What margin might a garden centre typically take?

[Random Orbital Bob]

Hi Folks

I'm investigating a business model for a maker who is thinking of making/selling posh planters for retail sales via posh garden centres. He's at the stage where we're trying to figure out what margin the retailer might take in order to do the maths of what he'll be left with, in order to do the maths of what his making cost needs to be.

We have no experience of the kinds of margins (in % terms) garden centres typically expect from their makers.

Anyone got any experience of this please???

 

[sunnybob]

I had a shop selling ornamental fish and associated foods and dry goods.
i took the buying in price and added 70% to that to get retail

 

[tomatwark]

At least a 40% of the selling price.

You add 66% to get that.

So if he is wanting a £100 for example the retailer will want to sell at £166.00 and not at £140 as most folks seem to think.

Also he will need to allow for VAT as well, as a garden centre will need to sell inc vat.

Casio (MX-8S) do calculator which does mark ups from buying or in your case making price for about £5-10.

It is a great tool, a lot easier than using formulas, I got mine at Sainsburys.

 

[Inoffthered]

Hi Folks

I'm investigating a business model for a maker who is thinking of making/selling posh planters for retail sales via posh garden centres. He's at the stage where we're trying to figure out what margin the retailer might take in order to do the maths of what he'll be left with, in order to do the maths of what his making cost needs to be.

We have no experience of the kinds of margins (in % terms) garden centres typically expect from their makers.

Anyone got any experience of this please???

It is difficult to comment without knowing the nature of the product and where it is to be sold, but in general for bespoke products the retailers I have dealt with start off by adding 100% to cost and target a 50% margin on sales value (after vat), more if they think the product can command a higher price.

How well does he know the garden centre? Is it an independent or part of chain? Speak to the buyer and ask them what their target margins are or whether they have a target selling price in mind.

Is the plan to put a demo unit on display and then make to order thereby avoiding stock holding issues and promoting the bespoke nature of the product?

 

[RobinBHM]

The problem may be that retailers may only accept a sale or return type deal, or free display samples which will alter the pricing model.

 

[custard]

I sell furniture via a couple of local interior design shops, and in the past I've sold Adirondack style chairs via a local garden centre. In all cases their margin has been 40-50% of the ex VAT selling price.

One tip, the garden chairs were made from Greenheart, salvaged from a local harbour pier that was being refurbished. They sold like hot cakes despite the fact that they were considerably more expensive than alternative Teak garden chairs being sold alongside. I think the local timber connection was a big motivation, if you can find a way to emphasise any local content or connection I think it might pay dividends.

Good luck!

 

[Random Orbital Bob]

Interesting - thanks chaps.

Inoffthered....right now there is no concrete plan because the garden centre has yet to be approached. The model is at the data gathering stage in order to inform the plan. It's the lack of knowledge of the way garden centres procure their stock that drove the question. I guess the sale or return scenario gives the retailer an almost without risk option ie the only thing they're committing is the floor space and sales collateral (likely no more than signage).

I like the idea about documenting the provenance if locally sourced too.
The garden centre in question is privately owned ie not a chain.

 

[Inoffthered]

Interesting - thanks chaps.

Inoffthered....right now there is no concrete plan because the garden centre has yet to be approached. The model is at the data gathering stage in order to inform the plan. It's the lack of knowledge of the way garden centres procure their stock that drove the question. I guess the sale or return scenario gives the retailer an almost without risk option ie the only thing they're committing is the floor space and sales collateral (likely no more than signage).

I like the idea about documenting the provenance if locally sourced too.
The garden centre in question is privately owned ie not a chain.

Sale or return is a bad deal for the supplier because you have all the risk and the cost of stock production with the uncertainty of any sales. A better model would be a demo unit and offer a bespoke made to measure service, that way the supplier downside risk is minimised. If the range takes off then you can adjust the model and produce stock but in the knowledge that the items are selling. Whichever way you choose, it would be worth agreeing with the garden centre how and where the items are to be displayed and the nature of the store display. A lot of potential purchasers do not have the ability to see a bare item and envisage how it would look on there patio so it is worth paying attention to soft furnishings (cushions etc) and other incidentals to make the product look appealing. Point of sale info is also important.

I agree with the comments above about "personalising" the sale to make the items different from the other garden furniture, that could be because of the source of the wood used or the design or craftsman builder.

Custard makes a good point about the source of the timber being a good selling point, locally sourced is one option but anything with a story can be helpful.

 

[AJB Temple]

My wife used to be a director of the UK arm of a major US business that supplied literally all garden centres and all DIY sheds with various products including fertilisers, composts, seeds, pest control chemicals etc.

Your question about how garden centres are supplied depends on whether they are chains or independents. For the chains almost all stock is purchased centrally and there are various arrangements relating to displays, rep re-stocking, distribution lead times, volume discounts, call backs, redistribution, theft and damage, marketing budget, advertising campaign spend and so on. Deals are done a long way in advance (this season for next season pretty much).

Local managers of chains have very little power to determine what is sold. They can't even control how things are displayed because suppliers pay for display prominence and positioning in the customer flow.

Markups and margins vary quite considerably depending on volume. For low volume (excluding "must have" products like controlled weedkillers) the wholesale price will rarely be more than half of the retail price ex VAT. Your friend should target the independents first as they often seek differentiation from the likes of Wyevale, Notcutts, Homebase etc.

 

[tomatwark]

Unless you know the retailer really well and really trust them avoid sale or return at all costs.

The retailer may go bust over night and then you have to struggle to get your stock back, they may sell the stock but fail to pay you and because they don't own it they will end up sticking in a corner no one goes into to fill space.

A shop local to me set up on this model taking things on sale or return from artists and small crafts people, and then did a runner when they could not pay the rent, folks lost money for the stuff that had been sold and their work when the guy emptied the shop over night.

 

[Rorschach]

My retailers ask me what the selling price should be and then typically pay me 50% of that.

 

[Keithie]

My experience of selling through independent local retailers (obviously not my woodturning output!...just some silver stuff I used to make) is what Custard and Rorschach said. You get half of sale price (maybe you can haggle to get 55% ... but may as well accept 50%)

also ..
You dont get a contract in writing
You're lucky if your stuff is covered by their insurance
You might want to provide your own display case

If you want to keep more of the value then an etsy shop might be worth considering ...but then your retailers get sad if theres a price difference so you need to keep them aware of how you're selling elsewhere (you dont want them badmouthing you)

ps 'Versailles' and 'Beehive' style planters seem to sell pretty well to posh folk! ..if your friend tries focussing on Nat Trust & RHS & Duchy national buyers and has some luck then he/she might have more work than they cancope with!

pps ..for silver stuff there's a very long standing guide that retail price is approx 6 (six) times making cost (ie accurately calculated cost of materials).. so if stuff sells through a shop your profit is twice your cost of making (typically a bit less as my experience is that shops often give small discounts to close a sale ..then tell you about it later ..lol)

 

[bugbear]

If you want to keep more of the value then an etsy shop might be worth considering ...but then your retailers get sad if theres a price difference so you need to keep them aware of how you're selling elsewhere (you dont want them badmouthing you)

Yes - if you undercut your own retailer when selling direct, they tend to get very angry.

BugBear

 

[Inoffthered]

If you want to keep more of the value then an etsy shop might be worth considering ...but then your retailers get sad if theres a price difference so you need to keep them aware of how you're selling elsewhere (you dont want them badmouthing you)

Yes - if you undercut your own retailer when selling direct, they tend to get very angry.

BugBear

Yes but the easy way to avoid this is to introduce slight design/spec differences so the items are not directly comparable.
Also, dont use the same promo photos for your retail display and Etsy

 

[Mr_P]

Agreed sale or return sucks for the maker but it might the only way to get your foot in the door.

You will make more money by selling direct but its a lot more hassle. If its small easy to post go for ithe net, big planters forget the internet or you will spend your life packing and dealing with breakages and worst of all returns.

I don't like the colour, it looked bigger in the picture even though you gave measurements, I've changed my mind etc......
Collection only then, you want the general public turning up seeing your tools and security set-up, wanting to chew the fat cos they have nothing better to do, can you make me one just a bit bigger , what do you mean you make them in batches and it will cost a lot more for a one off, I'm not happy I'm going home to tell the world how horrible you are.

People impulse buy at garden centres, they have to consciously search for planters on the internet/ etsy.

You lose 50% selling at garden centre, ebay you lose 10% (no idea on etsy) plus another 5% on paypal if you do free carriage you might only gain 25 % or less by doing it yourself, is it worth the hassle ?