Value Added: On The Christmas Tree Lot
By Thomas Heath
I've started a weird ritual on Christmas Eve the last few years.
In the early afternoon, I drive to a nursery, check out what's left of the Christmas trees and offer a ridiculously low price, like $10, to take one off their hands. "You can have money or a useless tree," I tell them. My wife shakes her head and walks away, so she doesn't witness "the big negotiation."
They usually go for it. I feel like I got a deal, enough to buy a lunch and holiday cocktail(s) at The Palm. Sometimes I even persuade them to throw in a wreath or a plant.
If I tried this on Faith Rodell, co-owner of North Star Christmas Trees, one of the largest independent Christmas tree retailers/wholesalers around Washington, it wouldn't work.
"I would tell you to keep on going," Rodell said. "I've got all this expense. I have top-quality trees and you need to pay fair price whether you like it or not."
If you buy a tree at a local military base such as Fort Meade or Fort Belvoir, you are putting a few bucks in Faith's pocket. She sells trees wholesale to Boy Scout Troops, Lions Clubs, churches, schools like Oyster Elementary in Northwest D.C. and other non-profits. She also has a few retail locations, including a location in Cherry Hill, one on East-West Highway and one on the corner of Wisconsin Avenue and Norwood Drive, less than a mile from my house.
"It's a really good spot," said Faith, referring to the Wisconsin Avenue location. "It's on a main artery coming out of a city. People head downtown from Montgomery County and boom, this is one of the first lots they get to."
Faith, 66, and her son, Hugh, 38, run North Star. They sell trees, wreaths, tree stands and other goodies. They sell flowers, pumpkins, and garden plants during the off-season to bring in more money. The Rodells were reluctant to be too specific about their business for fear of tipping off the competition (there is a Christmas tree rival a block down the street on Wisconsin). But I was able to coax some information out of them with the promise I would not reveal state secrets.
North Star, headquartered in Beltsville, sells between 15,000 and 20,000 trees a year. The trees come from all over: Nova Scotia, Quebec, North Carolina, Wisconsin, Michigan, Oregon and Pennsylvania. The big sellers? Fraser Fir for its needles and scent, followed by Balsam and Douglas Fir.
North Star has cobbled together its grower network from 30 years in the business. Some growers started with North Star back in the 1960s. It's not like raising petunias or gladiolas. An average "type 1," high-quality tree takes seven years to grow to a height of six feet.
Faith's ex-husband Clifford Rodell, (who hailed, appropriately, from Bethlehem, Pa.,) ran the business until he died. Faith took it over around 1986. She marketed real estate for Grubb & Ellis before that. Faith funded her first down payment for trees with a $150,000 inheritance because a bank wouldn't give her a loan without putting up her College Park house for collateral.
Her son, Hugh, handles the finances, operations and deliveries; Faith handles the hiring and scheduling. Hugh visits the growers every summer to inspect the tree crop and make sure it's up to standards and the right size. He negotiates prices and checks out the trees and delivers the down payments for that season's harvest.
I called them separately on their cell phones last week as they were scrambling around at the height of the season.
"You gotta walk the field. Make sure some pest didn't get into it," said Faith, referring to the summer visits to the growers. "We have longstanding relationships with growers. They are depending on us to market their product. They want to know they are going to get their money and we want to know we are getting a high-quality tree."
The growers put the trees on flatbed trucks hired by North Star to deliver the trees to their Beltsville central location. After they are bound with twine, nearly 20 or so trucks across North America are loaded with up to 1,000 Christmas trees each and delivered to the Beltsville headquarters.
The trees are North Star's biggest expense. They come to several hundred thousand dollars a year. North Star pays growers an average of $10 and $20 per tree, depending on size and quality. The Rodells then turn around and sell those trees to the nonprofits at a 20 to 40 percent markup. The big margins are in the retail sales. For example, a "number one," six-foot Carolina Fraser Fir may cost North Star $21, wholesales to a Boy Scout troop for $27 and retails for $45. A 10-foot Douglas fir at the Wisconsin lot was retailed for $116 last week. A 12-foot Balsam from Nova Scotia was $196.
The Christmas tree business is competitive too. There are 33 million trees sold annually in the United States, and lots of smart competitors have replaced fly-by-night operators. Big-box stores such as Home Depot can order larger numbers of trees than North Star, pushing Home Depot's cost-per-tree lower.
"They buy the $20 tree and sell it for $25," said Hugh.
North Star also buys in bulk, so that the economies of scale help lower the transportation costs. Once they get here, North Star keeps them under white, lightweight cloth that shields them from sun and keeps in the moisture.
Hugh said North Star tries to create a special niche with customers by offering a bit more personal service, such as bailing the tree and putting it in, or on, the customer's car.
"You have to have an extra level of service, making sure the staff is friendly," said Hugh.
The real trick, however, is running non-stop from Thanksgiving through Christmas Eve, making the most of every customer.
"That's the hardest thing about it," Hugh said. "It's a very short window. Nobody thinks about Christmas trees until the day after Thanksgiving."
The other trick is knowing how many trees to order. Hugh calculated in is mind while talking on the phone just how many trees he had ordered this year. Believe it or not, the downturn may help spur demand by keeping lots of would-be vacationers around the house to save money.That means they will buy trees.
"It's a lot of guesswork on what the market is going to do," said Hugh, though he added that Washington is somewhat predictable because the economy doesn't sway as much as other regions of the country.
The post-9/11 security restrictions at local military bases has made it more difficult for regular citizens to go on the base and buy Christmas trees. And this past year, Hugh said North Star lost a big downtown D.C. customer. It's tough finding and staffing the lots, too. The payroll balloons to around 60 or more during the season. They advertise for helpers on online and in The Washington Post. The weekly payroll can run more than $11,000. One manager is getting $2,600 for the entire season (the day after Thanksgiving through Christmas Eve), plus tips.
Other expenses include lot rentals, insurance, taxes, government permits, gas, rental trucks and little things like twine and plastic bags.
For all the work, Hugh said he and Faith make less than $100,000 each. I believe them.
"We do it for the love of it. My father did it. Sometimes, I think I should just get a job at AOL or someplace like The Washington Post."
The Rodells were praying for cold weather last week to help get people in the holiday mood.
"You want it in the 30s so people will bundle up and go out and get a tree," said Hugh.
I told Faith that I might come by Christmas Eve and try my negotiating skills.
She said that if I try to get a firesale price, she will charge me double.
December 14, 2008; 8:00 PM ET
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