Expect Some Nursery Stock Shortages For Spring 2014

Steal This Idea [Slideshow]A few retailers reported to Today’s Garden Center that they are having trouble sourcing some nursery stock for spring 2014, and nurseries confirm they are expecting some stock shortages in spring 2014.

“I am seeing some shortages on container grown shrubs for spring 2014 from more than one of my regular suppliers,” says Jim Schroer of Plant Place, a chain of seasonal garden centers in Minneapolis. “I believe that many of the growers have done what a lot of us have done and tightened up our inventories to keep our cash flow a little stronger. The cumulative effect is starting to show up in the supply chain and I think it will get worse as the season gets closer if the economic situation improves.”

Schroer’s perspective is being backed up by suppliers. Will there be a shortage in spring 2014? “Yes, I believe there are fewer plants available in the industry overall for this spring than there has been since probably 1998, when I started working in the family business,” says Lancaster Farms’ Art Parkerson. “Will retailers feel it? Probably. They should expect to pay more, to do without or to be open to substitutions. As always, a lot depends on the weather in early spring.”

The nursery industry was arguably hardest hit by the recession. Dozens of well-respected nurseries, including the renowned Carolina Nurseries, have closed their doors since the crash of 2008. That has created a volatile situation in the nursery industry. It began with gluts in inventory that grew the first few years, creating aging stock sold at steep discounts. And that aging stock is giving better-positioned nurseries a tactical advantage.

“We did not cut way back,” Parkerson says. “We will have the plants our customers need. Everything we have for next year is fresh. When we travel to other growers, we see a lot of really old plants — two to three years past when we would have thrown them out. It seems like most other growers are off-cycle. An awful lot of production in our region looks like it will be ready too late for spring.”

Others agree supplies may be tight this year.

“Some product shortages are beginning to appear,” says Imperial Nursery’s Greg Schaan. “We have been rebuilding inventories since 2011 at Imperial and will continue to do so for the next few years.”

“Now, with housing and general market conditions continuing their modest rebounds, some shortages are starting to develop,” says Overdevest Nurseries’ Ed Overdevest. “The extent of those shortages is hard to predict, but will likely correspond to the degree of continued economic recovery and the lag time associated with specific crop production cycles.”

Much of this is the result of a market correction. After a cycle of overproduction and fluctuating retail demand, most growers are still finding the right mix and quantity to grow.

Schaan expects the correction to last some time. “My personal feeling is that supplies will slowly rebuild as growers will go about it cautiously because of the significant negative financial impact this downturn has had on growers,” he says.

Parkerson concurs the nursery industry will take its time recovering.

“It’s absolutely a correction, and it’s far from done,” he says. “After five years of excess plants, growers need to sell out. Selling out is not a shortage! It may seem like one in that narrow interaction between buyer and seller, but overall it isn’t a real shortage. The market demand is still really poor. Many if not most retailers are truly suffering, just based on looking at the volume they are buying.”

Not all production adjustments stem from cutbacks, Overdevest says. “On our end, production shifted to emerging interest items moreso than being reduced during the down cycle. As our sales continue their recent trend to new highs, we have been adding modestly to production. Assuming our independent garden center customer base maintains its current pace of increasing order interest, we should be in a good supply situation,” he says.

Although several growers went out of business since 2008, Parkerson thinks the market is still flooded when compared to customer demand. “There are still too many growers growing too many plants for too few customers,” he says. “The next part of the correction is when retailers trim their vendors instead of their orders. We have to see fewer growers in the stores. I know the traditional way was to not put all your eggs in one basket, but having six or seven different growers for one SKU is crazy. Nobody can make money like that. There needs to be some winners and losers.  How soon will the large amount of off-cycle crops be ready? May or June?”

Should retailers be concerned about spring supplies? Not yet, Overdevest argues. “We don’t see overall conditions warranting panic or speculative advance ordering that would only distort true market circumstances. Placing advance orders in line with reasonable sales expectations would be the prudent approach,” he says.

 

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