An Industry in Flux

As green industry professionals focus on the New Year, one profound notion is shadowing their every move: This isn't your grandfather's horticulture world.

Actually, "profound" is just a composite adjective to describe the winds of change blowing through the greenhouses, fields and retail centers of North America. Depending on whom you ask, you're also likely to hear these words bandied: "frightening," "challenging," "foreboding" or "potentially devastating."

The one positive i-n-g word, "promising" … it's not often found in the 2012 hort vernacular, not at the year's outset, anyway. And as the market's principals gear for spring, they enter a landscape marked and marred by a "perfect storm" of obstacles, the likes of which the industry has not experienced recently—or, maybe, ever.

Indeed, as the calendar turns to 2012, the green industry stands at a crossroad. Which direction it takes is anybody's guess—but few of the players we've talked with recently are guaranteeing victory for their businesses or for the industry in general. Retailers, in particular, seem to be cautious, at best, and quite fearful about the future in some cases.

"I am not a pessimist. I have great hopes for what we are doing," said Trey Pitsenberger, owner of Golden Gecko Garden Center in Garden Valley, Calif. "But let's be honest. We are going through something none of us have gone through before."
 

The book on pre-booking. One way to project success or lack thereof in this market is to examine how prolifically retailers stock their stores prior to a selling season. The pre-booking of plants provides a fairly accurate means of gauging where a year is headed. Some early returns are not promising.

Take Pitsenberger, for example. Like many retailers across the country, he is in a quandary over just which amount of pre-booking is the right amount—as in the right amount to ensure the store has enough stock to look attractive, but not too much that it might have to eat inventory.

It's a yellow light he's seeing, and Pitsenberger is choosing to slow down.

"I see no reason for bumping up orders for this year, especially here [in California]," he said. "There is no catalyst for growth, our state government is just now starting to make major cuts, and we have a 10-percent-plus unemployment rate. Cautious doesn't begin to describe the feeling here. Deer in the headlights might be better."

California isn't the only state in ebb tide mode. Sandi McDonald, owner of Hillermann Nursery & Florist in Washington, Mo., said her store's green goods pre-bookings for 2012 are, on average, 10 percent less than what was sold during March-May of 2011.

McDonald and her staff (and much of Missouri) got hammered by the weather last year, at least on the all-important weekends, when it seemed to rain on schedule.

A past recipient of Garden Centers of America's Garden Center of the Year award, Hillermann Nursery & Florist is a model retail operation. Even so, McDonald said, the severe body blow from Mother Nature took a toll—on her garden center and on many in the Midwest in the same (almost literal) boat.

"I see the independent garden center market as pretty weak right now," she said.
 

Too hot to handle. Rain wasn't Merrideth Jiles' primary foil in 2011—in fact, he could have used some of the wet stuff. The general manager of The Great Outdoors in Austin, Texas, said that in 2011 his state suffered one of its worst droughts in recent history, which is saying a lot for the Lone Star State.

"Plant bookings are down here strictly due to weather," Jiles said. "We just had the longest, driest, hottest summer ever on record. Some meteorologists say this could be the beginning of a 5-to 10-year drought. From April to October, sales were down for the first time in my 11 years here."

Consequently, Jiles and his staff are approaching the upcoming spring with caution and hoping they can get the plants they need without being bound to quantities.

"Weather and water restrictions are by far our No. 1 challenge, so we'll be looking for lots of native plant growers and lots of cacti/ succulent growers to fill the nursery this spring," he said. "As with any big 'change' in product offerings, educating staff and clientele will be a bit of a challenge."


Speaking of challenges … In addition to battling debilitating weather, various parts of the market find themselves stuck watching dominoes fall, as one dire situation begets another. Pitsenberger could be have been speaking for much of the country when he said the tough economy has led to a sharp decline in housing and commercial start-ups, while also cutting back on home improvement projects that were part of the norm just a few years ago.

"What has really changed for us is almost no one landscapes whole or part yards anymore," he said. "They might put a row of trees in to hide the neighbors junk, but the stuff we used to get from Oregon and Washington is just not selling. We used to sell lots of Iseli type stuff [specialty confiers]—couldn't keep it in stock. Not now. Interestingly enough, not all edibles have been hot. Fruit tree sales are not what you might think they would be. People will plant a vegetable garden that can be harvested this year. Fruit trees? They take a couple of years, and when you finally walk away from your mortgage, you can't take them with you. We have homes around here that are empty, and no 'For Sale' sign out front. It's weird—like they just got up one day and left."

As a result of a challenging past couple of years, some retailers have been forced to rethink the way they order. Tina Bemis, owner of Bemis Farms Nursery in Spencer, Mass., said her garden center's pre-bookings are about the same as last year.

"But last year we were very, very conservative," she said. "Especially with woody plant material, we opted for the just-in-time method of purchasing. Things are not the same as they were 10 years ago, and getting one big order in the spring is an outdated method of buying. We are now sharing the risk with the growers. If we are going to take a big risk that this season is going to be great, then we need a much bigger incentive (discounts or dating) to do that. So, mostly, we have decided that we are no longer gamblers, and prefer to buy only what we are certain we will sell, and leave the rest up for speculation."
 

A potential silver lining. Despite a growing trend toward smaller pre-bookings, none of the industry professional we interviewed is ready to throw in the towel on the coming year—or on the plant industry. For one thing, the weather might be great across the board this spring, and all the gloom will be supplanted by joy as customers old and new return to garden centers again and again to get their gardening "fixes."

And the economy might get better—or, at least, businesses should be better equipped to turn a profit, given lessons learned over the past half decade. Also, not everyone had a bad 2011 or expects a bad 2012.

"We don't grow anything, but will be ordering more than last year in many categories," said Regina Ackerman Morrow, garden center manager at Crest Hardware & Urban Garden Center in Brooklyn, N.Y. "We're optimistic, but we're a young business. We have less to re-invent and are growing responsibly to meet our customers' interests."

Creating new interests has proven to be a successful tack, too, for some garden centers. At Watters Garden Center in Prescott, Ariz., owner Ken Lain said his pre-bookings are up 8 to 10 percent for 2012.

"Watters is working closely with our suppliers to contract grow or pre-book new varieties and sizes the mass markets don't have," he said.

Lain believes this kind of specialization puts prudent garden retailers in a good position to thrive—especially those that know how to market what they do well.

"Garden content is everything right now," he said. "Companies with the best local advice, local employees, local product unique to their market area will see increases. If they do things the way they have always been done they will continue to struggle. We are planning 8-percent increases again for 2012. If we get all the pieces to work together, I believe this is very attainable."

Then there is Victor Flaherty, owner of Plants for All Seasons in Houston, Texas, who takes a philosophical approach to 2012.

"I am more afraid of what happens if I scale back and I miss a good spring," he said. "We will go full-bore and adjust rapidly for bad weather or a poor economy with our reorders. I can't time the stock market, predict the weather four months from now or the unemployment rate next year. What I can do is put my boxing gloves on, get into the ring and take on every challenge that comes my way ... as long as I have some good people in my corner and a sense of humor."