Ellison Chair in International Floriculture
Ellison Chair in International FloricultureTeaching, Research, Extension and Service

Seeley Conference Delivers!

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Wow!

It’s been 48 hours since we closed to door on this year’s Seeley Conference and I am still chewing on some of the stellar presentations that were made.

Jim Marstiller kicked off the conference in good fashion. He is Senior Vice-President of Consulting Services for TNS Retail Forward, a leading management consulting and market research firm specializing in consumer behavior and its impact on retailers, those that supply retailers, and the economy. He is also the author of The Power to Innovate. Jim’s talk focused on growth strategies, category reinvention, brand development, and innovative merchandising solutions. For a publication that provides much of his discussion, click here.

I followed Jim on the program (not an easy task I might add) with a discussion I called Industry 2015, which focused on the driving forces and historical trends of the green industry. For an overview of that talk, click here.

That evening, Bill Lipinski, Chief Executive Officer, First Pioneer Farm Credit discussed the difficulties that many businesses had had in expanding while adjusting to the ever-changing business climate. Very few firms have done this successfully for several reasons: (1) the leap from hands-on management to delegating is difficult; (2) there is often a disconnect between strategy creation and strategy execution; (3) there is a hesitancy to change business strategy to the changes going on; (4) a lack of management systems and information; and (5) a lack of an ability to lead.

I opened the Monday morning session with a discussion of the economic drivers underlying differentiation strategies, particularly addressing the nature of perceived value on the part of our customers. Click here for more on this discussion. You can also click on the “differentiation” label on the right hand side of this blog page for more posts regarding this strategy.

The rest of the day highlighted a series of case studies illustrating firms who have been successful in differentiating themselves in the marketplace including Brian Minter of Country Garden and Minter Garden Center, who has one of the premier gardens & garden centers in the Northern hemisphere.

He was followed by Gary Mangum of Bell Nursery, who has been featured in several trade journals articles (click here). Gary discussed the Bell Nursery model and the unique and innovative ways they carry out their own differentiation strategy in servicing Home Depot.

Ball Publishing’s Jennifer Duffield White finished off the day by asking whether sustainability in floriculture is a tipping point for producers, retailers and consumers. The last morning of the conference, Peter Moran, Executive Vice President/CEO of the Society of American Florists (SAF), concluded the conference with a discussion of the draft sustainable standards for agriculture currently being proposed by SCS, the firm who is behind the Veriflora certification.

Needless to say, it was a busy 2.5 days but well worth it. If you missed the conference, the only respite you have is that your brain probably hurts less than mine right now.

Largest minimum wage increase in 50 years

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Fellow blogger Mark Perry makes a good point. In nominal dollars, the upcoming change in the minimum wage from $5.15 per hour in 2007 to $7.25 per hour in 2009 will be a 41% increase. In real, inflation-adjusted dollars (assuming a 3.8% increase in 2008-09), it will be a 25.5% increase, and will be the largest 2-year increase in the real minimum wage in at least 50 years (see chart below — click on it for larger view).

Increase marketing now!

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It really has been an interesting week of economic news:

  • Real GDP growth has been better than expected (good).
  • Real personal disposable income grew at highest rate in months in April (good).
  • Consumer confidence dropped for a fourth-straight month to 59.8, the lowest since 1980 (bad).
  • Unemployment’s only running at 5% while interest rates are quite low (good).
  • One-year inflation expectations grew to 5.2% (bad).
  • Falling housing prices continue to be a significant source of down-side risk to the economy (bad).
  • The EIA is forecasting gas prices below $3.50 by the end of this year, and below $3.00 by the end of next year (good).

Bottom line for green industry firms: As I have said many times, stay the course. Also consider increasing your marketing expenses. Yes, you read that correctly. Increase your spending on marketing right now! As others are making cutbacks (and marketing is usually the first thing to go during hard times), increase your marketing efforts to gain increased “mindshare.” While you should be spending 3-5% of gross sales on marketing normally, consider increasing this to 5-8%.

Speak when others are quiet and even a whisper can be heard. Imagine if you shout.

Real Disposable Income

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Buried inside yesterday’s BEA report on April Personal Income (tables available here, see Table 10) is the statistic that “Real Disposable Personal Income” grew at an annual rate of 1.82% in April 2008 compared to April 2007, the highest rate of growth since December 2007 (see chart above). This will probably not get a lot of attention from the media, but provides some additional evidence that the U.S. economy is not on the verge of recession, and might in fact actually be “moderately” healthy.

Mother's Day followup

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Despite the current economic situation, the proportion of American adults purchasing fresh flowers or plants for Mother’s Day held steady compared to 2007. A solid 36.7 percent of adult consumers purchased floral gifts for the holiday, less than one half of one percent below the finding in 2007 (37.1 percent). Forty-three percent of adult males and 31 percent of adult females made floral purchases for Mother’ Day.

Source: Synovate’s eNation online survey, commissioned by SAF, of 1,000 adults age 18 or older in the contiguous U.S., conducted May 12-14, 2008; SAF website.

Mergers and Aquisitions slowing

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Sluggishness in the U.S. economy is affecting mergers and acquisition activity in various industrial products sectors, namely industrial manufacturing, metals and chemicals, according to PricewaterhouseCoopers reports on first-quarter M&A.; Although M&A; deal activity remains steady, the value and volume of the transactions is not expected to surpass 2007 levels. I think the same can be said of M&A; activity in the Green Industry. Modern Distribution Management (5/14)

Latest consumer confidence data

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An adage among economists is that recessions are crises of confidence. Consumer confidence tumbled to its lowest in 28 years this month, a survey showed on Friday, as short-term inflation expectations reached the highest levels since the stagflationary early 1980s.

The news heightens the dilemma for the Federal Reserve, which has bet that slowing economic growth will tame inflation pressures. The report also showed that lower-income households were the focus of the downturn in sentiment. The Reuters/University of Michigan Surveys of Consumers’ preliminary index of confidence fell to 59.5 in May, the lowest since June 1980. In April it was at 62.6.

This data is somewhat disturbing given that consumer confidence is usually correlated with the necessary consumer expenditures to drag an economy out of recessionary times.

And yet, just a couple of days ago, I reported that that the Commerce Department’s retail-sales report showed an overall 0.2% decline BUT exhibited a 0.5% increase when auto sales were excluded.The resilience of the consumer seen in that report is particularly encouraging given that this number largely represents spending that occurred prior to the receipt of the economic stimulus rebates. While it’s conceivable that some spending may have been pulled forward in anticipation of the rebate checks, survey responses and historical experience suggest these outlays occur only after the checks have been received.

The bottom line…we need to keep close tabs on all of these indicators. It’s also an election year which means that some consumers will be very happy with the outcome and others not so cheerful. Either way, you might want to check out my February 18 post on how to combat falling consumer confidence.

Melodrama and villains

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Ok, I couldn’t resist. Tom Sowell spells it out nicely:

With all the commotion in the media and in politics about the high price of gasoline, is there really some terribly complex explanation?

Is there anything complex about the fact that with two countries– India and China– having rapid economic growth, and with combined populations 8 times that of the United States, they are creating an increased demand for the world’s oil supply?

The problem is not that supply and demand is such a complex explanation. The problem is that supply and demand is not an emotionally satisfying explanation. For that, you need melodrama, heroes and villains.

Click here for the rest of his entertaining article.

I think the graph below drives the point home!

Consumers showing resilience

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Today, the Commerce Department’s retail-sales report showed an overall 0.2% decline BUT exhibited a 0.5% increase when auto sales were excluded.The resilience of the consumer seen in today’s report is particularly encouraging given that this number largely represents spending that occurred prior to the receipt of the economic stimulus rebates. While it’s conceivable that some spending may have been pulled forward in anticipation of the rebate checks, survey responses and historical experience suggest these outlays occur only after the checks have been received.