Question

Case Study

Will Saleh and Sons Nursery Company, Al Kharj overcome prevailing business turbulence?

Mr Saleh is the owner and Chief Executive Officer (CEO) of a family owned and operated business established in 1990. His business operated under the name of Saleh and Sons Nursery Company and based in Al Kharj, Kingdom of Saudi Arabia (KSA). The company’s net worth is SAR 5 million. Their nursery is situated 40 Km away from Al Kharj which is managed by two of his sons. The nursery specializes in cultivating a variety of seasonal and perennial plants both indoor and outdoor and engaged in transplanting, budding, and grafting. Elder son Rakan manages outdoor plant business while younger one Salim manages the indoor plant business. In addition to nursery operations, the company also deals in other floriculture commodities related to seeds, soil, fertilizers, gardening tools, garden decorative etc.

The company is renowned and reputed in Al Kharj and adjoining cities since it has been in business for the last 30 years. It has 20% market share in the region. The Fresh Plant Company and Friends plant company are its two main rivals who operate out of Riyadh. Both hold a market share of 30% and 25% respectively. Remaining market is shared between big retail stores and unorganized businesses. However, Saleh has a competitive advantage of being local in Al Kharj region by catering to the needs of his customers by providing bespoke and consultative customer service. In spite of this advantage, their business is witnessing sluggish growth patterns over the past 5 years owing to the presence of new big retail stores who also stock indoor plants. Often these stores sell these plants at heavily discounted prices even below the cost prices that directly impacted Saleh’s business with decreasing sales and depleting profits. Nursery business annually growth rate is 15% due to awareness of the advantage of being green by community at large.

The company opened its first retail store (1990) in the Al Kharj city center near the main vegetable market which is a very popular and strategic located. The second store was opened up a decade ago along Riyadh road, Al Kharj due to recent economic developments in the region. Considering business scalability and expansion, Saleh shown interest in his sons to open up a Flower and Boutique store noticing a shift in consumer buying behavior in gifting from chocolates to flowers. Rakan is computer engineer proposed to open an online store and invest in building an e-commerce platform. On other hand Salim is a business management graduate, he proposed to reposition their products categories and diversify their business into gardening and landscaping since there is no other company offering such types of services in Al Kharj. Whereas Saleh intends to scale up and expand its business operations by opening new retail stores in nearby cities of Dilam, Hota Bin Tamimi ,Riyadh etc.

Saleh stands on a cross road, he wanted to convene a meeting with his sons and the company top management in order to discuss business scalability and expansion strategies from 2020 and beyond especially with Pandemic crisis.

Questions

Q1. Analysis of at least five micro(actors) and five macro(factors) environment factors affecting Saleh and Sons Nursery Company business in current situation. (

Q2. You are the company marketing head, propose viable five new business development plans with strategies to the top management.

Q3. Saleh intends to make policies in Corporate Social Responsibility (CSR) coupled with social marketing. Frame five plans with strategies can be devised to community engagement for this initiative?   

Answer 1

Answer1:

Macro Factors:

1. Shift in consumer behavior: Consumer behavior has shifted and they are looking at plants beyond indoor/outdoor thing. They consider it lifestyle, closeness to nature, gifting item, social signaling tool to be nature conscious

2. Super-store culture: People prefer to purchase from super stores, where they get most of their required item under one roof. This paradigm shift is keeping porspective buyers away from standalone stores.

3. Competition: Competition is heating up in the market in terms of pricing, super-stores are in much better position to offer a better pricing given they are selling multiple SKUs and working on weighted margins across categories. (It means on some item they are making good money, on some they keep margin low to attract customers, overall margin from a customer remains balanced)

4. Incresed awareness: As customer hs become more aware about the greenary and plants, so their dependence on seller recommendations have also gone down, so they are free to choose as per their requirement, in a pick and pay model.

Micro Factor:

1. Salesh and sons have kep the product category as indoor/outdoor and have not ressponded to the diversified need of customers to buy.

2. Their retail stores are standalone store, opened 10 years ago, their location required to be looked upon as per new customer centres.

3. Price competitiveness is required in current situation, they need to analyze and compare their pricing with big retail outlets as well as their established competition i.e. Fresh plant and Friends plant for pricing correction

4. When a world is more connected, you can't sell plant but it's use and utilizations, so they need to change product proposition.

Answer 2:

1. End to End solution: As customer awareness in increasing so does customer involvement also increases. They should get into end to end solution providing for indoor/outdoor garden set up. Interior based plant suggestions and maintainance. This way they will remain connected with customer and can service them for longer times.

2. Online store: In a post corona world, people tend to purchase online rather then visiting crowded markets and stores. So setting up an online store works good. Given it can be helpful to cater larger customer base and geography. (Category rethink is also required for this)

3. Rethink current stores: They need to rethink current stores location as per the consumer preference, if they are where the customer is. If not they need to plan store shifts.

They need to think store layouts and product categorization inside, as per consumer preference. Categorization based on the gifting occassion, utilization of plant, origin of plant etc. will give new perspective to customer in buying and will create new buying patterns,

4. Flower and Boutique store: Flowers and Boutique business is very close to nursuray business, there are viable synergies in both. So, they can diversify to new stores of flower and boutique offering, or they can reserve a shelf in their current stores for these.

5. Social media selling: They can start blogs/communication over social media like facebook/Youtube about gardening and plants, this will help them attracting customers who are aware about the plants or want to know about plants in local area, they will be the hot leads. On one hand educating them about plants will create a bond with these people, on the other hand it will also create a second line of prospects.

Answer 3:

1. Green Army: They can start a program of green army where they recruit volunteers from their existing customer base or other local peoples. The objective of the group would be to make the city greener. They would identify unutilized/barren or filthy corners of the city or locality and will develop them as green corners.

It will be a showcase of product and expertise of Saleh and sons on the corners of city, and they can create a lot of communication around this.

2. Adopt a plant: They can start plant adoptation drive where people can adopt plants in local parks and can take care of them, or can plant new plants and take full care of them, it will increase awarenesss and interest about plants and trees and Salesh will get credit of community education about greenary.

PS: For CSR as per your local community guidelines or locally active green groups collaboration can also be suggested.

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