Garden Retail 2012: Observations On Spring From Jerry Montgomery

Walmart #1452 in Charlotte, one of the best outdoor displays

After enduring the spring of 2011 — arguably one of the worst years weather-wise in the past two decades — 2012 brought a spark back to the industry. A number of areas, especially in parts of the West, encountered really good weather. Other areas had a good start with many reporting record sales in March, only to see cold and rain return in April and erratic weather patterns in May. But when the weather was decent, consumers were out in force.

Our team has visited 5012 garden centers since 2005. During this spring season, we visited 412 — boxes and independents — in California, the deep South, Mid-South, Mid-Atlantic and Midwest.

Here are the trends we saw this year.

Retailers

At most retailers we visited we saw fewer employees than in previous years. The exception was in independents where we observed more staff on the sales floor.

A good example of this was Pike Nurseries in the Atlanta and Charlotte markets where we always observed many green-shirted employees engaged with the consumers. It was evident after some eavesdropping that Pike employees are well trained and very knowledgeable. The same scenario was true at Armstrong Garden Centers in Southern California.

At the national retailers, we observed the most interaction with consumers at stores merchandised by Bell Nursery and Metrolina Greenhouses. Their merchandisers went out of their way to interact with the consumers.

The national retailers are becoming more adept at using their parking lots, along with grow carts, to create more selling space. Nowhere was this trend more obvious than at Walmart #1452 Charlotte, supplied by Metrolina Greenhouses, which had 100 percent of its green goods on tables in the parking lot. It was one of the best outdoor displays anywhere. There were more Sam’s Clubs using corrals in the parking lots this season than in the past — a sign that green goods must be growing in popularity.

In the independent segment, there are some great companies like Petitti Garden Centers in Northern Ohio with nine retail locations. They have spectacular garden centers staffed with friendly, knowledgeable people at each location. Petitti specializes in high-quality products with a lot of WOW at the point of purchase. They merchandise green goods with neat, clean displays, great end caps and easy-to-understand prices that are very visible.

Growers

Growers are more equal today in product quality. You seldom see poor quality on shelves. If you do, it is usually caused by the length of time at retail. There is no freshness dating in this industry, yet.

However, growers who supply the national retailers vary dramatically in levels of performance and this clearly affects the performance of the retailer.
There are three important areas that truly differentiates grower performance:

1. Merchandising: This includes plant care, store cleanliness, plant displays, end cap usage, pricing signs, communications and customer interaction — things that lead to a pleasant shopping experience and encourage return visits.

Some companies have made merchandising a real competitive advantage that has proven to be a very defendable position. The next step is going to be vendor-sponsored sellers in each store during peak selling periods. These people will proactively engage with the consumers to lead them to the right products and cross-sell into non-green goods categories.

2. Staffing: Who growers hire and how they train them to be highly effective in a retail environment is important. The merchandiser is the frontline contact with the retailer and consumer. They spend more time with the retailer in one week than your selling organization does in a year. Merchandisers can be trained to provide important feedback about the retailer and consumer. Those investing in a well-trained merchandising group are clearly separating themselves from the pack.

3. Replenishment: Growers who are maximizing their sales comps and controlling their discards have totally changed their methodology for replenishment. In the past, someone would be assigned to go into the greenhouse and note what looked the best. In some cases they forwarded digital images to the stores and/or the merchandising group. After a few years it was evident that what looked good in the greenhouse had little to do with on-hand individual store inventory.

The answer was to analyze sell-through reports every morning to determine what was needed at retail. Amazingly, comps went up and discards went down. That led to companies employing analysts who determine product mix for replenishment on a store-by-store basis. Some companies found software that has made replenishment more accurate and others have designed and built their own software.

Products

In the basic annual category the high-density 606 pack has been relegated to in most cases to a promotional item or “loss leader.” There is far more emphasis on 306 packs, 209, T-18, 6-inch, 1-gallon and 4-inch. The T-18 garnered a lot of shelf space over the past five years, retailing from $11.98 to $14.98. However, in the past two years this configuration has been downsized in some markets to an 8-inch by 20-inch tray retailing at less than $10, resulting, in some cases, in small and undersized plants. What was originally marketed as real consumer value has become another casualty of pricing pressures.

Basic seed-grown baskets have also been positioned in many markets as “loss leaders” with prices ranging from $4.98 to $9.98 with a popular promotional price, two for $10. In some markets this SKU is so small that unless you are looking down on it, there is nothing to see but the container.

In the premium seed category, Wave is the most dominant. It has obviously created a lot of brand loyalty that is recognized by the retailers and growers as evidenced by the amount of shelf space it commands. It would not be a stretch to say that Wave has has become the standard for high-value-seed marketing. In some markets you see a lot of seed geraniums, but they are mostly used as promotional items. Cora vinca is another premium seed product that is sometimes seen, but not consistently across the country. Occasionally we see Rudbeckia ‘TigerEye’ but it has not become a mainstream item, even though it has great potential.

There is clearly more emphasis on vegetative programs because of the enormous amount of breeding and the marketing spend versus seed items. The items that stand out in vegetative are Calliope (Big Red) geraniums and Sunpatiens, both heavily promoted in Home Depot across the country. Sunpatiens is usually sold in logo pots with large tags that clearly identify it at the point of purchase. Calliope is sold in Viva brand pots at some Depot stores, but there is not nearly as much name recognition at other retailers. I have not seen a Calliope container.

One new interesting program was Smart Planet, a line of really nice succulents. A 1-gallon (produced by Altman Nursery) retails for $4.98 in Home Depot. The program has good product benefits — from water and maintenance savings to habitats for native wildlife — clearly communicated on the large POS header board.

Recipes

There are hundreds of recipes for mixed containers and hanging baskets. But when you visit retailers, not many consistently stand out with all the components flowering at the same time and growth habits that present a compelling look.

Over the last two years, the recipes that fill this bill across a number of retailers and various regions are Kwik Kombos from Syngenta Flowers and Confetti from Dümmen USA. That is not to say others don’t, but these two companies have excelled from my observations.

One new interesting item was the Pop In, an 8-inch combo from Metrolina Greenhouses with recipes that were as colorful as anything on the market. The product is aimed at transplanting in a larger patio container.

Brands

The most recognizable brand at retail is Wave. With its distinct pink packaging and the amount of space it commands at retail, it’s clearly the No. 1 plant in the annual category. There was also a lot of Proven Winners, appearing in two of the three national retailers and many of the independents. One thing you have to like about Proven Winners is the fact the packaging is consistent across almost all retailers using the logo pot and large, information-packed label. We have noticed more Proven Winners baskets and mixed containers at Home Depot over the past two seasons.

The Viva brand at Home Depot seems to be the vehicle for new and exclusive products, whereas the Vigor brand is for tried-and-true premium items.

At Lowe’s, Garden Club Select continues to be the flagship for premium vegetative products, although most stores carry Proven Winners and Wave.
The new launch we saw this year was the Better Homes & Gardens brand at all Walmart stores, with what I would call varying degrees of success dictated by vendor performance and genetic selection. It seems to me the recipes could have been a little more compelling. The basic concept was well designed with good packaging and nice POS signage that made for a very recognizable display. There was a nice array of sizes and price points:

• Quart retail $3.68

• 8-inch pot retail $5.98

• 12-inch basket $15.98

• 12-inch patio $15.98

Hort Couture, the only exclusive plant brand for the independents, and HGTV’s soft launch were not visible in any store we visited this year.

Edibles

The lack of new programs with edibles was surprising with the category still on such an upward growth curve. At the national retailers, Bonnie Plant commands more space than ever, and at Home Depot, we saw no signs of any generic programs or attempts to develop other brands.

It seems as though the “Grow Your Own” brand at Lowe’s has been replaced mostly by Bonnie Plants. We saw only one cart of the Burpee Home Garden line in some of the Lowe’s, indicating it was probably a market test.

The only exciting new vegetable program was at Lowe’s, supplied by Metrolina Greenhouses. “The Color Of The Pot Tells How Hot” is a pepper
program in a 12-inch, caged pot. Four different colored pots indicate the degree of heat:

Green pot — Mild

Yellow pot — Medium hot

Orange pot — Hot

Red pot — Very hot

The program was supported by a descriptive header board on each merchandising cart.

Another cool program was a hanging tomato, Flip-It, in a flat-bottomed basket that looked like a bucket. When you hang the bucket by its handle, the top flips over, causing the tomato to face downwards. A 10-inch bucket retails for $13.98.

In the fruit sector we are seeing a tremendous increase of strawberries at retail, mostly due to the revolutionary seed products from ABZ Seeds in Holland. These high-performance strawberries have colorful flowers and loads of fruit.

Summary

Overall, spring 2012 was a rousing success compared to 2011. The season started, stopped and started more than usual, but overall there are a lot of positive results both for the growers who serve the national retailers and those who serve the independent sector.

The basic seed annual category is moving toward a larger cell with a proliferation of sizes. In some Southern markets the 4-inch to 4.5-inch is a huge SKU. Hanging baskets are moving to the premium types with basic seed types positioned as promotional items. Premium potted items are being sold more and more under the banners of various brands.

In perennials, growers are responding to the consumer’s desire for flowering plants at the point of purchase. This is especially true in stores served by Stacy’s Greenhouses, who leads the way in perennial packaging and now stocks a large number of high-quality flowering perennials. Finally, some WOW in the category!

It is surprising to see the lack of product development in the edibles category as it continues to grow. According to statistics released by Horticultural Advantage, 78 percent of independents experienced growth in the category and 48 percent reported increases in vegetable seed sales.

I find it interesting that with all the new products we see every year at the California Spring Trials, you can hardly find any of them at retail outside of a branded program. Except for Wave, Calliope, Sunpatiens and Cora Vinca, new genetics adopted by the retailers are mostly sold with generic labels unless they are inserted into a brand program.

Additionally, you never see any annuals, perennials or vegetables identified as “New.” It is well known that consumers go to garden centers to find out “What’s New” but rarely, if ever, is there any product identification indicating such.

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