Program provides small nurseries with big business market insight

By MATEUSZ PERKOWSKI

Capital Press

Everybody knows weekend weather strongly affects nursery sales, but up until now, that conventional wisdom hasn't offered much practical guidance to producers.

Though producers can't manipulate the weather, they can control where and when they ship nursery stock.

A new computer program developed by Robin Cross, an economist at Oregon State University, helps growers calibrate shipping decisions based on weather forecasts at their buyers' retail locations.

That way, growers have a better idea of when plants are likely to sell or when to hold back on shipments due to unfavorable conditions.

The system also relies on retail information about current inventories, advertisements, discounts, historical sales and other data to optimize replenishment.

The idea is basically to ship more plants when they're likely to experience "lift," or high demand, thus decreasing shortages and increasing revenues.

At the same time, reducing oversupply during periods of low demand can protect growers from having to buy back plants that don't sell.

"It keeps the store full of what they need to have in there," said Alan Kraemer, co-owner of Kraemer's Nursery near Mt. Angel, Ore.

Preliminary results are promising.

Nursery producers participating in the program were able to increase their sales 36 percent over last year, based on a study of more than $11 million worth of stock sent to about 260 retail locations in the Western U.S.

The system allows growers to realize a benefit from "vendor-managed inventory," where mass merchants require suppliers to track and maintain products they send to retail outlets.

Often referred to as "pay-by-scan," because the grower isn't paid until the stock is sold, the protocol is viewed by some producers as putting a disproportionate burden on suppliers.

"This is the solution to vendor-managed inventory," Cross said. "The position of the university is: If you're not equipped to watch your consumer every day, you can't win."

The system was developed in reaction to major retail changes in nursery stock procurement that began about four years ago, Kraemer said. Traditionally, retailers sent order forms that producers were expected to fill, but they've since shifted to having producers manage shipments.

"It was a different animal than it is now," Kraemer said.

Clark Seavert, an agricultural economist at OSU, said the program is especially exciting because it's being kept in the public domain, providing small nurseries with big business market insight.

"It's the future," said Seavert, who is also administrator of the North Willamette Research and Extension Center. "It diversifies what we offer the nursery industry. It's not just horticulture or pathology. It adds a new dimension to the services we offer."

The program could have applications beyond nurseries, such as the Christmas tree industry, he said. "It works well for commodities that sell directly wholesale and retail, where you have some kind of direct marketing."

Staff writer Mateusz Perkowski is based in Salem, Ore. E-mail: mperkowski@capitalpress.com.

 

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