The Retail Strategy That Lets Us Compete With Home Depot (Inventory Advice)

0:00The world is constantly changing around you and you just think about where do I want to be in a rocking chair at a retail plant store when I'm old.

0:14What if I told you there's a way to make your retail business look like it has unlimited inventory while never overordering again? Matthew Burroughs, the founder of Plant Material, has mastered this art, saving him over six figures so he can deliver the best plants for the entire community. When you build a garden that is interesting, the amount of life that you see come into it is incredible. With just three locations across LA, he's now competing with industry giants like Home Depot and Lowe's, growing on average 50 % year over year since 2019. If somebody is searching for a certain plant, we're there and we're competing.

0:49Matthew has managed to make the brand appear much larger than its actual grassroots operation while building genuine connections with local growers who can't flourish alone. I'm Adam Levinter, and this is Shopify Masters, your companion for starting and building a business. Matthew, thanks so much for being here. Thanks a lot. 50 % year over year. That is not nothing. Well, thank you. This year's data has been challenging because we do have one of our biggest shops close. The Altadena shop was affected in the fires. It didn't burn, but it is still closed. So if you take that one out, certainly the other shops have been doing significant growth, which I mean, I attribute it to years of building a strong community.

1:35But also, I mean, from an inventory management side of things, we always go back to not how we carry these products, but why do we carry these products in the first place? If we dial back in and answer the questions, you know, to increase biodiversity, to increase ecological input in your garden, I think it helps drive that question home for your customer base. We're still reeling from the shop being shaken up by the fires. And so we put a lot of energy into our other shops. The one that we worked on the most recently was the Altadena shop. It was our largest. It did provide a lot of our historical growth.

2:18With it down, we have been able to spend a lot more time and effort into our other shops. A lot of our customer base was dispersed, myself included. And so we have people that used to be in Altadena all over LA. Maybe they're coming to the other shops now. But I think it's just generally sticking to our long-term mission and not diverting from that. What is that long-term mission? So when you talk about the why, how do you articulate that for plant material? Generally, it's to give people more access to these plants, be it native or regionally appropriate plants. When we started the business, there was a lack of access, and it still doesn't exist in a way that can be found by the general public easily.

3:06So part of the growth strategy was to just give people more access. And, you know, overall, if access was growing and competition did increase, I think that's part of the mission. I think getting these plants into people's hands and allowing them to experience the benefits and the joy of working with California native plants. And that's really the goal. Do you see competition then as a net benefit for the business? For example, having these big retailers like Lowe's and Home Depot, who historically would not carry these types of products, in your case, native plants. If they did, you would see that as a net good.

3:51Absolutely. Yeah. Rising tides, raise all ships kind of thing. That's the goal. We think that it's, you know, with the challenges we're facing overall, the little things that we can do when you're working with these plants, you can see it firsthand. And some of these plants are hosts to certain species that without them, their lives, such as the monarch butterfly, it revolves around milkweed. And if you're not planting a native milkweed, you could be introducing negative impacts on their population. So the more we educate ourselves on the importance of working with these plants in our own gardens and in our spaces that we can't affect, we can see more of the opportunities to create answers to those problems, I suppose.

4:38But it's a joy. And so, yes, I think that if Home Depot or Lowe's started carrying these products and was threatening to put me out of business, I would feel like maybe it was time to retire. I'd done my job. So when you started, does this come from a place of passion? Does it come from filling a community void? Why do you think there was such a gap in the market? For starters, it comes from a place of passion. I've always been a gardener. I've always grown up gardening. Any place that I lived, I've tried to put something in the ground or create space for garden making, whether or not the opportunities were large or small.

5:18And I'm proud of the work that we're doing. Coming from a retail background where it was more fashion info, where we were selling a lot of things every season. And it was a ton of fun. But I wasn't as proud of the products we were bringing to market as I am now. There's just a lot of reward in this business. Was there ever a moment in time where you're being purely pragmatic about bringing this business to market and saying to yourself, I definitely think there's a need here. there is a business here? Or did you feel like instinctively you should just do this and you'll figure out the business part afterward?

5:54Well, certainly in my 15 years of working in the retail industry from retail marketing and retail development side, I worked with countless mentors that showed me the ropes and showed me the inner workings of companies, how things operated. And And, you know, over time you pick up little pieces of how to build a company. I credit them with their leadership and working at those companies was just so valuable over those years that I felt confident that I knew I had the kind of nuts and bolts of how this was going to happen. But, yeah, you certainly don't know exactly how it's going to flesh out.

6:35But I think that it starts to unveil itself. And it's been a lot of fun. I really enjoy buying and selling plants and talking to people in the retail setting and connecting with people at a distance. They're in our shops, but I'm not at their house, but we're talking about their house or their space. And I really, truly enjoy helping them walking through their use case scenarios and solving problems with them. You don't know when you start where it's going to take you. And there have been challenges along the way, and there still are challenges. Of course, with one of our biggest shops down right now, that's been a massive challenge this year.

7:17We ran most of our online business out of that shop. We've shifted that to another shop. We had to lease an extra space to do so. I think we've had to take a little bit of our eye off of our focus on our online growth, which I always have seen. Like, we're strictly pretty much brick and mortar with a nice small side dish of online business. But we're really, truly brick and mortar at this moment. But our opportunities for increased growth in the future are always going to be online. You were a retail guy before this. You bring that expertise into the mix. You're retail first, and then you layer on the online afterward.

8:01What is the role at this point for the website? I mean, the role, especially through the pandemic, was to showcase what we had in the shops, which is why Shopify has been so powerful for our business, because it takes a lot for somebody to get in the car and drive to your store and spend their time of day doing something. But if they can see that you've got exactly what they're looking for, and if it's already hard to find in general, but you've already proven to them that it's going to be there when they come, or they could buy it online and pick it up and shop, then it makes it a lot easier and even more access to the plants.

8:39But yeah, just showcasing the data online for somebody to, I get a lot of orders at three o 'clock in the morning where people are just like up and, oh, I'm going to buy some plants right now. And oh my gosh, they have what I'm looking for and they build, or they work with maybe a designer that isn't necessarily doing the work for them, but that has told them, here's what you want to do. Or they've taken a class and they've been told, here's the plants that you want to plant. They can put the whole collection that they want to put into their yard together, and we have it all ready for them. So I think it's hugely advantageous to be able to showcase what we have in the shops online.

9:20But then we do carry an assortment of really interesting tools and garden accoutrement. That's where I think that we can grow the business. We value craft, and we value quality. And so if we can find that somewhere else, we want to support that. And so we pull in things from all over if it's done within kind of the construct of respecting and creating a quality tool that has a purpose that you're going to enjoy using and that's not going to break on you. Over time, I'm interested in building that side of the business online. there is some competition because there's not as many products out there a lot of things have kind of disappeared from the market that we loved carrying early on and so over time i just i do want to build that assortment and offer that a little bit more online but yeah and some of those products i mean are online checkout friendly like all of the gardening tools i would assume are available for purchase online.

10:28Of course, they can't buy live native plants on your website, or at least not yet. They've got to purchase those in store. So you can showcase those they can't check out online. But with respect to the rest of the SKUs, are you seeing growth there? Yeah. It's, you know, sourcing has been challenging this year. A lot of things have just, you know, disappeared. We've had distributors close that we're bringing in products and then into LA and allowing us like really good access. They've closed. There is like a lot of undermining of the traditional distribution system globally. You can ship things in direct to customers going around the wholesale model.

11:09So when you can find things online at wholesale prices, it makes it really hard to sell them at retail. When we do carry products, we look at what the online marketplace looks like and whether or not we think that we can actually compete there. And we take that pretty seriously. If a brand isn't policing their products online and it doesn't seem like we can actually offer something reasonable or something that people would appreciate, then we probably won't go there. This last summer, I just went to Japan. We're able to go to some of the manufacturers of some of the tools that we sell and meet these generational families that have been building these tools for countless decades.

11:53and we were able to kind of build a few more relationships with new partners. And hopefully we can open more doors with that. And we look to continue to travel and find interesting products globally and also nationally that are built well and built sustainably and are useful to people. Talk to me about your inventory management system because I know that's been a unique strength. of the business. You're updating order quantities in real time. It's obvious that your supply chain has been quite efficient. Could you just explain how this all works in the background? It's a lot of labor of love from myself.

12:35I feel like I've always had my pulse on the inventory. I do have a lot of help from the team, but from the plant side, I used to scour inventory sheets daily. I'm always looking for the products that I think that we need to be bringing in, but I'm also like physically going out and buying plants and bringing them into the shops. I don't know how you scale that because you just, you can't, but for the level that we're at, you can really affect how you don't over inventory your shops and you have just the right amount. Over time, you kind to see trends. Our trends are the same. Shopify has really helped with that.

13:19It's like just no matter if you're up or down in a season, the general trend of seasonality in our business is the same. And so you can really start to forecast what you need for the future season. You can remain pretty nimble if you're closely watching it. I mean, generally with Shopify, I can pull out my phone while I'm at a grower, look at inventory levels, address whether or not I need to buy a bunch of stuff while I'm there in real time. That's super impactful for me because I don't have to over inventory. I can see what I need real time when I'm at a grower. And early on, we didn't have a lot of finances.

14:01We literally started the company with nothing. We've taken Shopify capital, but we've never taken investment money. With over inventorying, there is a finite amount of time that you can have these plants at the shop. So you don't want to bring in too much at any point in time. And so I've always been able to kind of buy just the right amounts throughout the season or right before the weekend, even early on, I would just go to the grower. And if I only needed four things to have a block of six where I liked it to look nice just for the weekend. I could just go buy those four things and I could do that multiple times to fill a table.

14:42And from the standpoint of aesthetics, walking into the shop, seeing it full and properly merchandised, we could really dial in on that for the shops. I really enjoy getting in my truck and going out and meeting with growers that are doing really interesting things and spending time with them, just talking and loading up the truck with things that I see I get to see things firsthand. A lot of people come into our shops and they're like, where are all the flowers? And all the plants are going to flower, but they're not flowering right now. But I can go out to a grower and be like, oh, that looks really good right now.

15:19I'm going to pull in a bunch of that. Or maybe that's a little rough. I'm glad I didn't have to turn that away on a truck. I hate sending stuff back. When I order stuff from a grower, somebody had to go drive out into a yard, pull it, put it in a truck. Unless there's like a disease or a bug on it that I don't want in my shop, I try not to turn stuff away. Because generally they won't ship me something that they don't think is retail quality. But there is, with native plants, there is a sense of seasonality. I mean, I've sold somebody a bucket of dirt with roots in it. And they were happy because they understood that this plant was dormant.

15:56The roots were alive and healthy. And sure enough, it probably came back bigger in season. and they were excited to find the plant. And they didn't mind that there was absolutely nothing above grade on the soil level. Our customers are different. And I think they're increasingly educating themselves and knowledgeable about the subject. But I do really enjoy being at the grow yards and connecting with our growers. And so I think that really helps me stay focused on inventory. The quality of these relationships that you've built with growers, does that allow you to be extra lean? Do they mind that you're so careful about quantities that you're bringing to retail?

16:40I think one of the most important relationships with a wholesale grower is retail because there's just consistency there. You can forecast together. You can say that, you know, we think that we're going to need this much this season. And it's okay if you don't get it right because they always, they've learned, I think over time that they can hold some stuff back ready to go get potted up and grow in if it looks like they'll need to. But they're not overextending. And when I say that, they start with like a seed and the seed grows in a little tiny thing. And that little tiny thing gets put it in into a bigger bucket and that bucket goes into a bigger bucket.

17:17And so that from a space allocation doesn't take much time to like start the seedlings. but it does if they start to grow it in larger quantities. But I think when they see stronger markets at retail, they can forecast and they can confidently grow these plants. Part of the relationship is just really defining what that clip is of need throughout the seasons and being able to grow together because without the retail channel, You know, it's just all over the place, I think. When you think about the ebbs and flows of your business model, Matt, and the seasonality behind it, what macroeconomic factors are you paying attention to right now?

18:05The good thing about our business is that most of what we buy is already in California. Moving plants across state lines is very difficult. You have to quarantine everything off, have a state inspector come in, check everything for diseases or bugs that they don't want to spread throughout the United States. And that's just a part of it. So we rarely bring anything in from out of state. Some of the indoor plant growers do. They have massive warehouses where they bring everything in. It all gets checked. Then it comes into distribution, and we're able to pull from that without having the headache of bringing anything in.

18:43That's generally a benefit of the work that we do and the plants that we sell. We don't have to worry about those things as much because they're all grown locally and in California, some in Northern California, but mostly Southern California. What about some of the hard goods like garden tools and such? Yeah, I mean, sourcing is always challenging. We've had distribution dry up. We've had some of our distributors bringing stuff in from Japan. They're just no longer here. There's not always a clear answer why, but that's out of my control. So we're always trying to find different avenues of sourcing the goods that we historically have carried, but also new things.

19:23There's great resources out there for sourcing that are alternative to some of the methods. I know there's FAIR, which is an incredible avenue for retailers to access wholesale goods. Over time, especially in my industry, smaller companies get bought up by bigger companies and prices keep going up. And without the avenues of different sourcing alternatives, it becomes challenging. So we're always looking for ways to get what we think is a good product for our customers. Everything that we carry from a fertilizer standpoint is always organic or not toxic. Nothing that we do is considered hazardous or toxic in any nature.

20:07So we can definitely find incredible products from different sources. But yeah, for some of the tools, it's always challenging. And we're always looking for new things to bring to market and looking at what is offered out there in the market. When you think about your competitor set and what differentiates plant material from, say, the likes of a Home Depot or Lowe's, is it purely product and curation? Or is there some sort of community or brand element to this that makes it work? How would you explain this? Yeah, I don't think about plants as trendy. They just are. They just exist. They've evolved here much longer than we have.

20:48But I think we are kind of evolving in our visions of what a garden is and can be. I think there used to be a lot of need for control in the garden environment, like toggle up, toggle down, lever up, lever down, like input and output. And now there's a lot of interest in kind of more of a wild landscape. Traditionally, gardens were not necessarily interesting to the species that lived here. When you build a garden that is interesting, the amount of life that you see come into it is incredible. It's just visible. You can see a sterile garden next to a lively native garden and next to each other and just see how many birds are flying around and how much life there is.

21:34So I think that just from that standpoint, our customers are definitely interested in that. And I don't really think that I have to do much. I think that is something that is more increasingly common in Southern California and for good reason. But we also do create a sense of brand and through that a sense of community. I don't even know if we have like a real logo. I think that it's just kind of been different iterations from friends and artists and my business partner who drew something lovely one day that we love. I just think that I like to not be super specific with our brand identity, although it probably exists and I don't really focus on it that much.

22:22but I do know that creating community through our shops has always been one of our goals mainly because we're open 10 to 5 and at 5 o 'clock we close and we leave and that's the most beautiful part of the day to be at the shop, we're never there and so anytime we can get into the space and watch the sunset and be in the nursery setting I just think it's lovely there's a lot of non-profits And there's a lot of great organizations that have really good funding and really good connections to educate people on native plants. And I have always felt that they do it really well. And I don't need to reinvent the wheel on that.

23:05But what I can do is bring people into our spaces that we've created with thoughtful approach to the way the spaces are designed and the way the inventory is laid out. but just to bring people in and have them enjoy the space with us in community. And then they never buy anything, by the way. We have concerts. We have poetry readings. We don't sell a lot of things. And that's not what it's about. But it's about people recognizing that we're there and that they can come back anytime and at their leisure. There's this illusion that the company, the brand, plant material is bigger than it is. I don't know if you feel the same way, but you've done a great job in terms of positioning this company against much bigger players, I would say.

23:55Even though maybe on paper you're smaller, there is this feeling that the brand, the company is bigger than itself. Why is that? One of the reasons, and my business partner, who is a landscape architect, they're always searching online for products. And he always tells me that his stuff and colleagues tell him that we pop up all the time on the internet. And that's a testament to my wife, Heather, and her focus on SEO and the ability for Shopify to allow us to do all the meta tags and the data. And we've been really focused on that since day one so that we would pop up and could compete without a lot of ad dollars.

24:41And I guess we do, which is pretty awesome to think that if somebody is searching for a certain plant, we're there and we're competing. So that is just more of like a back-end thing that you should do and can do to be present online without a lot of ad spend. I guess I didn't really see it like that. I'm in the weeds all the time, no pun intended, but I'm always just at the shops running through the motions every week, every weekend. You sell a bunch of stuff. You got a re-inventory. You never know what you're going to get. It's this constant energy cycle. And I don't know, I never really step back and see that.

25:25But I'm really grateful to hear it. And I think that we would like to grow. I think there will be challenges. Certainly real estate in California is challenging and expensive. And so growing a company, making sure that you're doing it responsibly and sustainably long term is scary. But I think that in the outset, we always imagine that we could have locations all over because that's part of the goal. But we have to answer a couple of questions early on. And maybe it comes with working with growers a little bit more or maybe growing our own plants. I'm just not quite there yet. How does this chapter of your career differ from the previous?

26:08You were in corporate for so long. You're responsible for so many of these big retail build-outs. And now there's this ebb and flow and seasonality aspect to your current business. You're in the weeds, so to speak. Again, pun intended. How do you manage the emotional burden of this? And how does it differ from your previous chapter? I always loved and have incredible memories of working in the corporate world. It was super fun to work with diverse, massive teams from product design to sales teams and being at sales meetings and trade shows and building products and bringing them to market with these incredibly talented teams.

26:53That was really fun and rewarding as well. But I think that over time, you start to think about what you want to do as you get older, and the world is constantly changing around you. And you just think about, like, where do I want to be? And I think I want to be in a rocking chair at a retail plant store when I'm old. Like, I just want to be hanging out at the store, and I don't want to be worrying about whether or not I— You can do that now, by the way. Yeah, yeah. You don't have to wait until you're old. True. We have lawn chairs, and they don't rock, but maybe we should look into that. So yeah, you start to think about where you want to go in the future as you get older.

27:32And so that felt like the right place for me to be. Working in these corporate environments was really rewarding. And leaving that is very scary. I know my wife was always saying, you know, we have health insurance. Just anti-entrepreneurship, right? Yeah, well, it's safe, you know. You get a paycheck, and that paycheck is always the same. When you go out in business on your own, you have to sacrifice a lot financially. And it's scary to make the jump when things are there and provided by a bigger company. That's really comforting at a personal level. But without risk, there's no reward kind of thing.