It’s difficult to believe that the Great Recession began in December 2007 and ended in June 2009, as independent garden centers have been feeling the effects for the past decade.
The economy wasn’t the only thing to change during that time. The customer did, too, and many IGCs still reference the Great Recession when discussing the industry. Many garden centers closed, and many had to reinvent themselves.
Since 2009, however, the majority of IGC owners and managers who responded to our State of the Industry surveys have reported increases in overall sales and profits. For our 2017 State of the Industry Report, we wanted to know how business has changed since the Great Recession, and whether garden centers have fully recovered from the economic downturn. We compared data from 2012 through to 2017 (when available) and examined the changes over time. We spoke to several garden center owners (page 42) to get their take on how their businesses have fared during the past decade. We spoke to industry experts about the housing market, the largest buying demographic, Millennials, and asked what IGCs must do to remain successful (page 52).
We also asked two new questions to determine if garden centers felt their businesses and local economies have recovered since the Great Recession. The good news is that nearly 40% of IGCs said that they have surpassed the sales/customer levels they had just before the recession hit. Another 25% say they are back to the levels they had just before the recession, and 23% say they’ve recovered, but are still below pre-recession levels. The majority of IGCs surveyed also reported that their local economy has improved significantly (28%) or somewhat (48%) since the economic downturn.
There are also promising signs of recovery in the housing market. According to research from Realtor.com, the median list price is up by 10 percent over last year. Homes also spend less time on the market — that figure is down 10 percent. Less housing stock is available — the number of active listings is down 9% year-to-year, which helped contribute to increased prices. Experts worry that high prices and low inventory for affordable homes could push first-time homebuyers out of the market, but others say historically low interest rates will continue to encourage defeated buyers.
Whatever the facts and figures, we hope that the state of your garden center business is good.
— Michelle Simakis
Who took our survey?
Sales volume increases
In 2016, 41% of garden centers surveyed reported sales volumes above $1 million; this year, that number jumped to 49%. The West had the most respondents in the $5 million-$19.9 million range, at 20%, compared to the survey average of 10%.
Grow your own
Over the years, more retailers taking our survey have indicated they grow at least some of their own plants. Back in 2013, 48% of respondents said they grew their own plant material. That number has steadily increased since then, with 65% reporting that they grow their own in this year’s survey. Canada had the highest percentage of garden centers that indicated they grew their own plant material, at 79%, and the next highest was the Midwest at 71%. The West had the lowest number of garden centers that grow their own, at 54%.
Seasonal staffing increase
We’ve seen some drastic variations over the years when it comes to seasonal employees. This year, the number of garden centers increasing their seasonal staffing is double what it was in 2012. This could be indicative of more businesses gradually gaining more room in their budgets to hire the personnel they need. Plus, 64% of IGCs hired the same number of seasonal staff as last year, which could be due to a more consistent, steady market.
It’s encouraging to see a majority of garden centers (87%) reporting that they have bounced back at least somewhat after the Great Recession, but some are still dealing with sluggish local economies, to varying degrees of severity.
What went well?
Succulents surpass edibles
Annuals, perennials and trees/shrubs continue to consistently reach the top of this metric year after year. However, while the edibles category was on top in 2012, with 27% of survey takers indicating that department saw the biggest increase in sales year to year, it’s dropped since then, with only 8% indicating the area had the biggest increase in sales. Newer to the ranking are succulents/cacti. Last year, 7% said they accounted for the largest increase in sales, and that number is now 10%. There are some regional differences; edibles topped the list in Canada, with 21% indicating that department saw the biggest increase between 2017 and 2016. Annuals were No. 1 for the Northeast and Midwest, trees/shrubs accounted for the largest increases in the South, and perennials and trees/shrubs were neck-and-neck for the West. Respondents from the Midwest saw a boost in succulents/cacti sales, as 15% reported that the plants accounted for the largest sales increase.
Ups and downs in the plant market
After a slight decline seen in the past two years, annuals are making a robust return, even for nearly 20 percent of respondents in the more drought-prone Western states. Edibles has remained a stable category in recent years, maintaining commanding sales positions among 10 percent of respondents. Shrubs and perennials, however, are being reported as top-selling categories by fewer garden centers compared to 2016 and 2015.
Succulents/cacti: the top trend
In 2012 and 2013, edibles, fairy/miniature gardening and the interest in growing your own food topped the trends section. Container gardening has remained strong throughout the years. The category that now surpasses them all is likely no surprise — succulents/cacti.
What did you struggle with?
The unpredictable nature of weather remains a dominant concern in our State of the Industry study. Year after year, the majority of respondents have named weather as having the most impact on their businesses. Economy used to be a larger factor. Back in 2013, close to 30% of those surveyed said it had the greatest impact on their selling season. This year, 21% said it was their greatest challenge.
Since 2012, the percentage of respondents who pre-booked more or the same as in the previous years has increased, while the number of IGCs that pre-book less has decreased, indicating a more stable market.
What else drives you?
Most marketing methods have remained relatively steady, with the exception of social media marketing, which has increased nearly 20% since we asked the question in 2013, and newspaper advertising, which has dropped 15% since 2013.
This is the first year we’ve asked if garden centers have a succession plan in place, and close to half our respondents do not. The number of garden centers using or implementing a point of sale system has slowly increased since 2014, with close to 65% using the system or currently implementing one.