Most Sydney-siders are familiar with Flower Power – the iconic garden centre chain with its sprawling stores and bright smiling flower logo.
Behind the rows of plants, relaxed cafés and drive-through landscaping supplies though is a tale of true Aussie entrepreneurship – a second-generation family business that has thrived against the test of time, the challenge of larger competitors and external threats such as drought and water restrictions.
My Business speaks with CEO John Sammut about the business’ strategy for growth, how its investment in rewarding customer loyalty is paying dividends and what the company has learnt in almost 50 years of trading.
“The big difference between my dad and anybody else who was running garden centres was that he was a customer and a keen gardener, he wasn't a horticulturalist.”
Sowing the seeds of success
As John recounts the humble beginnings of the business his father Nick started, he beams with pride.
“My dad was a keen gardener – he wasn't a horticulturalist. He was a little bit of an entrepreneur,” says John.
“He immigrated to this country in the mid-‘50s, came here as a very young man, I think he was 19 years old, with his young wife. He was a boilermaker by trade, so he worked in that field, and then started producing pots, cement pots with metal stands on the side, and supplying hardware stores and garden centres.
“He built up a good little business, but it was still a side business as far as he was concerned.”
As part of this business, John’s father supplied a garden centre at Moorebank in Sydney’s south-west. The owner of the business wanted to retire, and so offered to sell the business to the Sammuts. It was an opportunity they couldn’t refuse, and having paid the sum of 200 pounds for the business, immediately set about putting their own spin on it.
“The big difference between my dad and anybody else who was running garden centres was that he was a customer and a keen gardener, he wasn't a horticulturalist,” explains John.
“He looked at the place and said, ‘Why is there muddy paths in the middle? Why isn't there proper paths? Why are all the plants in...’ all the plants in those days were in olive oil tins, used olive oil tins, or prune tins. You pick up a plant and you cut your finger on the prune tin. Things like that. He said, ‘I couldn't understand why it hadn't evolved as a retail-type business; it was just focusing on being a garden centre and growing plants’.
“He just took it upon himself to put paths in. He built a trolley: he got a milk crate, put wheels on it and put a handle on it and made trolleys. He looked at punnet bags to carry. Actually, the seedlings in those days you used to dig them out of a wooden tray and wrap them up in newspaper. He went to a grower and devised a plastic punnet to put seedlings in. He looked at it in a way that other people never looked at it.”
Clearly this customer-centric approach worked a treat, as the little business grew strongly, eventually leading to a second site opening at Bass Hill, and more followed.
“We did find that once we did close the smaller sites down, they [had been] cannibalising some of our larger stores.”
Pruning cannibalistic growth
“We just bought various garden centres as we progressed and moved along… they're all company owned and managed by us,” John explains.
At one stage, Flower Power expanded to a total of 16 sites, including three in Melbourne when it took ownership of the Kmart Super Garden Centre brand – a totally different model to its Sydney stores.
The group had also acquired several smaller sites across Sydney. However, it became apparent that simply having more sites was not a sustainable growth strategy for the long-term health of the business.
“We found that the smaller model didn't work for us. We were more of a destination shop which had a full range of products, which included homewares, giftware, of course plants, huge range of plants, anything associated with plants,” says John.
“We also have a drive-through landscape centre where you can pick up bulk products and heavy items. That was the model that worked for us. The smaller type garden centre didn't work for us at all, so we decided about five years ago to close the smaller ones down and just focus on the larger sites.”
Far from losing customers and revenue, John says the decision has actually improved the overall bottom line.
“Now we're operating from 10 sites in Sydney only. We did find that once we closed the smaller sites down, they [had been] cannibalising some of our larger stores,” he explains.
“The business went back to our larger stores, where we were getting more average sale from those customers. They had more to offer and it just worked so much better for us.”
Another reason Flower Power has consolidated its offering exclusively within the Sydney metropolitan area comes down to an issue many business owners grapple with: access to good staff.
“Garden centre managers aren't easy to find. Most garden centres are owner-operated, and we've got to develop and grow our own managers,” notes John.
“We're just keeping it close to our management base that we have here [in Sydney], and know that we can easily [expand] to Gosford and to Wollongong and service those guys.”
Nurturing your strengths
Having identified and implemented the strategy of large formats only, John looked to grow the business by enhancing customer value and adding even more complimentary products to the mix.
“Our Enfield store is the closet store to the new model that we've created. Particularly when Masters came into the game, we sat down and we looked at the scenario: how we could differentiate ourselves as much as we possibly can from the likes of Bunnings, which is our main competitor, and Masters,” he says.
“We put together a model which is 75 per cent what we have at Enfield. At Enfield, we have the garden centre, the landscape centre, we have a café, we have a pet shop. We also have a farm shop or fresh produce shop as well. That works very well for us.”
The remaining 25 per cent of the model, John says, is to introduce other products such as a power gardens shop, with mowers, whipper snippers and the like.
“Also in some of our stores we have a spa/pool shop, which works very well with us. We want to incorporate that into the new model. What we're going to be doing is changing our stores into the new models, which incorporate all those things,” he says.
“What we're looking to do is to be the specialist garden retailer, where we have the largest range of plants available. It's the main part of our business and the main reason why people come shopping at our business. Then we have all these other parts of the business which kind of complement.”
Of course, expanding product lines into new areas can be fraught with danger if you don’t fully understand how they work, what's the consumer demand for them or where to source them cost-effectively.
John admits that for Flower Power, importing goods such as garden furniture has been quite a learning curve for a business that prides itself on growing most of its own stock.
“Where we had a few hiccups was in the importing side of things, and learning our way as far as importing was concerned and finding a good association with suppliers overseas etc,” says John.
“It got to a point where we had excess product – the product wasn't of the quality that we wanted. We had to sell it and lose margin on product, and most probably lose a bit of money in some instances as well.”
Yet the dedication of his employees, whom he describes as “fantastic people”, has enabled the business to greatly improve its importing processes, and it continues to do so.
Another key lesson that has become evermore apparent is that average garden sizes today are much smaller than they were 50 years ago.
In the past few years alone, Sydney (like Brisbane and Melbourne) has witnessed a huge boom in the constructions of new apartment buildings. One would think this would be a frightening prospect for anyone owning a garden centre business.
However John disagrees, and says it simply offers an opportunity to connect with new customers by tweaking the types of products available to suit the needs and wants of local consumers.
“We have our store at Mascot and that's surrounded by a huge quantity of apartments,” he points out.
“The amount of pots and indoor plants that we sell these days, it's a real growing market. I'd say a large percentage of our shoppers at Mascot would be apartment owners because they want to bring some greenery into their apartment.
“Whether it's indoor plants or plants on their balcony, if they want to sit out on the balcony and have a few pots with plants in them, that works as well.”
A third core lesson for Flower Power was the need to own its product chain as a means to remain competitive with its archrival Bunnings. This meant having the ability to compete on price, as well as quality.
“We grow about 70 per cent of our own plant requirements. We have about five million plants on the ground at any one time. That gives us the opportunity to be price-competitive,” says John.
“When we had water restrictions here in New South Wales, that was absolutely the worst thing that could happen to our business: the fact that the state government was saying, ‘You can't water your garden’.”
Virtually no business is immune from external threats. One that arose which had the potential to destroy Flower Power came at the hands of Mother Nature in the form of the serious drought that gripped much of Australia in the 2000s.
“Particularly during the water restrictions, when we had water restrictions here in New South Wales, that was absolutely the worst thing that could happen to our business: the fact that the state government was saying, ‘You can't water your garden’,” explains John.
“Particularly with lifestyle-type customers, they kind of dropped out of gardening. What saved us was the keen gardener.”
As a garden enthusiast himself, John knew that avid gardeners would do anything to save their gardens.
“If they had a bottle of water left and it was either them dying of thirst or their plant, most instances they give the water to the plant because they love their gardens,” he jokes.
By strongly targeting this segment of its customer base, and altering its range of plants to focus more on low-maintenance and drought-tolerant plants, Flower Power ensure revenues continued to flow into the business and that its customers remain satisfied.
Perfecting the product mix
For John, a crucial point for any retailer or wholesaler is maintaining strict oversight of your inventory. Aside from reducing storage costs, he says doing so enables you to closely monitor what is and isn’t being sold, so that you can adjust stock levels and prices to accommodate the supply and demand.
“We've had [that] going now for close to 30 years. We can monitor what we sell, the margin we make on the product. We look at it and we look to improve it every year,” he explains.
“With plants, it's like everything else these days. We're looking at ways of differentiating ourselves, getting new product constantly, and looking at that.
“We look at our existing plant range and it's the usual 20/80 rule: 20 per cent of plants account for 80 per cent of the sales.”
“We just monitor the sales, consider the growth that we're going to get or whether they're not being as popular, because plants… they're trendy. Sometimes they're in fashion, sometimes they're not,” John adds.
“For example, strappy leaf plants were very popular a couple of years ago. Now they're not popular anymore. They've gone out of fashion. Now flower colour's come back again. We've got to cater for that.”
Be an educator, not a salesperson
Positioning yourself and your business as a source of information, not just a product or service, is something regular My Business readers will have seen crop up again and again. And John is yet another fervent supporter of the ‘educational sales’ approach.
“We want to be able to get new customers into our stores as well, [but] trying to convert people to become gardeners is not an easy task,” he says.
“We've deliberately gone the path on our website to be very information-based, to help people if they want to grow a lawn or they want to grow some herbs or veggies or whatever, that the information is there on the website and it's easy for them to get it.
“I think our biggest job is to try to educate people to garden. The worst thing that we could do to somebody who's just kind of breaking the ice and coming in and starting to do something in their garden – ‘I've just bought a house and want to do something’, or improve what they have – is sell them a plant that is going to die in a couple of weeks because it's a high-maintenance type plant.
“Our role has been, over the last 20 years, to try to educate people as best as we possibly can. Even with our horticulturalist to ensure that if we refer them to plants that are easily grown, that they're going to get a good result, so they get a buzz out of it.”
“We have over 355,000 members now – those guys represent close to 80 per cent of our business.”
Feeding customer loyalty
For some businesses, building a strongly loyal customer base is an impossible dream. Other businesses do so with varying degrees of success. For Flower Power, rewarding customer loyalty is not simply a gimmick, but it has created a vibrant and fierce loyal customer base that forms the bulk of its total sales.
“We call it the Garden Lover's Club. That's a huge success for us. We have over 355,000 members now,” says John.
“Those guys represent close to 80 per cent of our business. We work hard with those guys and we offer them a lot.”
Such is the loyalty of most of these members that the Garden Lover’s Club has become Flower Power’s main marketing channel.
“Our main vehicle is the Garden Lover’s Club. We have email addresses for most of our members. We do EDMs to our members, who are keen gardeners and do get excited by the fact that, ‘Look here, we've got a new variety of plant’.
“For example, [last year] was the 200th anniversary of the Royal Botanic Gardens. We were very fortunate enough to get a variety of dianthus that was exclusive to us and commemorated the 200-year anniversary of the Botanical Gardens. All we did was promote it through our Garden Lover's Club. It was a sell-out, virtually a sell-out.”
Fast facts: Flower Power
Industry: Garden and landscape retailing
Location: Greater Sydney
No. of stores: 10
No. of employees: 634, plus a large number of casual employees during the peak spring period.