2021: The year of flexibility

PHOTO COURTESY OF VAN PINES NURSERY, INC.

In December, we asked liner growers to discuss market shortages, various trends and how the increased demand for plants in 2020 is likely to affect 2021 sales. Liner growers often have the pulse on the market before the rest of the industry since they’re the first stop in the supply chain.

The running themes from our conversations: order early, be flexible and expect plant demand to be high again in 2021.

2020 in review, and a look at what's ahead

The beginning of the 2020 quarantine created some anxiety among the green industry, but that was quickly swapped with action when most states deemed garden centers as essential, allowing them to stay open. And consumers clamored for plants. Being at home 24/7 encouraged both experienced and new gardeners to buy plants to beautify the inside of their homes, to beautify their outdoor spaces and to grow their own food. That resulted in double-digit sales increases among growers across the country.

“We are up 22% in gross revenues for 2020 and our bookings for 2021 are ahead of 2020 by a similar percentage,” says Brian Decker, president of Decker’s Nursery in Groveport, Ohio. “We do not know yet if this is earlier ordering or sales growth, but it is probably both.”

Mark Krautmann, co-owner of Heritage Seedlings in Salem, Oregon, also experienced a record-breaking year in 2020, with sales up about 25%. “Last spring, we didn’t know if we would have any sales at all. And it turned out to be the best ever,” he says.

Most growers expect continued higher demand in 2021.

“Right now, the bookings for ’21 are strong, and I think the demand we saw in ’20 will carry over into 2021,” says Alec Charais, marketing and communications manager at Bailey Nurseries in St. Paul, Minnesota. “There’s such an increased demand for plants right now across the board — whether they’re indoor plants or for the exterior, whether they’re shrubs and trees or perennials and annuals. Because people have stayed home, they’re focusing on beautification. The home environment has become the central hub.”

More growers were “buying on the fly” in 2020, something that’s not typical, says Rich Bailey, sales manager at J. Frank Schmidt & Son Co. in Boring, Oregon.

“People are having really good sell-through at their stores, so they're buying inventory more frequently than they would typically. Demand on their end has increased their trends and increased buying with us, which is all positive,” he says.

Vans Pines Nursery in West Olive, Michigan, received dramatic sales increases from online garden retailers. “A lot of them are telling us, ‘Turn on the faucet and keep it flowing to us’ because they can’t hang onto anything,” says Evan Van Slooten, Vans Pines president. “A lot of them are anticipating demand to continue into 2021.”

Managing through shortages

The 2020 sales gains caused growers to dip into their 2021 inventory, which is causing shortages in the market.

“Shrub liners are in high demand. A lot of growers were doing extra potting to make up for that demand,” says Ron Amos, president of Evergreen Nursery Co. in Sturgeon Bay, Wisconsin. “They potted more, and they went into their next year’s stock to sell. They’ll need to replenish with liners to build their numbers back up again. The strong demand really put a push on more liners, both in evergreens and deciduous crops. A lot of growers have had to push some things out the door and needed to replenish. It’s good for everybody.”

At J. Frank Schmidt & Son, their fastigiate oaks and specialty varieties are short, which is not necessarily uncommon. At Vans Pines, the exotic firs such as Nordmann, Trojan, Canaan, Turkish and Korean are limited or even sold out, Van Slooten says. He’s also already sold out of Canadian hemlock for 2022 orders.

“That has impacted our sowing schedule the most,” he says. “We continuously bump up our numbers for that crop, and every year we sell out very early. Combine that with the fact that we haven’t been able to find seed, so I think [Canadian hemlock] is going to be the No. 1 short item in the industry as a whole.”

Besides increased demand, Van Slooten says climate change has impacted the availability of seed and the way seed orchards function. He thinks seed availability is “going to be the biggest driver of what is actually available in the marketplace.”

Production flexibility will help some growers through the shortages, Charais says.

“We’re seeing all that sell-through happening at high levels, so growers may need to produce their products differently,” he says.

Using bareroot material or upshifting plants may be options that could help ensure growers have product going into spring, he adds.

“I think it's a huge learning opportunity and I think it could lead to some positive outcomes in terms of growers being successful from a production standpoint,” Charais says.

When shortages are looming, it’s critical to order early.

“I think by the time we get into mid-January the industry will be short on so many things to the point where we have to take people’s wish lists and confirm half of what’s on it,” Krautmann says. “If growers and retailers wait [too long to order], I think they’re going to be very disappointed. In August or so, we started encouraging our customers to simply go to what we call a standing order or a contract, because that helps them assure supply and helps us … so we’re not speculating beyond the comfort zone of sales.”

Vans Pines Nursery is already taking orders for 2022 sales.

“Next year, my gut tells me we’ll still have very high demand for our product,” Van Slooten says. “Then the following year it will taper off.

Don't get sticker shock

Bailey at J. Frank Schmidt warns to not cut back on liner orders and keep building up supply for your customers to make sure they’ll have trees to sell in the future.

With limited supply and high demand, expect to pay (and subsequently charge) some higher prices in 2021.

“Since costs are not stagnant and supply is limited, some price increases are likely,” Decker says.

Amos is expecting prices to increase.

“We’ve been fortunate that we’ve been able to see some price increases over the last few years, and I hope that continues,” he says. “There have been a lot of years where we’ve had to hold prices.”

Other consumer products are going up in price, and plants will likely be no different, Charais says.

“Pricing is going to be a bit higher for liners, but with that increased demand, I think we can command a higher price at the retail level,” he says.

In 2020, the entire supply chain reacted and adapted quickly.

“We started the spring ready to buy cots for managers to sleep at work as a step to survive,” Decker recalls. “We ended the year with record profitability and we’re spending money on American-made equipment and products for expansion.”

Buying behaviors shift

People’s buying habits changed in 2020 and the green industry, including J. Frank Schmidt & Son, were able to evolve.

“It’s been an extremely challenging year for our industry,” Bailey says. “I think all of us pivoted really well Businesses have learned to do thing differently, and I think many of those things will stick.”

Charais doesn’t expect the industry to revert to all of its pre-pandemic ways.

“How we serve the customer — whether it's on a B2B level or the consumers themselves — the ways that we serve the customer are going to completely evolve” because of tools that were put in place in 2020, including online sales, curbside service and increased education, he says.

Will the new customers of 2020 continue to make plants a priority in 2021? It’s the proverbial million-dollar question.

“We need to see if the new generation of stay-at-home gardeners embrace their new hobby as the pandemic wanes. This is the consumer spike we have been hoping for. Let’s see if it sticks,” Decker says.

Krautmann doesn’t anticipate the market slowing down.

“I don't see a slowdown. I just don't. I guess what we can all hope for is some rational policymaking at the federal and state levels. It can be a bit of a more calming hand in the scheme of things,” he says. “2021 is an opportunity, right? Opportunities are everywhere.”

Sierra Allen, Matt McClellan and Julianne Mobilian are editors at sister magazine Nursery Management.