As gardening gained popularity throughout the COVID pandemic, another trend was on the rise: pet ownership. One in five American households acquired a cat or dog between the beginning of the pandemic and May 2021, according to a survey conducted by the American Society for the Prevention of Cruelty to Animals. That amounts to roughly 23 million homes.

What’s more, according to the American Pet Products Association’s 2021 State of the Industry report, Americans spent $103.6 billion on their pets in 2020, compared to $97.1 billion in 2019 and $90.5 billion in 2018. In addition, the APPA predicts Americans will spend $109.6 billion in 2021, a growth of nearly 6% from last year.

According to Garden Center magazine’s State of the Industry Report released last month, only 11% of garden centers surveyed reported operating a pet division. While the number of IGCs that have them is low, the category is rich with potential to reach both new and existing customers.

Know your customers.

• Appeal to pet parents by merging their interests with solution-based strategies.

Ashley Helmrich, farm and pet manager at New England’s Homestead Gardens, says their standard garden customer is a senior woman buying for herself and her family.

“With pets, the profile is a mother with kids who want to do 4-H or who want to raise animals themselves. They want to teach their kids about animals and agriculture, and get them outside in the garden and in the farm setting. We focus on that middle-aged, growing family,” Helmrich says.

At Chalet, located 14 miles north of Chicago in Wilmette, Illinois, the retailer takes a holistic approach to serve its customers. The 104-year-old IGC has been operating its pet division since the 1950s, but it wasn’t until a few years ago that it updated its marketing strategy, says Nathan Herman, general manager, retail. The nursery created the department to provide income in the off season, when expenses were up and little revenue was coming in.

“We’d been operating for many years as a traditional pet store, and it was kind of separate and not really connected to the rest of what we do,” Herman says. “We were always thinking about, ‘How does this enhance the health and wellness of our customer and the community?’”

As a result, the pet division split amongst the four different subcategories of the garden center itself: home, wellness, outdoor and nutrition. This decision achieved two things, Herman explains: One, it makes it easier for customers to shop because they’re shopping by solution, and two, it allows Chalet to market pet products with the rest of the merchandise cohesively.

“We’re bringing the pet into the whole fabric of the family-oriented experience,” Herman says.

As a whole, pet profits are generally flat, with slight increases — a success, by Herman’s standards, given that the level of competition in the pet division is vertical. As furniture and home décor sales boomed during the pandemic, so did pet-friendly indoor plant sales, pet treats and pet toys.

“We started seeing some significant declines a few years ago and it has bounced back partly because of the puppy pandemic phenomenon. But I do think it's because we found ourselves and we recognized what the pet customer was looking for from us,” Herman says.

Strive for product diversity.

• Curate a selection of tried-and-true basics like food and toys, along with holiday- and luxury-themed specialty items.

At Homestead Gardens, Helmrich notes the IGC created the department to boost foot traffic and balance the garden center’s seasonal peaks, much like Chalet. “We do have deliveries for our equine feed and things like that, and those people are always getting deliveries,” she says. “So even if it’s not necessarily always bringing people in, it’s definitely adding income to the store,” she says.

The department’s gross margin contribution is in the mid-30th percentile, which may seem much lower than a typical department contribution, Helmrich says. Still, the category helps bring in a weekly customer base compared to a standard seasonal customer base — while filling a need for their ever-growing market of pet-loving customers, she says. Like Herman, she says the margin has seen some uptick as more toys and treats sell.

Homestead Gardens launched its pet department in 2012, initially carrying standard cat and dog products, like treats and toys. Then, they expanded with more products around 2014, finally breaking into the animal feed, equine and backyard flock sectors.

“The backyard flock category does well each year. And with the pandemic, that was a huge boom all across the country,” Helmrich says.

They try to carry quality items customers can’t buy at surrounding pet stores or online retailers like Chewy because it’s not worth price competing with them, she says.

Both Chalet and Homestead Gardens offer price points for every customer, and both buy from local businesses or trusted vendors. Helmrich notes they also carry mid-range products, such as toys and treats, to coincide with different seasons and holidays.

Jessica Wright, merchandise buyer for Chalet, pays close attention to the ingredients used in their products, particularly when it comes to food or treats, which helps them stand out from competitors that also serve cats, dogs and birds.

“I think our customers are looking for something that they would consider that they would eat them that themselves, in a way. They’re looking for those organic and natural, less chemical, products,” Wright says.

Cross-promote complimentary products.

• Market pet products with gardening and lawn care solutions as a way to foster customer education.

Many pet products can complement existing plants or garden center goods. Helmrich says they like to educate customers about certified pet-safe products, especially since their pet department is close to their garden supply department.

“I do tie in a lot of the chicken/backyard flock information with gardening, because there are things that chickens can do to help you garden — composting, eating scraps, and how things like that can help turn over your garden beds. If you have raised garden beds, they help on the lawn side when it comes to keeping ticks and fleas at bay in your yard, because they're eating them,” Helmrich says.

At Chalet, Herman says they try to incorporate plants into every category they offer, and pets are no exception. They feature a vignette of pet-friendly plants, along with handouts listing their unique qualities and care instructions in the garden center. He notes they’ll also place gypsum in this vignette, which is a non-toxic mineral — typically used as a fertilizer — that neutralizes urine spots in customers’ lawns, as well pet-safe ice melts.

Look for the purrfect partnerships.

• Partnering with local shelters or hosting educational events are great ways to build community while promoting a pet division.

Both Homestead Gardens and Chalet partner with local shelters to help fundraise for local animal rescue causes and adoptions, which also helps to build bonds within the community. Throughout the year, Homestead allows the SPCA of Anne Arundel County to host events and food drives at their stores.

Chalet partners with different animal rescues and hosts adoption day events at their store every month. In August, they ramp up their efforts and host an adoption day every week. Almost every single cat or dog gets adopted, Wright says. Thirty to 50 people attended each adoption day before COVID-19, but even with attendance limitations in place, they could set up one adoption every 15 minutes. Additionally, anyone who rescues a pet during their event receives a $50 gift card to Chalet.

Market with events.

• Host events where pets can join in on the fun.

Pets are not only welcome in both garden centers, but encouraged. Wright says they even keep dog treat samples on hand, and owners often end up buying a bag.

In addition, Chalet hosts many pet-themed events, such as National Ice Cream Day where dogs can get treats, a Barks and Brews-themed “yappy” hour where guests can socialize with other pet parents and enjoy beverages, and costumed pet parades.

Chalet's Selfies with Santa event is one of their most popular of the year. Guests and their pets line up around the building to get their photos taken with Santa. Herman says there’s no charge for the event, and hundreds of customers wait in line for hours.

“I just heard that we have a lot of upset customers because we’ve already sold out. We actually had to extend Santa for two or three more hours,” Herman says with a laugh.

At Homestead Gardens, the first Saturday of April kicks off chick season with the annual “Chicks on the Loose” event. Several breeds of chicks are for sale while the IGC hosts educational seminars on various chicken topics. There are also "essential" chick/chicken product displays, along with arts and crafts projects for kids, Helmrich says.

“The educational workshops don’t end with this event. We host several workshops throughout the year to help our flock customers stay knowledgeable in each life stage or season. We strive to make sure our customers are informed and knowledgeable throughout their chicken ownership to enjoy it to the fullest,” Helmrich says. The garden center hosts similar seminars for other farm animals, livestock and pets.

Like Chalet, Homestead also ties holidays into its event marketing. For example, the IGC hosts a Santa Paws event where pets can get their photos taken with Santa, as well as an annual Critter Crawl costume contest during Halloween.

These events are a lot of work, but they’re necessary to make this category successful. Helmrich says they’re continually developing their social media efforts and have targeted bi-monthly email lists to farm and pet customers, as well as a separate Facebook page for the department. However, she says that Facebook is their most prominent social media push when marketing farm and pet.

At Chalet, Herman says they leverage social targeting campaigns to reach customers in the pet community and offer things like birthday packages and a subscription program. They also partner up with local doggy daycares, vet clinics and dog walking services, all of which provide discounts to the Chalet customers who use them and vice versa.

For example, The Doggy Dudes, an independently owned dog walking service in the city, has a link on their website and then that links back to Chalet. “We have a tracking tool that to find out where the traffic is coming from on their site and their customers automatically get 10% off of their purchases,” Herman says.

Above all, Helmrich stresses that a garden center with a pet division should focus on its marketing efforts.

“The marketing is huge initially when you bring it in but then obviously staying on top of it and then if they’re a garden center, like we are, who’s primarily a greenhouse, I would make sure that rodent control is part of their plans. And then also some type of UV protection for the product, because otherwise your product will become damaged from the sun,” she says.

The estimated 18 million new gardeners who flooded the market last year continued to hit garden centers this spring, driving spring 2021 sales over spring 2020 sales for nearly three-quarters of IGCs that participated in this year’s State of the Industry survey. Despite the challenges of staffing, supply chain issues and the always unreliable spring weather, 95% of garden centers are expecting to turn a profit this year. The increasing customer base was the biggest positive factor for garden centers over the past year, followed by the economy but staffing, as always, was the biggest challenge, followed by availability of product.

Garden centers are not only dealing with product shortage, but increased shipping costs for the materials they are able to get. In fact, only 7% of IGCs indicated that they are not impacted by rising shipping costs and only 11% said they are not experiencing plant or product shortages. Plant shortages and shipping issues are likely bumping up the number of grower-retailers, which has been steadily rising over the past five years but jumped by 10 percentage points this year alone.

Read on to see how fellow garden center owners and operators are managing the challenges and opportunities of a constantly changing market. And be sure to visit gardencentermag.com/magazine for more survey results. — Kate Spirgen

Survey methodology

We surveyed more than 300 independent garden center owners, operators and managers in the U.S. and Canada about their IGCs, their markets and trends in their areas. The following statistics were gathered via an online survey in October.

Editor’s note: Not all percentages will add up to 100% due to rounding and non-responses. Not all answer options are listed here.

To view the full report, click here

The challenges of COVID continue to force the green industry to be quick on its feet, and the effects are going to be long-lasting, according to Dr. Charlie Hall, Ellison Chair in International Floriculture at Texas A&M. “COVID has forced us to be better business managers across the board whether you’re a grower or a landscape service provider or a retailer,” he said during a Garden Centres Canada Speaker Series presentation. “We are not going to waste that crisis.”

The shape of recovery is going to follow the shape of COVID, Hall said, especially as the Delta variant affects reopening plans in both the U.S. and Canada.

Supply chain

The rising price of moving material through the supply chain plus the increased time is causing problems throughout the green industry. From problems finding labor for production and manufacturing to a severe driver shortage, the supply chain problems won’t be going away anytime soon. The U.S. was about 46,000 drivers short at the time of publication due to high retirement levels, driving school closures during COVID and problems matching up team drivers for freight due to vaccination status. All of this is contributing to the increased truck rates.

“All of this pressure is going to continue until at least 2022,” Hall said. “It just simply can’t get better fast enough.”

Hall said this may provide some room for niche players, and the demand for local or regional products will increase. “It’s going to cost a lot of money to build the supply chain domestically to handle a portion of that demand.”

So, Hall expects to see a bullwhip effect on inventory. “We’ve seen that in every recent economic downturn,” he said. The labor shortage doesn’t seem to be letting up any time soon either. Along with the pandemic has come what many are calling The Great Resignation. More than 30% of people are not planning to go back to the same level of work they were doing 18 months ago, Hall said.

“People are re-evaluating their hour-long commute or working in the service industry,” he said. “They’re looking at their alternatives in terms of job placement.”

Costs across the board

Production costs increased dramatically as freight became more expensive and material prices rose. Container costs, for example, are 43.5% more expensive now than they were pre-Recession in 2007. Overall, the cost of inputs at the grower level has increased 13-14%, which means prices will need to raise at least the same amount, or growers are going to lose margin.

Since growers are going to need to increase prices, retailers will need to raise their prices accordingly.

“Also, consider that demand is really increasing,” Hall said. “Retailers aren’t getting a lot of pushback on the price increases they’ve already done. How much is going to be too much before you get pushback from the end consumer?”

Gross sales for garden centers are up 23.4% through August, according to Hall’s numbers but the jury is still out on the rest of the year. While sales from January through May of 2021 were much higher than last year, June numbers were significantly lower and July was about even.

Retailers saw increased online sales along with higher traffic and spending per transaction. But input prices have gone up for both plants and hard goods. Due to supply chain issues, substitution became more normal, and IGCs are buying ahead and stocking up where they can to fill demand, Hall said.

Another change that’s here to stay is contactless shopping. “Make no doubt, the consumer likes it,” Hall said. “You see it at the grocery store level and the garden centers that offered that, they’re going to keep doing that.”

2022 and beyond

Hall predicts a pent-up demand in 2023 as people get more comfortable hosting events, which could lead to increased lawn and garden spending.

He’s also expecting to see more mergers and acquisitions.

“There’s strong demand and higher margins so here come the venture capitalists,” he said. “And most of the time, that hasn’t been necessarily beneficial for our industry.”