In recession-era nursery industry, changes take root

By Debbie Arrington
Sacramento, CA (September 8, 2010)- The sea change sweeping through California’s nursery business continues to make waves. Target is phasing out its garden centers while adding more space for groceries. Meanwhile, Home Depot, the nation’s No. 1 nursery retailer, is making more space for vegetable plants and fruit trees, plus succulents and colorful annuals.


On the other end of the scale, small mom-and-pop nurseries have seen business tick upward as they focus on personalized service and expert advice. “On the growers’ side, a lot of companies have gone out of business,” said Tim Obert, Home Depot’s lawn and garden buyer for the West Coast. “On the consumer side, with the lack of construction, sales of big-ticket landscaping (for new homes) have gone way down. People aren’t buying big trees and foundation plants.”
During the recession, nurseries have seen their business drop dramatically after 15 years of steady growth. California ranks as the nation’s leading nursery and floral crop producer. Most stock found in Sacramento area nurseries was grown in this state. A study by UC Davis agriculture expert Hoy Carman found that California floral and nursery sales plunged 17.7 percent in 2008, down from $4 billion to $3.29 billion. Most of California’s nursery crops are grown along the temperate central and south coasts in areas where land is expensive and population dense.
“With the economy being down, their land was worth more than the nursery product,” Obert said. “We’ve seen companies like (rose giant) Jackson & Perkins go bankrupt. That’s quite a big shock and a big name in the rose community. Instead of shrubs or ornamentals, customers are gravitating toward color (such as bedding plants),” he added. “It’s an easy way to spruce up your home – or make a foreclosure look good.”
At the Target store on Riverside Boulevard at Broadway, the garden center represented a microcosm of current trends: lots of vegetables, succulents, perennials and drought-tolerant plants. But that was not enough. “The garden centers were no longer profitable for us,” said national Target spokeswoman Jenna Reck from the company’s Minneapolis headquarters. “We have 262 garden centers (out of 1,743 stores nationwide), mostly in California and Florida. So it was really a small part of our overall operation. But (the garden centers) will all be closing in September.”
Customers are already mourning the loss. “I was not happy when I heard they were going to add food and take away plants,” said Amy Salmon, a mother of eight from South Land Park. “I rarely buy any food at Target. I have a large family, and I do my food shopping in bulk. But I really like their plant area.”
Recent trends have shown consumers are returning to independent garden centers while nursery sales at retail chain stores such as Kmart, Rite Aid or Target have sharply declined. Big box home centers account for 49 percent of total sales, with the independent sector getting 44 percent, according to a recent industry study by Nursery Retailer magazine. Chain stores – which had 40 percent of the market in the mid-1990s – have plunged to 7 percent.
“The pendulum is starting to swing back to independent nurseries,” said John Adams, owner of Sierra Nursery in Roseville. “It doesn’t really surprise me that big guys like Target are pulling out.” Adams and his wife, Lyn, bought Sierra Nursery almost four years ago, just before the real estate bubble burst. With the recession, they have seen business drop off significantly. No new homes has meant no all-new backyards and landscape projects.
“The good news for 2010: For the first time since we bought the business, sales are heading back in the right direction,” said John Adams, estimating sales are up about 6 percent this year. Independent nurseries often offer what big box stores can’t: Highly personalized service and expertise, Adams added.
“It’s definitely a fight every day, one customer at a time,” said Ashley Gill, marketing director for Green Acres, a family-owned nursery with locations in Sacramento and Roseville. Added Adams: “People are spending more time at home and in their gardens. They want to be successful. They’re going to folks they think will give them the right answers to their questions and sell quality plants.”
Increased interest in vegetable gardening has helped buoy nurseries during the recession. “Vegetable sales are huge for us,” Gill said. “If we can sell you vegetables, we’re hopeful you’ll come back for lawn fertilizer.” Edible plant sales continue to boom for the second consecutive summer, with sales up double digits for major retailers, as gardeners branch out from tomatoes and zucchini into blueberries and citrus.
Lower prices through volume buying are where large chains have held a big edge over small independents. A typical Home Depot may see its inventory of bedding and vegetable plants turn over almost daily during spring. The economy also has led to the consolidation of growers and liquidation of stock. “We’ve seen a lot of ‘wow’ buys; crazy, wild deals,” Obert said. “We’ve seen queen palms that were $200 two years ago sell for $20.”
But the little guys have started to band together in cooperatives. For example, the Concord-based Master Nursery Garden Centers represents more than 750 independently owned nurseries, including Sierra. “Another plus are private-label products (such as fertilizers and soil mixes) that you won’t find in the big box stores,” Adams said.
Meanwhile, the countdown at Target continues. “I was just there and I walked through the nursery, but nothing had changed – yet,” Salmon said. “I keep waiting for the big plant sale to begin.”
Related Resource:
The Sacramento Bee- In recession-era nursery industry, changes take root