The state of the industry is something that is tricky to predict or comment on during these tumultuous times and a recession.
Best-laid plans and projections went out the window this year with COVID-19 and mass shutdowns turning the world upside down. With a contentious election on the horizon, none of us really know what to expect come the 2021 spring sales season. One thing I feel fairly confident stating is that as we all experience more unrest — and what I like to call “COVID Cranky” — products and hobbies that decrease stress and make us feel better should continue to see improved sales. Provided enough people are gainfully employed come the next spring season.
That said, uncovering and analyzing current trends and business behaviors is always a good way to refocus your planning efforts and keep a grasp on reality. At least in the short term, growers and garden centers have benefited — some greatly — from COVID-19-related shutdowns, which nudged many middle-income consumers back into their gardens or houseplant collections, or to pick up a trowel for the very first time. If your end-customer demographic is wealthy, they have been spending freely with landscape design/build companies on home improvements such as landscapes, pools and the like. This has kept many top-tier landscapers busy and planting.
Many garden centers were overloaded with demand for plants this spring, yet many found themselves unable to capitalize on all the demand due to a lack of e-commerce infrastructure. For you as growers, it’s going to be crucial that garden centers get their act together to make online selling and digital access to plants easier, given that in-person shopping limitations (or inclinations) may continue for a good while. Hopefully, if nothing else, this has been a wakeup call to the industry that digital commerce is no longer optional.
For the moment, the short-term profit outlook is pretty green for many growers, at least until homeowners start spending more of their available post-recession cash on things like cars and dishwashers. Greenhouse Management’s SOI survey results show that 63% of respondents project significant increased sales projections for the next year, with a majority coming in at the 5-9% increase range. Healthy and doable.
This year also saw steady price increases on plants, both due to demand and increased costs, with 33% of respondents raising prices by between 1-4%. One category where you can probably afford to increase your margins substantially is houseplants and tropicals. While I’m no fan of the price gouging going on in the houseplant auction market these days — as it may cause a negative backlash for us all down the road — I also support a customer’s desire to pay what they choose for a plant they truly desire. Demand is there, so you should charge accordingly and remember we are training new plant consumers on the value of our products.
Now is a good time to evaluate your offerings to see where you can command better margins.
When it comes to which plant categories respondents plan to increase production on over the next 12 months, it is no surprise that perennials still top the list, which it has done for the last several years. Customers are always looking for plants with resiliency, beauty and wildlife and pollinator support. Resiliency, I believe, is really going to be the key to how perennials are categorized and valued moving forward. It was interesting to me, though, that annual bedding color ran a close second to perennials. In normal years, I would expect this; but in COVID-19 2020, I would have expected to see edibles capture a bigger planned increase over annuals, given the rush on vegetable crops this spring. Not to mention the fact that some growers were only allowed to sell and transport edible crops. However, edibles are running a close third to annuals followed closely by houseplants and tropicals. I think everyone should be taking a close look at their edible offerings to make sure you do not miss out on a big 2021 spring opportunity.
It looks like wages are up as well – 53% raised hourly rates and 35% raised annual salaries. I’d love to think this is a result of our industry coming to the realization that many of our employees are underpaid, but based on what I’m seeing with most of my clients, it’s labor shortages that are forcing the wage increases. Finding qualified labor, coupled with the economic recession and increased input costs, are forcing our hands. We should all get ready to spend a lot more time and effort on effective recruiting strategies.
On that point, most respondents stated that increasing labor costs is their second-biggest issue. So it is no surprise that when asked which aspects of your businesses you would most like to improve, automation ranked No. 1. I have always felt we have not done a great job in this industry of marketing our jobs and careers and creating good trade education programs; but now seems like a great time to invest in such an initiative. With many people in the service industry out of work, you may just have access to the very human resources you need, if you are willing to invest in PR and job training.
It is easy and understandable to feel negative about the current pandemic, economy and political realities. Everyone I talk to is feeling serious strain. Just a side note: Many of you are taking it out on your employees right now (I know because they are telling me!). I am no Pollyanna, but I do have a natural inclination to operate as a downturn investor. While things are incredibly difficult right now, it is how we react and respond to the challenges that will determine our fate. When challenged so severely, you may discover new opportunities to be had and improvements and innovations to make. Resiliency and evolution are the answers.