Private label moves to the front burner in L&G

Discount Store News, June 23, 1997 by Richard Halverson

Kmart is racing hard to reposition its lawn & garden centers now that it has lost its lead to the home centers. And it is not alone when it comes to repositioning.

Home Depot, the New No. 1 L&G retailer in the country, is making a major commitment to the category through such moves as putting in permanent greenhouse for year-round green goods sales, shade houses and fenced-in nursery areas.

Kmart's approach is different than the Big Box home center chain;s. Kmart doesn't have the money for such big scale projects. Instead, the discounter is focusing primarily on extending its franchise in its KGro private label program (which is best known for fertilizer) and slowly expanding on a new garden center prototype as money and time permit.

Kmart dropped all nationally branded outdoor power equipment this season, and it extended the KGro label to all power equipment, including push and riding mowers (made by MTD), chippers, snow blowers and even string trimmers.

In another move, Kmart introduced a line of BBQ-Pro gas grills this spring, but it continues to carry national branded grills, such as Char-Broil and Weber. In fact, Weber is a new addition to the grill line-up this year, Bill Anderson, senior vp/gmm, hard lines, pointed our recently on a store tour of a Chicago Big Kmart unit. Anderson noted that in April, when Kmart ran a circular featuring grills, the response was overwhelming. Kmart charted its largest single grill sales period in company history when that ad hit, he said.

In another L&G initiative, Kmart is sourcing patio furniture sets and collections directly from abroad, and the only branded outdoor furniture it carries is basic resin furniture from Bemis (made in Canada).

And though it lacks the capital and store space to put in greenhouses, Kmart is putting its Jackson, Miss., L&G center prototype in all six new stores for 1997, such as its Parsippany, N.J., stores that opened in March, as well as the three new Super Kmart Centers. Moreover, Kmart is adding the Jackson centers to a select a few of its Big Kmart store conversions.

The Jackson L&G center, named after the Kmart store where it was first tested, includes a 5,000-sq-ft. heated and air conditioned space that can be used year around for other seasonal purposes. The prototype also includes a shaded outdoor green goods area with a computer controlled sprinkling system for better plant care.

Kmart now has installed the Jackson L&G center into 320 of 2,134 stores, an increase of 100 units over the past year. The lack of cash, as well as space, in its small older stores, appears to be hampering what was to be a national rollout.

"[The Jackson prototype] creates increased sales and interest in the category," said Chuck Greenidge, an Evergreen, Colo.-based consultant to the L&G industry.

Kmart now is selling live shrubs and trees under the KGro label, as well as a constantly growing selection of garden tools, grass seed, pesticides and herbicides, hoses, and hose accessories. KGro fertilizer, which has become a national brand, and KGro spreaders dominate the fertilizer department, while Scott's and Miracle-Gro are relegated to a secondary role.

Only vegetable and flower seeds now lack the KGro label. Much as Wal-Mart has done, Kmart has dramatically reduced the role of national L&G brands.

Kmart sold $1.20 billion worth of L&G products last year, Nursery Retailer, a trade magazine reported in its 1997 survey of the top 100 L&G retailers. That puts Kmart No. 3 behind Home Depot' $1.54 billion, and Lowe's at $1.38 billion.

In discount department store retailing, Kmart is the leader in lawn & garden sales, far exceeding Wal-Mart, which posted 1996 sales of $770 million.

Kmart had developed KGro into a national brand in fertilizer, Greenidge stressed.

"We'll have to wait and see whether it will be as successful with KGro riding mowers and BBQ grills.

"A lot of people go to Kmart for KGro fertilizer," Greenidge said. "If Kmart properly merchandises other KGro lines, it could prompt fertilizer customers to make cross purchases."

The consultant cautioned, however, that no one, not even Sears, has been able to make the branding transition from fertilizer. Sears never carried fertilizer under its Craftsman brand, a powerhouse in mowers, he said.

It takes several years and a lot of advertising to build a brand preference, Greenidge said. "I've not seen a lot of advertising [for KGro mowers and grills]," he said.

"Customers are looking for price and reliability in mowers," Greenidge has observed. "They want to be able to return and get service." MTD, which produces the KGro line, is a good name in the industry, he said.

To service its KGro mowers, Kmart made arrangements with local power mower repair shops.

The KGro mower line, dubbed PowerPro, consists of seven walk-behind mowers and five riding mowers and tractors.

The price point for push-mowers opens at $149.99 for a 4 hp Briggs and Stratton engine and goes through $329.99 for a self-propelled unit with a 5.5 hp B&S engine and an electric starter.