Scullin: How Did Spring Play Out?

Scullin: How Did Spring Play Out?

Sitting here mid-spring at the end of April, there are bits of good and bad news to report.

First, spring has arrived, despite the naysayers. Birds are singing, lawns are greening and folks are in the garden centers. Despite the gloom and doom, the world did not end.

Second, from many reports, people are shopping in both big box and independent garden centers. From a bedding plant perspective, items are moving at a good pace. Some regions of the United States are worse than others, but from all early indications, bedding plants are selling at or near last year’s pace in many markets.

To quote from this past year’s Pack Trials: “Flat is the new up.” Depending on weather and region, I’m hearing slightly up or down 5 percent compared to last year.

Third, on the expensive stuff, read “expensive” as shrubs, trees or anything with a retail price of more than $25. Again, numbers vary and stories are worse in areas of more foreclosures, but the higher-ticket items are well off last year–down 40 percent by some estimates.

With fewer homes for sale, fewer people moving and higher unemployment, we are all on a budget. There are simply less disposable dollars. We might spend a few dollars on a flat of flowers, but we are less inclined to spend $45 on a shrub or tree. Some of the programs are impacted less, but everyone I’ve talked to on the nursery side of business has concerns.

Comparing To Prepare

Fourth, USDA data was recently released for 2008, so we can take a look at last spring, think about what we’re seeing right now this spring and start forecasting Spring 2010. As you may recall, USDA surveys the top floriculture states and offers an indicator of general trends. These past few years, USDA data was a good benchmark to see if your company growth was keeping up with the industry as a whole.

In 2008, the category of all bedding plants was up about 1 percent in dollars from 2007 but down 1 percent in units. If you factor veggies out of the bedding data and look only at bedding plant annuals, then the number in 2008 was down about 3 percent in units from 2007.

To me, the bigger concern is that our industry has been in decline for awhile. If you factor inflation into the USDA numbers and look at the total dollars in floriculture–include cut flowers, perennials, potted plants, foliage and bedding plants–then you get a chart that is sloping the wrong way.

These are all factored to 2008 dollars. So, ahead of this current spring, we are seeing floriculture crops as a whole decline in total value since a peak in 2002. Factor in 2009, likely a dip of some sort from 2008, and we are looking at seven years of less real dollars.

While some categories have growth–look at recent veggie sales as an example–an overall decline in our category suggests we need to do a few things differently in 2010 and beyond.

Here are a few ideas:

1. Survival. If you are still breathing, mostly making payroll and well enough to read an article like this after Spring 2009, pat yourself and your staff on the back. Job well done just to make it through!

2. Product mix. It was huge this spring. Did you have the right percentage of value compared to higher-end items? Did you have you the right percentage of veggies? How was your ratio of generic to packaged items to store brands?

Product mix has always been important. This year, the right product mix was critical to squeeze every possible sale for you and your retailer. We assume it will be just as critical in 2010.

3. Packaging. What worked and what did not? Did the better-packaged items sell through faster than the generic? What was impact on price points on your disappearance rates? Even at the high end this spring, it looked like packaging made a huge difference in sell-through. What was your experience and what do you have planned for 2010?

4. Price. It was a massive factor this spring. Most retailers were very careful not to load stores with wrong-priced items (read as “too expensive”), so we assume that trend will carry over into 2010.

Even in USDA data, we see flats making a comeback at the expense of more pricey baskets and potted plants. But with that said, if the better-packaged items sold through well, are there options for price increases in 2010 or shifts in product mix to reflect the better-selling items?

5. Teamwork. Work with the retailers. Growers who had ability to connect with what was really going on at retail and shift their products on the retail benches did better. How was your store signage? Did you have the right number of people in the stores at the right times? How can you work more/better with retailers to get those last few percentage points of business?

Now, take a breath, be nice to friends and family and roll up your sleeves. It’s 2010 planning time right now.

Leave a Reply

4 comments on “Scullin: How Did Spring Play Out?

  1. Dead on analysis, Laurie. Veggies and herbs are HUGE, especially our certified organics. Big combo baskets a bit sluggish, but our weather has been terrible, too—a MUCH bigger factor! Also, we traditionally sell far more baskets AFTER Mother’s Day anyway. We are extremely upbeat, still have major booked orders to fill, feeling pretty good. Our firsr quarter sales were down significantly, but EXPENSES were down much farther—we’ll take that combo without regret. Still, not convinced of the’packaging’ thing, as you and I have spoken about, and we still have WAY TOO MUCH product mix. We’d be better off with 30% of the items.

  2. Lloyd
    So far it feels like growers/retailers heavy in bedding will be ok – as you say especially those who kept eye on expenses (almost all I spoke to this spring) – My worry is for retailers who have larger % of traditional sales in nursery/tree/landscape items.
    We agree on product mix – we have too many items and confuse the poor consumer. I still will hold out that the product mix you sell should be well packaged – and that pesky ‘market’ will sort that out for us 🙂

  3. Dead on analysis, Laurie. Veggies and herbs are HUGE, especially our certified organics. Big combo baskets a bit sluggish, but our weather has been terrible, too—a MUCH bigger factor! Also, we traditionally sell far more baskets AFTER Mother’s Day anyway. We are extremely upbeat, still have major booked orders to fill, feeling pretty good. Our firsr quarter sales were down significantly, but EXPENSES were down much farther—we’ll take that combo without regret. Still, not convinced of the’packaging’ thing, as you and I have spoken about, and we still have WAY TOO MUCH product mix. We’d be better off with 30% of the items.

  4. Lloyd
    So far it feels like growers/retailers heavy in bedding will be ok – as you say especially those who kept eye on expenses (almost all I spoke to this spring) – My worry is for retailers who have larger % of traditional sales in nursery/tree/landscape items.
    We agree on product mix – we have too many items and confuse the poor consumer. I still will hold out that the product mix you sell should be well packaged – and that pesky ‘market’ will sort that out for us 🙂

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