State Of The Industry 2011: The State Of Garden Retail
The economy, weather and other factors conspired to create challenging times for retailers in 2010. Surprisingly, retailers are optimistic about their chances of a comeback in 2011.
February 1, 2011
Little Orphan Annie, ever the optimist, declared with unfailing certainty: “The sun’ll come out tomorrow.” Retailers in the garden center market are not unlike this American icon.
Despite challenges like lack of consumer spending, unemployment rates, weather and increasing pressure from big box stores, the majority of independent retailers we heard from in this year’s State Of The Industry survey are optimistic that 2011 will come with increased sales and more opportunity to woo customers, especially new ones.
In the survey, 79 percent of respondents predicted an increase in sales over 2010 – particularly after seeing slight improvements in customer count and average ticket, and many seem genuinely excited about the possibilities for 2011.
“We have new, interactive areas in the greenhouse to really engage customers – particularly younger, first-time gardeners,” says Phyliss Williams, co-owner of K&W Greenery in Janesville, Wis. “We’re working with a local home builder showroom to run a year-long series of seminars for the first-time homeowner. Our green business can impact energy usage and property value, as well as lifestyle.”
Facing The Challenges
However, independent retailers are not without concerns for the upcoming year. A sampling from our survey showed increasing margins at the top of the to-do list for more than half of those surveyed.
“Again, the weather is our biggest concern,” says Jennifer Schamber of Greenscape Gardens in Manchester, Mo. “We’ve shifted our product mix over the last few years to help drive sales through the economic challenges, but of course it would be nice if customers had more confidence when it comes to their finances.”
Bank lending and securing lines of credit still seem to be an issue in pockets of the country, with anecdotal horror stories cropping up about banks pulling financing on a whim. And then there’s the vendor side, which is being pinched increasingly by banks looking for better performance after years of overstock, particularly on the live goods side.
Retailers are facing a continued dry spell in the housing market, which is effectively dampening sales of larger material and landscaping services. And then there’s the concern that as older customers downsize and eventually stop gardening, there won’t be a generation following behind to buy garden products.
Trends As Opportunities
In our survey, we asked retailers what they thought the top three trends were for 2011. Edibles continued to rank at the top of the list, showing garden centers will again hit home the message of home-grown and grow-your-own.
“I think vegetables and herbs will be strong this year, but organic and local are the keys that will keep it growing. That’s where the interest will be,” says Chris Sieff of Knupper Nursery & Landscape. In fact, through our Revolutionary 100 program, we have heard multiple strategies to keep capitalizing on the edibles trends, from farmer’s markets to seminars and festivals, Community Supported Agriculture (CSA) programs and even partnerships with community colleges to teach canning and freezing classes.
Some retailers are finding success with larger vegetable plants already bearing fruit at retail, as well as larger finished plants for spring sales versus seeds.
Another trend that appears to be making some headway is getting children involved in gardening. There were products at many of the winter trade shows specifically designed to get kids interested in vegetables, herbs and flowers.
Retailers, too, had ideas for bringing kids into the garden center and hosting activities to get them excited about plants. One idea, from The Wreath Factory at Otter Creek in Wisconsin, involved having a bug hunt for kids where the staff hides plastic bugs and the kids bring them to the front for a prize. It’s a simple, yet effective and inexpensive way to get kids involved (and let parents shop a little longer).
The buy local movement is also one retailers identified as a growing trend of which they can take advantage.
Programs like the 3/50 Project (The350Project.net) and other regional and city-wide buy-local campaigns bring retailers more business from customers who may not be aware of them but want to support local independent stores.
Garden centers also can take advantage of this movement by carrying products from local vendors, including greenhouses and artisans.
Legislation As A Key Factor
It sure isn’t sexy, but Congress and national and regional regulatory agencies will have a major impact on small businesses this year. Craig Regelbrugge, who is the vice president of government relations and research at the American Nursery & Landscape Association, gave us the rundown on key legislation and regulation issues for 2011.
They include topics that have been a thorn in the side of seasonal businesses for a while, like immigration reform, as well as sudden changes in health care reform and its sidekick, the universally hated 1099 requirement (which at press time was on its way to being repealed – a move President Obama is expected to approve).
On health care, Regelbrugge expects the bill passed last year to be picked apart for possible repeal. “There will be oversight hearings on both health care and other administration-related initiatives, like the environment,” adds Regelbrugge. “Administration officials will be hauled up and made to defend themselves, but we won’t see a full-blown dismantling.”
On the immigration and labor front, he says there won’t be much movement legislatively, and organizations like ANLA will look for ways to “move narrow pieces of a solution.”
On the regulatory side, Regelbrugge says there are movements in the Department of Labor to clarify who is being called an “independent contractor” to ensure the classification is being used properly (which could have tax implications for businesses). This may result in more detailed self-evaluations at the time of hire and additional efforts in Human Resources to be able to verify such claims.
Crystal Ball Time
So what’s going to be the big story in 2011? Garden centers are going to have to get better at all the things they know differentiate themselves.
Technology can be a big advantage for retailers trying to reach existing and new customers. Retailers in our survey said they were keeping an eye on new advances like QR codes (for more on these see our Retailer Q&A with Dundee Nursery and our Vendor Q&A with John Henry) and social media as ways to keep the dialog going with customers.
Engaged and loyal customers are the endgame in a long race to the finish.
Jennifer Polanz is a freelance writer with Grasshopper Freelance. She can be eMailed at email@example.com.