Market / Industry Analysis

1. Market / Industry Analysis

2. Green Industry Market Structure Input Sector Households Landscape Services/ Contractors Nursery Products Bedding Plants Potted Plants Foliage Cut Flowers Greenhouse Nursery Products Wholesale Market/ Florists Mass Merchandisers Commercial/ Industrial Retail Nurseries Garden Centers Government Retail Florists The Changing structure of the U.S. Green Industry: Factors and Influencing Opportunities and Issues Surendra P. Singh. Journal of International Food and Agribusiness Management (Vol. 10 (12) 1999)

3. Size of Industry: Retail Garden Center/Green Goods Encyclopedia of American Industry – (NGS) Ø1995 - $25.9 Billion – over previous 5 years sales up about 10 percent annually ØIn 1996 approximately 12,000 establishments operated retail nurseries and garden stores – majority being small establishments.

4. Size of Industry: Retail Garden Center/Green Goods Ag Outlook 1999 - (USDAS/ERS) Ø1998 - $38 Billion ($141 per capita) for environmental horticulture (trees, shrubs, bedding plants, garden plants, turf); $16 Billion ($61 per capita) for floriculture (cut flowers and greens, potted flowering and foliage plants) for a total of $54 Billion ($202 per capita).

5. Size of Industry: Retail Garden Center/Green Goods National Gardening Survey 1998-99 Ø1998 - $30.19 Billion - double digit percentage increase in sales last two years. Ø65% of all households (67 million households) participate in some lawn or garden activity down 1% from 1997. ØHigh in participation was 1994 with 74% (72 million) low of 65 million in 1996.

6. Size of Industry: Retail Garden Center/Green Goods Nursery Retailer 2000: Ø1995 - $67.2 Billion Ø1998 -$79.1 Billion Ø1999 -$81.7 Billion – with Green goods sales at $21.7 Billion; Accessories sales of $5.8 Billion 2000 Projection - $85.8 Billion

7. Size of Industry: Retail Garden Center/Green Goods Nursery Retailer 1997 In 1996, reported 8,600 Lawn & Garden store establishments, total of 53,800 selling L&G product lines

8. Size of Industry: Retail Garden Center/Green Goods Census of Retail Trade 1997 US 1997 # of establishments = 10,908 1992 # of establishments = 10,857 Ohio 1997 # of establishments = 545 1992 # of establishments = 560

9. Consumers: Encyclopedia of American Business Ø1995 – 74% of households participated in garden activities of some kind = 72 million households ØOn average $342 per household spent on lawn and garden ØCustomer Profile: College educated, business/professionals or retirees, Household income $30,000+, Midwest or West, 50 years or older, Married no children at home.

10. Journal of International Food and Agribusiness Management Ø1986 - $39 per capita on cut flowers, greens, indoor plants Ø1995 - $54 (same) Ø1994 - $119 per capita spend on outdoor landscape flowers & plants ØThe “aging” of our population overtime brings larger populations to the 35-64 age range – perhaps more retirees will be targets. Healthier, with more disposable income, increased purchasing power. # of family and household units more important that straight population numbers

11. $17 Million in One Store “The profile of our customer is well known to us. That makes buying easier and more difficult …. Suffice it to say, if they aren’t high level goods, don’t bring it in the store.”

12. National Gardening Survey – 1998-99 Ø1998 – Average per participating household expenditure on lawn & garden activities was $452 - Up 17% from $385 in 1997.

13. National Gardening Survey – 1998-99 ØParticipation in lawn and garden activities was the highest for: Women, (however dollars spent Men were higher) Households 30 years and older, College educatedhouseholds (high school also high), people in manual labor, professional, retirees, and business (respectively), Married households, Households $40,000+ (big category – 30-39K substantial too), households in South, West and Midwest.

14. Competition: Encyclopedia of American Business Ø1996 – 12,000 establishment operated nursery & garden stores. ØMajority were small businesses with 7 employees. Larger businesses average 12 employees. ØAbout 16 % of the nursery garden stores are multi-unit businesses. Small companies have competed against well-stocked chain stores by narrowing their focus and meeting more specialized needs of the consumer.

15. Nursery Retailer 2000 • There is a continuing shift to the hardware sector • (Lowe’s and Home Depot) • Proj. 38.3% • Most at cost to the warehouse, club and general chain stores • Proj. 29.9% • Garden centers, nurseries and farm stores are holding steady • Proj. 31.8%

16. National Gardening Survey 1998-99 Consumers reported using at least 2 different types of retail outlets: Outlet Type1998 Household%change Garden Centers 2 million -3% Hardware Stores 16 million -20% Mass merchandiser 21 million 0% Feed/Seed supply 11 million -8.3% Supermarket/Drug 8 million -20% Home Centers 29 million 7.4% Mail Order 8 million 14.2%

17. Channel of distribution Ø1998green goods has 88% of goods one-step channel – {Supplier to Retailer}. Accessories often have two-step channel – {Supplier to Distributor to Retailer}.

18. Products: Nursery Retailer 2000 ØGreen goods DRIVE sales in other categories. ØAccessories sales increased at greater % in 1998 than other categories. Becoming a major profit center. ØWater features now its own sub-category – has grown to $638 million in sales Biotech and micropropogation – benefiting the small businesses to hit niche with new products.

19. Green Goods Product list according to sales: Product% of Sales Evergreens 37.2 Bedding/ground plants 18.8 Shrubs & flowering trees 17.2 Flowering plants 12.2 Fruit & nut trees 7.4 Foliage 4.4 Bulbs 2.6

20. National Gardening survey 1998-99 # of Participating % change in ProductHouseholdsHshld spending Lawn care 49 mil 30.1 Flower garden 40 mil 13.3 Indoor plants 30 mil 15.0 Shrub care 26 mil 34.0 Veg garden 25 mil 1.2 Insect control 23 mil 18.5 Landscaping 23 mil 15.4 Flower bulbs 22 mil 10.0

21. National Gardening survey 1998-99 # of Participating % change in ProductHouseholdsHshld spending Tree care 19 mil 13.3 Fruit trees 10 mil -2.0 Container garden 11 mil 54.9 Grow berries 5 mil 56.2 Ornamental garden 5 mil 73.9 Herb garden 7 mil 0 Water garden 4 mil 63.3

22. Encyclopedia of American Businesses • ØChanges to more bedding plants • ØConsumers doing Nature-like gardens • More environmentally conscious Wall Street Journal ØSome movement away from perennials and to annuals.

23. Trends: Encyclopedia of American Business ØPhenomenal growth in the industry in 1980’s and 1990’s – much of this is linked to change in demographics and increased population in the age and income group to purchase.

24. Ø2 major changes: 1)Increase in multi-unit chains with large selection and computerized inventories 2)Increased supply segmentation – specializing in a narrow focus and not competing head to head with multi-units

25. MSU Extension Pub Retailers have noted changes: 1.Increasing need for ease and convenience of shopping ·(parking, hours, layout, checkout, signage, variety) 2.Increasing competition and category killers 3.Increasing competition for good employees 4. Increasing desire to enhance shopping experience – entertain – fun atmosphere

26. National Gardening Survey 1998-99 ØProduct segments with largest sales increase were: lawn care (already the largest product category), flower gardening (third largest category), insect control, ornamental gardening, container gardening, and landscaping. ØAn increase in average spending per household was realized in each category EXCEPT: fruit trees, herb gardening and raising transplants.

27. Industry Seasonality 1987 HRI Operating Cost Study Month% of Sales January 0.7 February 0.7 March 4.1 April 14.7 May 29.1 June 12.8 July 6.3 August 5.1 September 6.7 October 6.3 November 4.9 December 7.7

28. Product Lines Product Lines% of Sales Green goods 57.4 Florist & Gift Dept 7.2 Christmas Items 7.1 Hard Goods 24.6 Landscape Maintenance 6.7 Other Retail 3.5