It wasn't really so long ago that we had a milkman deliver fresh farm goods to our home. I'm not sure what happened to him, but I know he doesn't deliver milk any more. That niche simply vanished from the marketplace. This is also happening today with independent retail Christmas tree lot operators.
Will they recede into a memory of things past? The short answer is yes, for the most part, they will. Many have already and more will disappear in the future. While this trend is especially important to small growers, it has implications for the industry as a whole.
Independent retailers are facing an onslaught of challenges. If their declining numbers have not been noticed at the farm level, it may be masked in growing regions where tree demand has matched or exceeded supply.
Some areas such as the Pacific Northwest have seen significant increases in planting trends. As a result, these growers will need to substantially expand their markets in the near future. However, recent national surveys suggest that this need may occur in the face of declining tree demand.
Who will the small growers sell to when this supply increases? The independent retailers will not likely provide a sufficient, nor even perhaps a significant contribution to future markets.
Challenges Facing Retailers
Look at the challenges facing independent retailers today. There is a one-two punch of escalating costs and a smaller share of the market.
Head to head competition with the chain stores is not profitable. So the stand alone tree lot must appeal to the more upscale customers and those who enjoy the tradition of taking the family to a tree lot. Increasing costs for trees, rent and labor have left the independents in a state of teetering viability.
In the major cities, vacant land is at a real premium. The modern style of development just doesn't leave room for temporary Christmas tree lots. Competition for the best sites has resulted in rents that are often five or ten times of what they were in 1990.
To service upscale markets, independent retailers also have higher outlays for lot setup, decor and more complete customer service. Significant additional outlays for better product handling are also required because freshness is a top priority. So, even at current price levels, the cost of trees still represents less than half of most retailers' overall expenses.
Pacific Northwest growers and their customers are aware of the rapid escalation in prices for Noble fir over the last few years. This is also showing up on retailers' bottom lines. Most independent retailers have been increasing prices relentlessly over the last four or five years to meet these and other escalating costs.
However, the price hikes may be one reason surveys have shown a declining market share for real trees during the past few years. Shrinking revenues and declining margins will continue to be a death knell to many small tree lots in the future.
Retailers Promote Tradition
Beyond the world of small growers and sellers, the existence of the independent retail lot has implications even for the industrial sized farms and the mass merchandisers. Obviously the large volume the major players sell is needed to sustain the tradition of using real Christmas trees. But the industry needs the smaller independent retailer to maintain and promote this tradition.
By creating tree lots for the traditional family outing, it is the smaller retailers who are playing a major role in keeping that tradition alive. They do this by creating attractive displays and offering services that appeal to those with the nostalgia for that shared family experience.
The rustic tree lot of a remembered youth, being re-lived with today's children, is a very big part of why people buy real Christmas trees. That's the image that needs to be encouraged. It is a traditional image that is useful to every segment of the market.
It is the small retailers, often family owned and operated, that are generally the front line messengers through which the story of real Christmas trees is told. And they are the grower's best source of information about tree preferences and price points.
The industry also needs retailers who will promote Christmas trees as a conservation crop and growers who are careful stewards of the land. This is where the industry needs to be sure to stay out in front with its environmental friendly image.
Unfortunately, producers have a limited ability to aggressively promote the tradition. So who's going to help carry that message to the customer? The chain stores aren't going to do it. But for independent retailers, promoting that message is promoting themselves. They have the same interests as the growers in selling trees and associated products.
Retailers invest money in the marketing of growers' products. Although it is a short-term investment, it is real money put at very real risk. Large and small growers have counted on their long-term investments to bring their goods to market. So the independent retailer is not just some junior partner in all of this.
Better Tree Care
Perhaps the independent retailers' most important contribution to the industry is that they generally take the best care in the handling and display of the trees. They present the customer with a fresher, better product that creates greater customer satisfaction than most mass merchandisers. The industry risks permanently losing more customers to artificial trees when it continues to offer customers dried out trees because of poor care.
But, proper handling and attractive displays do not come cheap. That's why most chain stores don't do it. Independent retailers invest in everything from in-water display stands to tents for protection from the sun and wind to maintain freshness. It's also the reason behind retailers' requests that growers harvest trees at the last minute.
Remember that the number one message from your customers is Afreshness matters a lot.@ By providing it, the independent retailers help the entire industry maintain customer acceptance of real Christmas trees.
If customers lose their sense of value about the Christmas tree, then the tradition could become passe', a hassle best avoided, just a thing of the past, or even worse, a wasteful embarrassment. For the industry to find continued success, the tradition and the image need to be nurtured to maintain that sense of value customers still place in the product.
Growers and retailers' interests overlap in substantial and significant ways. But increasing cooperation between the parties hinges on an appreciation of the challenges the other party faces.
For those used to a rural lifestyle, it is very difficult to appreciate the hurdles involved in placing a high volume, temporary business into today's cities. Similarly, few retailers have much of an understanding of the complexities and difficulties involved in managing Christmas tree fields.
It requires a spirit of cooperation and a willingness to work together to improve grower-retailer relationships. So what can be done to encourage such cooperation?
The optimum arrangement is when established retailers develop long term relations with established growers. This type of relationship is characterized by cooperation on many of the following issues.
Ideally, growers must have trees to sell on a consistent basis. But that does not make it a simple issue B particularly for small growers.
Even age stands, varying climates and the complexities of crop rotations make it impractical for any one supplier to produce all the different sizes and species a retail lot needs every year. But solid grower - retailer relationships can work out arrangements to match a guaranteed future supply of trees to a proven ongoing market.
Here's an issue that runs both ways. The peak sales periods that occur on weekends account for over half of total sales at most retail lots. Delays in shipments can cause lost sales that are not recoverable. Retailers absolutely must have the full product line during those key weekends if they are to be successful.
While harvest mishaps and foul weather can happen without warning, retailers' must have confidence that growers will be prepared with adequate facilities and manpower to make timely shipments
Retailers can help with responsible actions of their own. Timely payments are to be expected as agreed upon. If there are concerns with the trees upon delivery, retailers must contact growers immediately to work out any problems.
When the buyer is responsible for providing trucks, coordinating loading schedules with a grower is critical to assure on-time deliveries. Buyers can also help by providing written purchase orders with realistic quantities and mixes they expect to put on a truck. Quality trees take up more room, tall trees eat up space quickly and the mix needs to match the reality in the field.
Retailers in the cities almost always have limited storage space. With a perishable product, inventory management is absolutely critical. This is another area where both parties must work together where on time delivery of fresh trees is essential.
A retailer has every right to expect trees that are fresh, clean and unbroken. To accomplish this, retailers expect growers to have adequate yards and clean space to stack the trees. It is important that workers are instructed in proper handling and closely supervised during the processing of the trees.
For instance, a simple thing like watering tree piles during dry weather or protecting them from the sun with shade cloth will help maintain freshness. Not letting the baling crews tie off the string to the leader is another example. It causes far too many broken tops, which diminishes the value of the tree to the retailer. Being serious about proper tree handling reflects an awareness of the impact that it has on the final outcome.
And there is always the issue of freshness. Having fresh trees is so important that one can never say too much on the subject. Most independent retailers have sold fresh trees to replace ones purchased from a chain store that dried out. How many dissatisfied customers do they represent?
Both parties have a role to play in keeping the trees fresh as possible. Growers can make a huge difference by harvesting as close to shipping dates as logistics allow. In competitive terms, this is one area where the small grower does have a real advantage over the big growers and chain stores. By being smaller, they can reduce lead times for harvest and ship fresh cut trees to arrive just prior to the peak sales periods. During the final weeks before Christmas, freshness becomes as big an issue with the retail customer as does species or grade.
Retailers need to pay close attention to storage methods as well as developing in-water display methods when possible. Covered storage and maintaining high moisture contents of trees sold in warm climates increase the chances of creating satisfied customers.
Quality and Size
Here again, the smaller grower seems to have a natural advantage. Retailers investing their own money should want to see the exact trees they will be buying. This is something that can't happen with most large growers.
Personal inspections will allow the retailer to visit the grower and to address any questions as to Awhat is a #1 and what is a #2 grade@, or Ais that a 6'-7' or a 7'- 8' tree?@ Such visits dramatically lessen the chances of problems following tree deliveries to retailers.
Retail customers have endured fairly relentless price increases over the last several years. As mentioned earlier, this is due to a variety of causes, but they all end up as part of the final consumer's bill.
It seems time to consolidate those gains and give the consumer a break from further increases to avoid further shrinkage of the market niche for independent retailers. Price fluctuations seem to run to extremes in agriculture and Christmas trees are no exception.
But growers who extract too much from buyers will find them seeking out cheaper suppliers at the first opportunity. The best arrangements are long term commitments of supply and stability of prices between established growers and retailers that do not follow the market to its extremes.
The independent, stand alone retail tree lot or choose and cut farm should be promoted as the archetypal ideals of where to buy a Christmas tree.
Ours is an industry that is 100% reliant on people maintaining their traditions. It must continue to emphasize the Christmas tradition to encourage families to shop for Real trees.
Unfortunately, promoting the Christmas tradition and the attributes of Real trees will not stop the gradual demise of the independent retailer. The structural difficulties are too great. And the price the industry will pay for that will be far greater than most imagine.
About the Author: Mark Rohlfs is the owner of Santa & Sons Christmas Trees (est. 1983), an independent retailer in Los Angeles and small Christmas tree grower located near Philomath, Oregon. Beginning in 1976, Mark was a principal in the Cone Tree Workers, a co-op crew providing field labor to Willamette Valley Christmas tree farms. Santa & Sons was named one of the city's five best tree lots by Los Angeles Magazine in 2002.