Daniel G. Reynolds October 31, 2014

Collaborate with Suppliers

Using Technology

to Drive Performance

2

About Our Industry • Retail lawn and garden centers

–Independents

–Local/regional chains

• No Internet retailers

• Fragmented suppliers

• No imports of live plants

3

Fragmented Suppliers 4

Local/Regional Chains

No Imports of Live Plants CFR § 319.37-8:

– Plants for planting at the time of importation into the United States must be free of • Sand • Soil • Earth • and other growing media

5

About Our Company

• 2nd largest garden center chain

• Dallas and Houston markets

• Public company (SEC exempt)

• 70% of revenue from live plants

6

Today’s Agenda • Competitive challenge • Strategic response • Rethinking how we stock our

stores • Rethinking how we work with

suppliers • Key take-aways

7

Competitive Challenge • Launch of Home Depot Landscape

Supply –5 stores in Atlanta –6 stores in Dallas

• Dallas stores within close proximity to our Calloway’s stores

8

Strategic Response

• Total retail focus

• The best merchandise

• The best people

• The best shopping experience

9

Total retail focus

• Divested all growing & wholesale operations – Distraction of management attention

– Money pit

– Antagonized supply chain

• Deregistered from SEC – Odd-lot share buyback

– Reduced administrative overhead

10

The Best Merchandise

• Live plants drive everything else

• The best quality

• The best selection

• Reasonable pricing

11

The Best People

• Training

• State certifications

• Low-value paperwork tasks

12

The Best Shopping Experience

• Take care of the customer first

• Everything else comes second

• Make the store look, feel and smell great

• Have fun and informative events

13

How We Stock Our Stores

• Before –No UPCs on live plants

–Manual cash registers

–No item sales data

–Cycle counts several times/week

14

How We Work With Our Suppliers

• Before –Store manager purchased

inventory

–Over 500 live plant suppliers

–Availability via fax

15

Transition 1: Centralize Buying • Vice President of Merchandising

– With full staff – Best people from the stores

• Team self-assigned product lines to Buyers based on supply chain

• Plan, source, stock, replenish, promote

16

Transition 2: Planning

Items – use Pareto (80/20) – Sales plans

– Stock plans

Suppliers – use Pareto (80/20) – Supply plans

17

Transition 3: Execute

• Manual cash registers

• Spreadsheets

• Cycle counts

• Updated plans with results data

• Continuously refine methodology

18

Transition 4: Automate

• POS system • Back office purchasing • Our own UPCs • Web application for collaboration

– Buyers – Suppliers

19

Web Application for Collaboration

• Buyer develops plans

–Sales

–Stock

–Supply 20

Web Application for Collaboration

• Supplier reviews plans –Confirm –Propose

changes

21

Web Application for Collaboration

• Supplier updates quantity

• Retail-ready merchandise

22

Web Application for Collaboration

• Buyer completes

–Supplier selection

–Store allocation

–Purchase order

23

Results

24

Before After

Number of SKUs ? 73,000

Number of live plants suppliers 500+ 138

Weekly store manager hours spent on purchasing 20+ 0

Average inventory per store $315,000 $196,000

Finance, IT, administrative staff 28 9

Web application development cost $60,000

Take-Aways Designing the new process:

–Put your top people on it –Show them the goal –Let them show you how to reach it –Give them the tools and authority –They will take you past your goal –And be missionaries for the change

25

Take-Aways Getting your suppliers on board: • Understand your suppliers’ business

–Know their pain points –Be their best customer

• Pick reliable suppliers • Make sure both of you make more

money

26

Take-Aways Implementing the technology: • Use Web apps in the cloud

–Faster to develop –Runs anywhere on anything –Keeps your network secure

• Share all the data • Give away the technology

27

One More Thing…

• …Home Depot Landscape supply closed all 11 of its stores

• And shut down the division

28

Questions

29