This has certainly been a year like no other. What started off as another normal spring quickly turned into the strangest season many of us have ever seen. Between increasing sales, social distancing, mask mandates and a whole host of new issues to deal with, the industry is one of few that’s weathering the storm well.
In fact, more than three-quarters of respondents said quarantine measures and the coronavirus had the biggest positive impact on sales this year. Despite the challenges it brought, COVID-19 has definitely been good for business.
Edibles were on the rise as unemployment rose and parents looked for activities to do with their kids. New hobby gardeners entered IGCs for the first time and delivery, online ordering and curbside pickup became the new normal for many.
Read on for more insights into the current state of the industry and the changes that came with this year.
—Responding to the increased consumers’ interest in growing their own food, IGCs are growing more veggie and herb plants. Beating out annuals and bedding color for the No. 2 spot for the first time since we started asking this question two years ago. While edible plants jumped up 6 percentage points, indoor foliage plants also saw significant growth, rising 7 percentage points.The houseplant market just keeps getting hotter. Even more IGCs than last year are operating a houseplant or tropicals division, driving the number up by 13 percentage points. And IGCs continue to diversify. Growing operations, landscape design and custom container creation, cafe and patio furniture all grew by about 5 percentage points.
SALES, PROFITS AND PRICES
Despite the uncertainty and lost sales when the COVID-19 first hit in early spring, garden centers have rebounded, making it look like this year will be the most profitable one in years. While about as many IGCs are projecting total profit or loss, the profits are much higher. The number of garden centers projecting a profit or higher skyrocketed this year, up 18 percentage points. Spring sales jumped up by leaps and bounds for most IGCs, which comes as no surprise.With the resurgence of victory gardening in the midst of the coronavirus pandemic and high unemployment rates, edibles saw the biggest growth this year, beating out annuals for the first time since 2012, as you can see in the chart to the right. Fountains and statuary are losing momentum, as are apparel, birding and nature products, and water gardening, which fell off the list this year when no survey respondents said those divisions grew in their stores. The fairy gardening craze topped the list of growing divisions in 2016 when nearly half of garden centers reported increasing sales but since then, it has dropped significantly last year and fell off the list this year. One of the biggest changes this year is in the number of IGCs responding that they didn’t see a decrease in sales in any division, which went up by 20 percentage points.
IMPACT OF CORONAVIRUS
When we first asked IGC owners and operators how the coronavirus was affecting their businesses in March, their outlooks were drastically different from what they are today. Back in March, less than a quarter of IGCs were reporting an increase in sales, but now nearly 90% have seen an uptick. We also asked how readers think COVID-19 will impact the industry in the future. Read what they had to say on the next page. (Responses have been edited for clarity and length.)
The quarantine era led to a renewed interest in gardening and planting. I hope to keep those new customers involved and interested.
It takes more people to run the store due to the need to disinfect carts, monitor entry to the yard, so labor costs are higher.
For now, business is booming. I fear a shortage of quality plant material and plant material of any size next year.
I think over the next couple of years, people might still be sticking closer to home and therefore still work in their gardens/yards. After that, perhaps IGCs will slow down slightly as people travel more again.
The short-term impact has been positive. However, it will be interesting to see if there is a “bubble” months down the road where things slow. However, most customers interacting with the business means more opportunity to put your business/product on display to a consumer. If they have a positive experience, it can only mean good things for business in the future.
This coronavirus experience taught us the value in having a well-groomed online store. We are happy with our online presence, but need to do better and invest more into it.
We found out we don’t have to be open seven days a week to make profit. We will have to come up with plan in 2021 to solve customer count allowed to shop because of COVID-19 protocols. We have a five-year average of 650-750 per day in May and June but because of size of store area we could only process 350-400 per day.
The lack of digital content freely available is preventing our move to e-commerce and will continue to negatively impact our business until the horticultural supply industry changes their ways and offer a centralized website that all digital content is updated by the suppliers and is available to the IGCs free of digital copyright encumbrances.
Like many others we wanted to start an online store for years but never did it until we had to. We plan on continuing it but need to integrate with our POS inventory.
The lost month
Features - 2020 STATE OF THE INDUSTRY: COVID-19
Three garden centers share how they bounced back after state government-ordered shutdowns in March.
In February, coronavirus was barely a blip on the radar in North America. By mid-March, many U.S. states issued lockdown orders and closed non-essential businesses to curb the spread of the virus. The public turned to victory gardening and other outdoor activities to reconnect with nature, and many IGCs adapted to serve customers’ needs on a dime. Vegetable seed starter packs and gardening supplies were quickly snatched up by eager patrons, and IGCs saw a boom of profits.
However, IGCs located in Pennsylvania and Michigan had a tougher break than most when the pandemic first started, as their businesses were not initially deemed “essential” by their state governments. Garden Center spoke with three IGCs to learn how their business overcame the initial shutdown slump, and the biggest lessons they’ve learned since it all began.
On March 23, Gov. Gretchen Whitmer signed the “Stay Home, Stay Safe” Executive Order that directed ‘non-essential’ businesses to suspend in-person operations and told residents to stay home if at all possible. Under section 8a of the order, all agricultural industry businesses were considered essential and could remain open. However, retail garden centers weren’t specified, and their status was unclear.
The next day, English Gardens (No. 13 on Garden Center’s 2019 Top 100 List) announced via that it had been ordered to close down. John Darin, president, says the impact was immediate. The IGC, which has six locations scattered throughout the metropolitan Detroit area, scurried to preserve its cash flow. Darin says they had to go into “survival mode” and furloughed 225 employees (most of whom have now been rehired), leaving only a skeleton crew to provide curbside service.
“We had to preserve cash flow; we had to hold up shipments and we had to stop our seasonal hiring until we could get back open,” Darin says.
On March 27, President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion relief package designed to assist citizens struggling from the COVID-19 economic impact. The CARES Act introduced the Paycheck Protection Program (PPP) for small business owners, allowing them to apply for a loan that provided them with “the resources they need to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead” according to the U.S. Treasury. In order to survive, English Gardens applied for PPP assistance — a process that went well, Darin says.
“Now one of the things that happened during that time is that, while we were closed, for about two weeks, she left the box stores’ garden centers open. Finally, there was enough pressure put on the governor to shut all the non-essential departments in the box stores,” Darin says. “But in essence, the box stores’ plants were deemed more essential than ours, which was clearly upsetting.”
On April 5, The Herald-Palladium reported that the Benton Township Police ordered Lowe’s to cease sales on non-essential garden center items. Two days later, the Michigan Farm Bureau urged its community members to message Whitmer to clarify the order and deem retail plant sales as essential.
Ray Schwall, general manager of Begick Nursery & Garden Center in Bay City, Michigan, assumed garden centers would be deemed essential. Begick’s didn’t have to close down right away, but the IGC did have to lay off most of its employees. Begick’s (No. 78 on our 2019 Top 100 List) also applied for PPP assistance and started doing curbside pickup.
“You know, the weeks leading up to it, [the staff] kept asking me and I kept on saying, ‘No, no, we’re going to be OK. We’re a garden center. In all the other states, they let garden centers stay open.’ Well, guess what? [Whitman] had a different mindset, and we weren’t OK,” Schwall says.
Begick’s offered a gift card program with a 20% added bonus to bolster the loss of sales, a strategy that worked far better than the company ever hoped. “You would think people would be buying the $25 or $50 gift cards. No, we were selling $3,000 gift cards and stuff like that. That’s how amazing people were,” Schwall says.
Likewise, English Gardens offered $20 gift card incentives for patrons who spent $100, and Darin says customers showed tremendous support.
On April 9, Whitmer issued another executive order extending the initial order and introducing more shutdowns, this time including all IGCs and garden-related sections of big-box stores.
The Michigan Nursery and Landscape Association (MNLA) filed a federal lawsuit to stop the order on April 17. And on April 24, Whitmer issued Executive Order 2020-59, which extended the “Stay Home, Stay Safe” order until May 15, but allowed retail garden centers, nurseries and greenhouses to return back to work.
Pennsylvania IGCs also dealt with a similar situation. Shaina Barnum, garden center manager and marketing/events coordinator at Froehlich’s Farm and Garden Center in Furlong, Pennsylvania, calls the experience “unnerving.” In fact, the IGC was only open for one day before it received the order from Gov. Tom Wolf to shut down on March 20.
Froehlich’s applied for “essential status,” which was denied, but it could still sell items via curbside pickup. So the garden center received orders from every available avenue, including phone and email. Barnum notes this was a positive thing, but with limited staff, it was hard to fulfill orders.
“Immediately we figured out a way to reinvent our business model overnight. It was really unclear who was actually essential and who was not. And it kept changing day to day. It felt like every day we were on tippy toes waiting for whatever the new information was,” Barnum says.
Greenhouse, nursery and floriculture production operations, as well as landscape service companies, were deemed essential, according to the Pennsylvania Nursery and Landscape Association (PNLA). Like Michigan, big-box stores were allowed to remain open, but The Sentinel reported these had been ordered to close down on April 7. PNLA submitted an exemption for retail garden centers on April 1, which Wolf denied on April 10.
“We had customers calling us like, ‘Hey, what can we do?’ ‘What can I buy from you right now?’ ‘What can we do for a curbside?’ or, ‘I’ll buy a certificate.’ So, it was really kind of cool to see the community really reaching out to us, and other small businesses, just to really kind of keep everyone with everyone afloat and going,” Barnum says.
Rebuilding & strategizing
On April 25, English Gardens reopened — and received its PPP money on same the day.
“During this time of being closed down and operating with curbside only, more ‘essential business’ details were clarified and it was noted any business with a nursery license was considered essential,” Barnum says. With this new information in hand, Froehlich’s announced on April 26 it would reopen on May 1, the same day Begick’s reopened.
Schwall says the moment the news announced they could reopen, phone lines exploded off the hook, and describes the reopening process as “hectic” because they assumed their reopening date would be May 1.
“At the time, we had received our PPP through the federal government. So we started to bring back a few of the girls and some of the guys, and we were working as the stock was coming in, trying to get the store ready for that May 1 opening,” Schwall says. “Well, our governor threw us a wrench and the week before that she actually came on and said, ‘You guys can open not a week from now, but you can open now.’ Well, that was a little bit more difficult to turn that.”
Once they were open, all three stores also had to adjust to the COVID-19 world. New protocols included heavy sanitation wipe downs, revised store hours, social distancing markers, face mask policies, one-way aisles, sneeze guards and outdoor registers. There was an overwhelming surge of demand, and right off the bat, garden seeds and plant starters sales experienced an upswing.
“We came very close to selling absolutely all the way through our seed inventory, and we’ve never done that,” Schwall says.
Darin says the pandemic taught him to be opened-minded and quick, and he learned some valuable business lessons. “Normally in May in June (and part of April) we’re open 13 hours a day. So, we had a reduction of almost 30% of the store hours. Sales were robust. We saw great sales increases in May, and June and July,” Darin says. “In essence, the lesson we learned is we could do more business in less hours with less inventory and less staff than we ever thought possible.”
He also notes they’ll likely stick with outdoor registers to maintain the flow of customer traffic in store. For both Darin and Barnum, COVID-19 spurned an e-commerce reckoning.
“We were just in the process, in March, of redeveloping our website. And we had the e-commerce portion of it on our radar — we were already doing e-commerce the last few years for Christmas and things like that. We really had to put a lot of investment and horsepower into developing the e-commerce site. So that was probably a good thing,” Darin says.
They’ve rolled it out but haven’t promoted it too much, because changing inventory across the six stores is challenging to keep track of on the e-commerce site, Darin says.
Barnum says that while their site doesn’t have an e-commerce portion, it did force them to create a Shopify account. It’s not currently active and running, but it’s in place as a security measure should they be ordered to shut down again. Orders can be directly placed on Shopify, so a limited staff won’t be inundated with phone or email orders.
In the event of another shutdown, Darin says they took measures to ensure they would be considered essential. They looked to hardware stores for inspiration, as Whitmer had allowed these to remain open. They added a small inventory of pet food, cleaning supplies, automotive supplies and promoted the cannabis growing area.
“So we put in all these essential departments that we’ve got photographs of and everything else, so if we ever get challenged as an essential business again, besides just saying, ‘OK, we sell all these edible products, food products, we’re also selling these items as well,’” Darin says.
Darin, Schwall and Barnum note that they’re currently in the process of planning for next year and are unsure of what the coming seasons will bring.
“We are starting our spring buying for next year, but there’s so many question marks. How can you expect to do the kind of business that we did this year, next year? I don’t know if that’s possible or not. Is the pandemic going to be gone for next year? Are we still going to be limited? My personal feeling is, I think some of this is going to carry over — the vegetable gardening and stuff like that is still going to be high on people’s lists,” Schwall says.
One of the silver linings throughout the ordeal was the amount of industry support, Barnum says. IGC Facebook groups were a valuable source of information, tips and camaraderie throughout the uncertainty. Barnum especially praises the support of Little Prince of Oregon Nursery, because they designed Garden Center 911, a program in which garden centers could refer their products on social media and receive a 20% portion of the sale.
“It was just really cool to see another vendor, especially all the way out in Oregon on the other side of the United States, reaching out and really looking to help garden centers in this time of need. And that’s one thing I’ve always really appreciated about this industry. It’s the community — not necessarily your immediate community — but the community of the industry as a whole,” Barnum says.
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Finding the sweet spot
Departments - Straight Talk | Honest insights from an IGC expert
Take the fear out of buying and inventory management with these tools and strategies to make profitable decisions.
Buying and committing to inventory … it is one of the most important functions of a successful garden center. Yet not all IGC buyers have the training or tools to make smart buying decisions based on hard data and solid marketing strategies. Too often, a lack of buying protocols and promotions leave you with bad buys based on fear.
Your inventory is your garden center’s biggest expense. If you have too much inventory, it reduces your cash flow, your inventory turns and GMROI falls. Excess inventory becomes a drain on your business and you may end up having to ditch it or put it on sale. Buy too little inventory, and you will lose sales and damage your perception of value with customers. The right amount, and type, of inventory is that just-right bowl of porridge Goldilocks was hunting for. So how do you find the right balance?
As a garden center buyer, you deal in at least 50% live perishable goods. Plants have a shelf life. So do hard goods, for that matter. Unfortunately, many of your plant-loving sales staff (and buyers) do not see it that way. They will leave those flats of two-week old petunias, stretched and gasping for their last breath of life, on that bench forever, convinced someone will eventually buy them. This emotional resistance to ditching unsellable plants will kill your annual revenue and your GMROI, and make you look bad to your customers. No one came to your garden center to buy chlorotic petunias. No one. Let them do that at the big boxes.
A refusal to ditch bad product, and a fear on the part of the buyer to spend more money to quickly replace it with fresh new stock, is one of the most common IGC inventory issues I encounter. If buyers are just refilling benches as they visually empty without incorporating sales data, that is also going to significantly hinder your success.
Are you training?
Here are a couple of questions I will throw out at you: Are your buyers trained in how your P&L and GMROI work? Are they trained in how to track and run meaningful sales data? Do they use an open-to-buy? Are they included in marketing and promotions planning for all buys? If your buyers are basically garden floor staff pulling double duty as category or department buyers, then I suspect the answer to all or some of these questions is “no.”
I have worked with great, knowledgeable plant people who have years and years of retail garden center experience. Yet, despite their extensive horticulture and operational knowledge, they still had little understanding of how to buy inventory strategically based on the numbers and marketing. Their trial-by-error based approach of buying left them fearful of buying aggressively when needed and resistant to cutting inventory when necessary. If you are in this situation with staff, you need to commit to retraining them as buyers, not just plant enthusiasts. That takes tools.
One of the most powerful tools you and your buyers should be using is a retail open-to-buy system (OTB). An OTB is a super simple, yet magical, tool (in my opinion) that guides you on what you need to spend (or not spend) each week on inventory to hit your target sales goals. OTBs help you forecast your end-of-the-month sales based on current sales and inventory numbers. Based on how sales are going and where current inventory levels sit, you can quickly adjust your spending. Without an OTB, you may spend far too much or far too little. Essentially, OTBs take the fear out of your buying decisions, replacing it with knowledge.
OTBs are only as good as your up-to-date inventory and sales data. If you are not properly tracking existing inventory, write offs and sales data, then you cannot forecast inventory spending needs appropriately. So, it may require some logistical housecleaning on your part before you can effectively deploy an OTB with your buyers.
Sell before you buy
Good buying also does not happen without good marketing strategies and advance promotional planning. The best way to be able to go deep in inventory, or book much bigger buys than you have committed to in the past, is to have a plan for how you are going to sell it before you buy it. I am a big fan of committing to pre-ordered bookings before the product’s sales season. Pre-bookings give you time to plan marketing and promotions in advance, and sell your customers on the product before you even receive it.
If your marketing and buying teams are working closely, marketing may have great ideas for promotions that will better guide buying decisions.
The only way you are going to make more profit per square foot of inventory space in your garden center, is to turn more inventory in less time at a better margin. That takes skilled and attentive buying, not guesswork. And certainly not fear.
Leslie (CPH) owns Halleck Horticultural, LLC, through which she provides horticultural consulting, business and marketing strategy, product development and branding, and content creation for green industry companies. lesliehalleck.com
Attracting garden geeks
Departments - Retail Revival | Store improvement tips from the Garden Lady
Use these four ways to maintain loyalty and interest among your experienced gardeners.
If you work in an IGC you’re well aware that many of our customers are inexperienced with plants or new to gardening. You’ve helped people like this woman, who said to me, “If I buy this shrub, do I have to take the pot and the dirt too?”
We’ve all assisted those who don’t know that plants require water or haven’t been told that a perennial should come out of the pot before it goes into the ground. We’re used to the naïve and the newbies, and most IGCs go out of their way to speak to these folks in blogs, newsletters and educational programs. But are we giving the same attentiveness to those on the other end of the spectrum? Are we paying proper attention to the garden geeks who come to our stores?
Many times, we take experienced gardeners and plant fanatics for granted. Of course they’ll come in! We sell what they’re crazy about, right? It behooves us, however, to put at least part of our focus on these passionate plant people. Not only could they be our best customers, but this group can also be our informal marketers and advisors.
Since the majority of people share their enthusiasms on social media networks, garden geeks can help us market our businesses and products. After finding an exciting plant, they’ll post about it, which frequently leads to their friends and followers asking, “Where did you find that?” So, making sure that we’re stocked with the unusual and new, as well as the tried and true, will keep the plant nerd excited about our IGCs, and that excitement is contagious.
Experienced gardeners are often the earliest to spot potential problems and difficult situations. They might be the first into the store for Spinosad, for example, to treat the newly hatched hibiscus sawfly larvae. The rest of the population often doesn’t notice early insect damage, but those who are well attuned to their plants frequently have a better awareness of such issues.
Plant enthusiasts also have their eyes open for new products and plant varieties, so when a known garden geek asks if you have the newest organic fungicide, shrub rose or houseplant, you’d be wise to pay attention. Instead of saying no and returning to the stock at hand, it might be smart to write down what that experienced gardener was looking for. The perennial or garden hose that they were asking about might just become a best seller that other customers will soon be requesting.
Beyond paying attention to when an avid gardener comments on what’s happening in the landscape, or asks for an innovative product or new-to-the-market plant, how can a garden center keep the plant geek’s loyalty? Here are just a few suggestions.
Garden geek night
Once we’re able to gather safely again, have an invitation-only event just for passionate plant people. Invite those you’re aware of, local master gardeners and garden club members. In the meantime, schedule a virtual event for this group of people. Give them some insider information about what’s just arrived, play a “name this plant” game or ask them to send in photos of their favorite plant or section of the garden to share with the group. Ask your vendors for information about plants or products that will hit the shelves in the coming season and give those who attend a “you heard it first” update. At the end, reward them for attending by handing out or emailing a special discount coupon.
Gather this group’s emails and ask if you might tap them for a quote on a plant or product in the future. They’ll be flattered, and personal statements from such garden geeks will make your newsletter, blog or social media posts livelier.
Show that you know them
Keep a list of plant enthusiasts in the office where your employees can access it. Such a list should show the gardener’s name, email, phone number and the plants they are known to admire. Given such a database, the greenhouse manager can contact those who love succulents, for example, when a new shipment comes in. Likewise, a gardener who collects dwarf conifers, loves orchids or maintains large perennial gardens can be sent an email or given a call when fresh stock arrives in those departments. Another way to connect with plant lovers is to tag them on social media when you post a photo of new plants they will be interested in.
In the age when most plants and products can be ordered online, make sure the local plant lovers know that you value their business supporting their passion.
C.L. Fornari is a speaker, writer and radio/podcast host who has worked at Hyannis Country Garden, an IGC on Cape Cod, for more than 20 years. She has her audiences convinced that C.L. stands for “Compost Lover.” Learn more at www.GardenLady.com