The Great Conundrum
Charlie Hall shares insights into the current state of the horticulture industry, consumer spending and the economy.
We’ve moved from the Great Recession to the Great Shutdown to the Great Conundrum, said Dr. Charlie Hall at the State of the Industry presentation during Cultivate’21. “We’re in a period of probably growth but we’re constrained,” said the Ellison Chair in International Horticulture, Texas A&M University, “but that’s not necessarily a bad thing.”
Pre-COVID, we were in an unprecedented period of 128-month economic growth. Housing was peaking, inflation was in check and consumption was steady at 70% of overall GDP, Hall said. Unemployment was low and the stock market was steadily growing.
According to Hall, since the Great Recession, we’ve seen:
- 16.1% fewer growers (nursery and greenhouse)
- 4.6% fewer IGCs and box stores
- 17.6% more landscape service providers
However, there has been mixed performance across the industry. The last six years have seen steady growth for growers in Hall’s database. In 2020 versus 2019, there was a 10.6% increase for all growers in Hall’s database. But when digging into the numbers, the median growth was 7%, and the range was wide from 26% down to 32% up.
“A lot of the negative was due to the fact that businesses weren’t deemed essential until May and it’s tough to make that up,” Hall said.
On the landscape side, 46% of firms were up significantly while the remainder were either static or up slightly.
All of that increased business has resulted in a high level of working capital. “I have never seen working capital as high as it was going into 2021,” Hall said.
But Hall cautions against aggressive spending. Whenever consumers are forced to remain at home, whether it’s due to economic reasons or public health issues, the horticulture industry gets a “shot in the arm,” he said.
“But in every single case bar none (since 1949), when people make the switch to buying durable goods like cars and refrigerators, they pull back on buying lawn and garden products,” he said.
And in the past, the industry hasn’t been able to maintain the public’s interest. On top of that, there has been huge disruption in the supply chain. Not only are there not enough truckers to move product, but Amazon and other delivery services are stressing the system even more. The plant shortages of 2020 and 2021 are challenging the industry as well. Hall noted that unlike past years, retailers are not reneging on pre-orders.
For more on Hall’s outlook on labor, visit bit.ly/GreatConundrum
— Kate Spirgen
Crisis to Innovation
Here are the trends retailers should take note of for 2022.
At Cultivate’21, Katie Dubow, president of Garden Media Group, shared the group’s 2022 Garden Trends Report: Crisis to Innovation. As the industry emerges from COVID-19 and heads toward a renaissance, customers are responding by spending more money. Retailers can capitalize on the revolution by focusing their efforts on the individual and putting an emphasis on customer personalization, she said. Check out the eight trends that can help your business capture customers’ attention and better serve their lifestyles.
1. Creator class
The chaos and upheaval of 2020 fashioned more creator opportunities as people quit their lackluster jobs in search of greener pastures and personal interests. These creators built on the behaviors and trends of TikTok or Instagram influencers to sell products inspired by their own individuality and values, and garden centers should pay close attention.
Creators are likelier to start their own microbusinesses, and COVID hasn’t changed the fact that many customers want to shop small and give back to the community, she said. Garden centers are poised to partner with these creators by working with local artisans — mural painters, ceramists and more — to boost their local economy. She suggested that garden centers should set up up pop-up shops or host classes with these micro-influencers to expand their businesses and create community bonds.
As IGCs logged on to the Zoom boom of 2020, virtual events “broke the boundaries that confined in-person events,” she said. As a result, garden centers should focus their e-commerce efforts on “Shoppertainment,” which is where customers can make online purchases while watching online videos (think Instagram or TikTok). According to Dubow, brands will eventually have a link in their social media handles where shoppers can do this. Entertain your customers into live-buying or virtual buying from your social media accounts. She also noted that the future will be hybrid, and IGCs should offer in-person as well as virtual shopping experiences.
People want to reconnect after the isolation of 2020, but there’s a fine line between FOMO (Fear Of Missing Out) and FOGO (Fear Of Going Out), she said. To navigate between these social behaviors, retailers should focus on the INsperience for a better EXperience. This means front yards can be the new entertainment space and garden centers can offer up a nice middle ground to quell the anxiety of returning to social life. Think of the front yard as a new room and offer smaller plants, outdoor décor and dining sets to set the mood, she said. Show customers how to designate kid zones and work-from-home zones in their outdoor spaces as well. Items like trampolines, badminton sets, treehouses or big, leafy plants offer children a fun place to play or hide. Privacy hedges, shady trees and hanging plants can create ideal outdoor working spaces.
4. Bridging the gap
Retailers must provide new gardeners with an educational foundation that bridges their knowledge gap to turn them into lifelong gardeners. Focus on lower price points, as these new consumers are interested in edible gardening and gardening for stress relief. Provide smaller plants for new homeowners and apartment or townhouse dwellers — these people want to garden, and they don’t need a lot of space, she said.
COVID-19 gardeners are from the DIY generation, and retailers should offer them organic and natural products, as well as smart accessories or easy-to-grow plants. Narrow your product range and offer quality over quantity, she said. Use funny, educational videos on TikTok or Instagram, and even experiment with platforms like Reddit or Clubhouse. It’s also a good idea to designate a point person who can answer plant questions they might have.
Take it a step further and create handy guides embedded in QR codes so they can easily access plant care information, she said. All of these steps will help them become more successful gardeners and keep them coming back.
For four more trends from the 2022 Garden Trends Report, visit bit.ly/CrisistoInnovation
— Julianne Mobilian
The art of visual merchandising
Make your products pop with these strategic display tips from expert Joe Baer.
After plants, the No. 1 thing garden centers can offer their customers is experience. During his Cultivate’21 session, Joe Baer, co-founder and CEO of ZenGenius, shared how retailers can showcase their products for a better customer experience.
“It’s about driving sales and celebrating your products, services, and ultimately, your brand. Garden centers are competing with big-box stores, so you need to make sure customers are attracted to your business,” Baer said.
Plan and strategize
Approach your game plan with a methodology in place. Ask yourself, “What are my best-sellers?” and “What are my slow-movers?” Your displays should center around those best-sellers or key items. Take one key item in every department and surround it with two or three other items (complementary items, add-ons or even slow-moving products) that you want customers to buy when they’re buying those key items, he said.
“Dissect the numbers from the business side first before diving into the visual aspect,” he said.
Understand your SKUs and inventory so you can dedicate an appropriate amount of space for them. Know the flow of your products so you can keep them organized. He suggested the following techniques:
Identify your target. Who is your customer? How are they shopping? and How do they like to shop? are all questions you should be thinking about. Tap into the younger generation and take note of their habits, because they’re shopping differently than their predecessors, he said. Take note of community happenings as well as your competition.
Put a strategy together and plan. This involves a lot of preparation but setting goals and taking actionable steps will save you the hassle in the long run. Build a calendar, review your marketing plan and analyze your sales so everything is in line with your initiatives. An example of this might be creating a seasonal floorset calendar and sharing it with teammates so every employee is in the know.
Test, implement and observe your strategy. Do a trial run to see what’s working, and what isn’t. Watch how shoppers use your space: Is your dollar volume increasing? If not, tweak or change your plan. Start small, and focus on one department or one season at a time, he suggested.
For advice on execution and quick tips to get started, visit bit.ly/ArtofVisualMerchandising
— Julianne Mobilian
Get inside gardeners’ heads
Dr. Bridget Behe explored the motivations behind the garden popularity of 2020 at Cultivate’21.
The plant-buying boom of 2020 drove customers to IGCs all over North America, but what was the motivation behind the gardening craze? Dr. Bridget Behe, professor of horticultural marketing at Michigan State University, dug into the trends, analyzing survey results from both those who did and did not buy plants from July 15 to Aug. 21, 2020. Funded by the Horticultural Research Institute, the research project compared results from 1,211 members of Generation Z, millennials and baby boomers to see which motivations drove their purchases.
What compelled consumers to garden was not as much about the end product as much as it was about less tangible rewards such as connecting with others, staving off boredom and improving health, the study found. “Plants have become a safe haven for people looking to improve their health in different ways,” Behe said.
Grow your own
Before the advent of COVID, there was a growing trend of cultivating your own food for “food independence” as well as increased interest in plant-based diets. That movement took off during the pandemic. “We need to think about helping people have control by growing fresh fruits, vegetables and herbs,” Behe said. “It’s about the perception of control. It’s probably not enough tomatoes to feed your family but it gives people a sense of control.”
More powerful than the plant-based diet trend and the desire for food independence is the local movement, Behe said — even more powerful than the organic movement. So backyard farming can not only help gardeners feel more control over their diets, but also give them feel the satisfaction of feeding their own families right with great flavor and great nutrition.
And that’s where IGCs can really differentiate from the big box stores. While consumers can buy vegetable and herb plants from big-box stores, only garden centers will help gardeners be successful all the way through to the harvest. For example, a big-box store isn’t going to help customers with their blossom-end rot.
“You can’t stop with the plant sale; you have to get them to the plate,” Behe said. And to help customers get their produce on the plate, be the conversation-starter to help gardeners figure out what to do with their bumper zucchini crop or ask what they’re doing with their garden produce.
When marketing, she suggested IGCs stop using so many plant images and instead, use images of people who represent their demographics. “Show people enjoying the same plants you have,” Behe said.
Among those who spent some of the pandemic on home renovation projects, there were high scores on buying both edible and ornamental plants. These were generally Gen Z and millennial customers looking for home improvements, as well as online shoppers. For more on home renovations and the social benefits of plants, visit bit.ly/GardenersMotivations
— Kate Spirgen