A sharper focus

The industry learned some tough lessons during the Great Recession. With an eye on progress in 2016, growers are using hindsight to make additional and necessary changes to protect against the next downturn.

During this year’s State of the Industry survey, reports of sales this year were encouraging – some 61 percent said sales increased in 2015 over 2014. And 65 percent anticipate an increase next year, while 29 percent expect sales to stay the same in 2016.

We asked participants to identify new crop categories they plan to grow in 2016. Ranked from highest to lowest, those crops are: drought-tolerant plants, natives, edibles, legal/medical marijuana and “other,” which included conifers and wetlands plants.

Let’s celebrate the 78 percent of respondents who raised prices in 2014. Well done! Find out more about raising prices on page 32. We found that respondents are a bit more confident in the market than last year, and those who aren’t confident dropped a few percentage points this year.

When asked to name the three greatest problems facing the industry, the top three responses were labor, economy and weather. Increased expenses and government regulations rounded out the top five. Learn more about economic indicators on page 24 and get updates on some of the legislation affecting the industry on page 36.

— Kelli Rodda, editor

If you own or manage a nursery and didn’t receive a link to this year’s State of the Industry survey, please send an email to krodda@gie.net to be added to the list.

Profits

The responses regarding profits were encouraging. Some 76 percent turned a profit, with 50 percent in the double digits. Five percent broke even. Only 6 percent reported a profit loss, but more discouraging was 10 percent who weren’t sure of their profit margins. Profits increased this year compared with last year for 51 percent of respondents, while 26 percent experienced no change. More than half (53 percent) said they anticipate an increase in profits in 2016, and 41 percent think profits will remain flat next year.

Silver Creek Nurseries is increasing profitability by selling smaller plants. “To turn a crop a year or two before planned, cuts our costs per plant, yet the prices may be the same or even more than the ones they’re substituted for,” says Jeff Edgar, co-owner.

One of the charts on this page asked what measures growers are taking to maintain or improve profitability. Some of the “other” measures include advertising, better sourcing (i.e. better partners with everything from banking to customers), expanded geographic coverage and simplifying product line such as offering fewer varieties.

Sales

Sales are up in 2015. Let’s take a moment to celebrate. That’s worth the reveling because 61 percent of respondents said sales were up this year. But 17 percent reported sales decreased and 22 percent said sales were flat. Despite the double-digit number of decreased sales, only 5 percent believe sales will decrease in 2016 and 65 percent think sales will increase next year.

“Spring 2016 orders are already ahead of where we were last year,” says Jeff Edgar of Silver Creek Nurseries.
Another bit of good news: 78 percent said they raised prices in 2015. As for those 19 percent that didn’t raise prices – what’s stopping you? See page 32 for some encouragement.

Confidence in the market remains in the middle of the road with 60 percent either “confident” or “somewhat confident” that demand will grow in 2016. See page 24 for the 2016 economic outlook and page 28 about consumer insights for a more successful marketing strategy.

Prices

Other Markets: Landscape

To get a better handle on the overall health of the green industry, let’s take a peek at the revelations of landscape contractors (this page) and independent garden centers (below).

The landscape industry has finally recovered from the hangover of the Great Recession. Contractors across the country are raising prices, and report that customers are spending again – especially on outdoor living and construction projects. Get more details on the state of the landscape industry in Lawn & Landscape’s October issue. In terms of the top business concerns for landscapers, 45 percent cited a lack of quality labor, 39 percent named difficulty raising prices, and 30 percent noted the regulation of or a ban on water/irrigation. Make sure your customers know the scope of plants available for low water-use landscapes.

IGCs experienced an average increase in spring sales of 6.5 percent in 2015, when compared with 2014. A majority use local growers – 65 percent have plant material that originates from growers within 250 miles of their garden center. Nearly half (45 percent) have an on-site greenhouse/nursery, and 30 percent use non-local growers.

Have you considered adding edibles to production? Because 21 percent of IGCs selected edibles/grow your own as the hottest trend in their garden center this year. To maintain/achieve profitability this year, 48 percent of IGCs surveyed raised retail prices. Have you reciprocated? Find out more about the state of the IGC in the November issue of Garden Center magazine.

 Other Markets: Garden Center

Production & Crops

Nearly three quarters of respondents (71 percent) did not change production acreage in 2015 compared with 2014. Only 6 percent decreased production acreage and 23 percent added some. With interest rates still at an all-time low and continued crop shortages, 30 percent plan to increase production acreage in 2016, while 65 percent are planning no change.

Container-grown shrubs provide the highest sales volume, while field-grown trees tied with container-grown shrubs for the most profitable crop. In last year’s survey, edibles were on the radar, but only 24 percent said they planned to grow more of the trendy crop. This year a whopping 60 percent plan to grow more edibles in 2016 compared with 2015. Just like last year, field-grown trees topped the list of crops that growers plan to reduce.

“Native plants have been really strong for us,” says George Radtke, W.E. Radtke Inc. For Bill Stroobants of Leaves Inspired Tree Nursery, Exclamation! London planetree and Kentucky coffeetree sold well. “Those are our biggest hitters.”

Our Method

The State of the Industry data was collected by Readex Research via an online survey from Sept. 14-28, 2015. The survey was closed for tabulation with 337 total responses.

To best represent the audience of interest, the results in the report were based on 175 respondents who indicated that they own/manage a nursery whose primary business is growing nursery crops for the wholesale trade.
The margin of error for percentages based on the 175 respondents who indicated they own/manage a nursery whose primary business is growing nursery crops for the wholesale trade is ±7.1 percentage points at the 95% confidence level.

Not all stats will add up to 100% because we did not include the “did not answer” percentages in the charts.