Altman Plants’ COO awarded top annual honor by Grower Talks magazine. Award presented at OFA 2012 Short Course.
Title: Chief Operating Officer
Operation: Altman Plants
When I look into the future of our industry I see a couple of large changes on the horizon. The impact of the Internet cannot be overlooked. It has already made an incredible impact and will continue to affect retailing in all sectors while giving consumers more access to products and product knowledge. Secondly, via every channel, consumers are confronted with more options to spend their money than ever before, creating stronger competition across industries. There is more customization of products to specific consumer groups. And trends and fashion are changing faster than ever before along with consumers’ purchasing habits.
For our industry to compete in this environment, we need increased cooperation and a consolidation of resources throughout the supply chain. We have to do this in order to better promote and customize our products to fit consumers’ lives. We can see other successful industries, as varied as clothing and consumer electronics, evolving their business models and products in this way in order to stay in tune with consumers and win those sales.
The changes that the Internet has wrought on our national retail landscape are huge. There is something of a panic amongst those who see companies like Best Buy or Blockbuster, who had successful business models only a few years ago, either closing stores or closing down completely due to competition from new ways to buy the same products. We are left to wonder if these same changes will find our industry as well.
In Blockbuster’s case, their products were completely replaced by a digital product that could be delivered electronically. With Best Buy, however, there is more similarity to our industry’s retailer group. Best Buy has had to refocus itself on customer service and value-added products and services in order to capture sales, as consumers use Best Buy’s inventory as a convenient hands-on display before easily comparing prices online and then purchasing somewhere else—a practice now called “showrooming.” Manufacturers of consumer products, including consumer electronics as well as live goods, will be compelled by this to increasingly customize products for retailers so that the retailer can differentiate themselves from their competition.
In the same vein, as technology allows for increased niche marketing and an understanding of different demographic purchasing behavior, retailers will also push for manufacturers to provide products that are customized to different consumer groups. We are moving away from a one-size-fits-all retail offering and retailers will be pushing the supply chain to help them with this. All manufacturers, including growers, will need to be able to create and design products that can be customized and marketed to different groups.
But whether plants are purchased online or offline there is no guarantee that consumers will be interested in our products. As an industry we will soon realize more than ever that our products must not only compete against each other, but against every other product that the consumer wants but does not need. In other words, to survive as a viable and thriving industry we must convince retailers that our products are important and our message to consumers must be compelling enough to cut through the competition from thousands of other products in the marketplace.
Some key questions we have to ask ourselves are: Why will retailers feature and promote plants compared to other products? How will consumers be introduced to and excited by our category of products?
Currently, shifts in our industry happen slower than in most industries due to longer production cycles and the complexity required to change our products. Developing and introducing a new rose variety into the market can take at least five years of breeding and trialing and another three to four years of stock build up and production time before it can be produced at a volume that could be noticed by the end consumer. By the time this rose hits the market the color may be out of fashion!
Styles and fashion will have changed in eight months, let alone eight years. Forever 21, the fashion chain for teens and young adults (and wannabe young adults!), provides “fast fashion” styles that can change monthly or even weekly. Forever 21 has continued to thrive in a fickle industry dominated by seasonal fashions due to its ability to stay close to its market through an adaptable supply chain and fast production cycle. This marketing strategy would never work with plants—or would it? What if plants were seen increasingly as fashion rather than as a pet, and could be discarded just as easily as last season’s skirt line?
In that same eight years we will see advances in consumer technology products that we cannot even envision at this time—I would bet the iPhone and iPad will be unrecognizable in eight years! There will be new ways for people to spend their time and money and we will still be working on a new flower color.
Too many times there are plants that have been introduced after years of effort and they go nowhere. Consumers are more interested in products that provide them with an answer—a fast answer! Competition from other consumer goods is fierce and only getting more ferocious. Our industry will have to focus our energies on fewer products and programs in order to spend enough resources on those that can make a difference. And we will need to become drastically better at breeding to create new variety improvements that will keep people interested. While it may seem counter-intuitive, as the focus becomes narrower, there will be more resources devoted to product development because companies will see a higher return on the initial product.
The only way for our industry to do this is for the supply chain—from breeders, seed and cutting producers, young plant and finish growers, to retailers—to cooperate or vertically integrate. Based on what we see in other industries, it is not hard to predict that both will increasingly happen. Cooperation throughout the supply chain is the only way to achieve the degree of promotion, customization and execution that is required to match resources with other consumer products and achieve consumer awareness.
Through supply chain cooperation we can drive information on consumer demand down the chain to the breeders and send new products and devote promotional resources back up the chain to retail. We will have to learn to do this more quickly and effectively. “Fast fashion” retailers, like Forever 21, have created this type of close supply chain integration in order to manufacture and deliver goods in time as fashion dictates and changes. And consumer electronics companies like Apple have created value through a combination of vertical integration—their Apple products are sold in Apple stores—while leveraging a tight cooperation with their supply chain. This allows them to create and promote differentiated products that have a compelling message and can reach the consumer quickly.
While our horticulture industry has slowly continued to consolidate, driven by consolidation at retail, there are still hundreds of growers and various channels for introducing product changes. Promoting those changes through the supply chain to the end consumer currently takes many years and more cost than one company can shoulder. We have seen few products achieve consumer awareness. And it is debatable whether these products would be missed if they were not available given the cornucopia of offerings one sees at any retail garden center.
Our industry has a leg up against other products because of our green and natural image, but even that can deteriorate if we don’t collaborate on this message. Negative stories about the effects of pesticide use and our industry’s use of limited resources such as energy, land and water can have an equal impact on the consumer’s buying decisions.
It is not hard to see that our industry has incredible products that can bring a lot of joy to people. But to ensure our plants reach a home we will need to innovate and cooperate at a level that has not yet been seen. But when we get there, the message and production efficiencies created will fundamentally change the value of our products. Supply chain efficiencies will drive down the price enabling plants to become addictively consumable and the messaging and design will speak to the consumer’s current lifestyle in a way that allows them to find their voice through the purchase of our products.