thing we struggle with—finding the right availability on that particular line.” Consumer purchasing trends Kunce: “Pike has a larger average ticket than California does—perhaps because people spend more time in the garden. Pike also, as a percentage, sells a lot more trees and shrubs. Even though California is twice the size in both sales volume and the number of stores, we [Pike] sell significantly more trees and shrubs than Armstrong.” Corporate culture and morale Kunce: “I have certainly seen the morale grow very fast over the past three years.” Holcombe: “Just from the support-center standpoint here, morale just keeps getting better. I would say it’s at an all-time high. Everyone has much more work to do. We downsized our office from about 60 people when Mike first got here to around 19-20. Everyone wears a lot of hats, and I think everyone is staying busy—which is a good thing. “I think we work better as a group. The buyers work with the marketing department, and vice versa. When you start doing that it all flows down to the store level so much smoother, and I think the overall outcome is just a better product for our customers.” Kunce: “Our turnover has been drastically reduced by approximately 50 percent ... Also, regarding the ESOP [employee ownership] plan at Armstrong: My goal is to ultimately put the two companies together as one, and at that point the associates here at Pike would also become ESOP owners with their seniority generated from day one.” The changing customer Kunce: “Armstrong and Pike did the largest research project in the U.S., I believe, on garden-center customers. It involved focus groups, and we hired Just Ask a Woman, a consulting firm out of New York. We also dealt with a consultant to Oprah Winfrey and her branded stores. “The findings told us that our customers want to be talked to a certain way, and different generations want messages delivered in distinct manners, also. Knowing this, I think the thrust of the marketing efforts in both California and Georgia is to go out and lower the age of our average customer. We’re seeing results. I think our average customer’s age has dropped two years over the past three-year period.” Growth opportunities Kunce: “We’ve identified categories that we feel we can ‘own’—that our competitors would have a hard time competing with us: houseplants, birding, pottery, fountains/statuary and patio furniture are what we’re focused on right now. We feel that due to the decline in competition in the patio and fountain/statuary areas, that’s a great opportunity for us. Birding is strong here in Georgia/Charlotte, so we’re expanding that department. “For the first time in several years our woody ornamentals are up significantly. People are starting to plant again.” Holcombe: “I think customers are starting to show some confidence with the economy. I see that with the average sale and the customer count being up a little bit. And there’s no big news or discussion of the droughts we used to fight. So we’re optimistic with those two things going in our favor.” Further expansion Kunce: “Here in Atlanta—even with the 16 stores—I feel there are about five areas that we’re not serving that I would like to put stores into. In Charlotte [N.C.], we only have one store there, and from our research it looks like we could put in an additional four to five stores. I don’t plan at the present to go outside of Charlotte and Atlanta. There are a lot of opportunities to fill that void, and to do that I think it would take four or five years. “I think bringing the two companies into one would be something we accomplish in two years.” |
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