Signs of Life

In early fall we took the pulse of the industry to review this year’s sales and profits and to get a glimpse of growers’ plans in 2013. Some of the revelations in our 2012 State of the Industry research were encouraging. Sales are up, although it’s not by a huge margin, and the majority of respondents believe sales will continue to grow. This data point is a bit of a contradiction to the 49.5 percent of growers who said they’re “somewhat confident” that the market for nursery products will grow in 2013. But that’s a more positive outlook than the 35 percent who are “not confident at all.” Let’s take a closer look at some of the results of our research.

Sales and profits
It was reassuring to learn the majority of those surveyed realized an uptick in sales between 1-10 percent, followed closely behind by a reported 10-20 percent increase in sales. About 10 percent said sales were flat, while almost 5 percent dealt with sales decreases of 1-10 percent. In total, the gains were higher than the losses – 49.5 percent reported increased sales and 40 percent experienced a decrease.

A whopping 66.3 percent anticipate sales to increase in 2013, while 26.9 percent expects sales to remain the same and 6.7 percent believe sales will drop.

Hoffman Nursery in Rougemont, N.C., initiated a more aggressive marketing plan in 2012 to boost sales.

“We concentrated on our existing customers to make sure they had great product to start the season, growing information to finish what they received, and marketing material to help sell their product,” said John Hoffman, company president. “We believe customer service can make the difference in keeping our customers satisfied and loyal.”

About a quarter of respondents said they don’t pre-book orders, but 28.2 percent said pre-bookings stayed the same in 2012 compared to 2011, and 11.7 percent said pre-bookings were up this year.
 

While a quarter of those surveyed said profits have been flat the last three years, 17.5 percent said profits were up. More than half believe profits will increase in 2013. Growers identified “offering a better product mix” as the best way to retain or improve profits. As for profit margins, 29 percent identified their numbers between 6-10 percent. Unfortunately, 12.6 percent revealed they’re not profitable and even more troubling were the 8.7 percent who answered “I’m not sure.”

But there’s good news. Growers may boost profits by successfully articulating their value proposition. Find out how reading "Labor" below.

Crop choices
Container-grown shrubs were listed as the primary crop grown in 2012. The three crops with the highest sales volume and highest profit margins in 2012 were container-grown shrubs, container-grown perennials and field-grown trees.

At Sunny Border Nurseries in Kensington, Conn., the most profitable crop this year has been green-roof plants, according to Pierre Bennerup, CEO at the nursery.

“The greatest part of our business has become green-roof production,” he said. “It’s the fastest-growing area of our business. We’re producing a tremendous amount of sedums and similar plants.”

In the future, growers plan on adding more perennials to the mix, followed by flowering shrubs and natives – a result that mirrored last year’s data.

Perennial Favorites Nursery in Layton, Utah, added more in-house propagation, said owner Preston Cox.

“Now that there are sources of off-shore cuttings available, we don’t have to manage a mother stock program here. That would be difficult to do with the number of varieties we grow,” he said.
 

Labor
An overwhelming majority of respondents have not added or subtracted from employee counts the last two years, and 64 percent expect employee counts to stay the same in 2013.

But this year more growers said they have increased workers from 1-9 percent during the last 12 months. And with no immigration reform passed this year, labor issues were named the No. 1 greatest problem facing the green industry in 2013.

Ray Rueda, owner of Nature’s Dream Nursery in Miami, Fla., agreed with the labor assessment.

“The number one challenge is labor. We still have issues here of not being able to get regular workers,” he said. “Some of the available workers in this area are undocumented, so we need a solution for that.”

A glimpse across the supply chain
Wondering what some of your customers are saying about their sales and profits? Our sister publications also conducted State of the Industry research.

Landscape contractors said their average annual expenditures for trees/shrubs totals $32 million, followed by $10 million for annuals and $8 million for perennials. In 2012, independent garden centers reported a 1-9 percent sales increase. IGCs noted that edibles had the biggest increase in sales this spring, followed closely by annuals and perennials. Trees and shrubs dropped in sales this spring.