A story of growth during COVID

Neighborhood Plant Store (NPS) is a family owned neighborhood nursery in Seattle. In 2018, NPS pivoted from being a neighborhood apparel gift store to a rare plant store. With an increase in investment in social media, NPS had experienced growth in online sales and brand recognition. However, the owners still had two questions in mind when they approached Birk Consulting: How to improve company profitability?
How to "GROW" sustainably?

Situation

Like many business owners, Neil has many decisions to make every day: Do we have enough cacti in stock this week? How many candles should we buy this month? Should I replace a recently departed sales associate with a nursery grower? The COVID pandemic has increased the demand for indoor plants, but the supply chain has become less stable. How much buffer stock should we hold so we can guarantee sales in the December shopping season?

These are all important decisions that small business owners have to make every day. In times of increased uncertainty, small decisions may have large impact on cash flow and operating margin. Previous best practices may not yield future success. Without access to experienced business analysts and digital marketers, owners often have to make decisions based on their intuitions with minimal data-driven insights. In this increasingly dynamic economy, Birk Consulting provided PLHC data driven insights and capabilities to succeed in the era of digital economy.

Approach

Birk conducted a comprehensive study on the business model and the profit and loss statement, and led the initiation and execution of a few key initiatives to improve profitability.

On the revenue side:

1. For online sales, the website is key for brand recognition and conversion. We benchmarked the existing website against peers and proposed a re-design.

2. For online sales, Google Ad is key to acquiring new customers who are ready to purchase, especially for specialty products.

3. For online and point of sales, Email Marketing is key to reach and retain our most valuable customers.

On the cost side:

1. Cost of Goods is the largest expense. Buying the right product in the right amount delivered at the right time is key to cash flow and gross margin.

2. Labor is the second largest expense. By stabilizing employees' job roles, we standardized work flow and lead to an increase in productivity with a decrease in labor expense relative to net sales.

3. Standard Nursery Operation - After product receiving, many specialty plants require rehabilitation and reproduction treatments before they are ready for sale. Value Stream Mapping standardized and compartmentalized this complex operation. Along with the introduction of the right tools, the labor required in this cost center is reduced.

4. With new data available from Shopify API, we found that the limiting factor for sales of specialty products is their consistent availability. Keeping a minimum par stocks for top selling products is key to improve sales.

On the corporate level:

1. Growth - reviewed and recommended expansion strategies, including point of sales expansion, securing specialty product availability, and increased investment in brand recognition tactics.

2. Standardized corporate decision cadence - Birk implemented a series of effective recurring meetings to provide employees a platform to communicate and commit to decisions. Birk helped implement a "Do What We Say" culture.

Recommendations / Implementation

1. Implemented new website UI, Google Ad, Google Analytics

2. Implemented weekly Email Marketing cadence

3. Implemented an automated data dashboard as the single source of truth to summarize KPI metrics and performance trends

4. Implemented Weekly operation review to standardize decision rhythms for purchasing and promotions

5. Implemented Monthly strategy review to review initiative performance and initiate new corporate initiatives

6. Implemented leadership north star metrics and reviewed performance monthly and weekly

Result

1. Revenue - 30% YoY net sales growth

2. Profit Margin - 10% YoY operating margin growth

3. Growth Readiness - improved team management, data availability, and disciplined governance

Skills Utilized

Program Management, Financial Operation and Financial Planning, Google Ad, Data Science (Python, SQL, AWS product suite)