LowesGreenhouse_2017_cropped LowesGreenhouse_2017

Reading The 2017 Tea Leaves

Feb 15, 2017 10 Comments

I took a few months off the blogging trail, so we didn’t distract our massive readership from the 2016 election! Then I waited a few more weeks to see what the election had done to the retail garden business and voilà, here we are now well into 2017.

Happy New Year

I do believe it will be a happy 2017 for the retail garden business and the supply chain that supports it. The business signs are quite positive, always allowing for the usual weather challenges and a (mild) cyclical recession predicted for 2018. The fourth quarter of 2016 ended very well once the consumer’s attention was re-focused after the election. Garden center teams or independent garden retailers I spoke to after Christmas said the last two months had been very strong in sales and the consumer’s attitude to spending. Average sale per customer was well up over the last few years and all operators I spoke to focused on the same observations (albeit anecdotal).

Simply put, the biggest, most expensive end of the range of almost everything, sold out first. It didn’t matter whether it was wreaths for the front door, “everlasting” Christmas trees or swag for the mantle, the most expensive selection sold out first. The $2000 everlasting tree sold before the $800 one, the new clever lighting set sold before the cheaper one designed five years ago and the biggest table-runners went first. Even the sadly “footballed” Poinsettias were elevated for a few weeks with the bigger pots and higher priced specimens selling out early.

It is at least 8 years since garden retailers told me that they sold out of cut trees by Dec 18th and no consumer seemed to want a plain, decorate-it-yourself wreath. They wanted them fully decorated and ready to shine. So the end of a dominant election, a record-high stock market and finally, rising household income, do seem to have combined to loosen the purse strings.

Spending Can Be Fun!

From the “Do It For Me” side of the aisle we saw a strong and increased ticket demand for “Christmas Porch Pots,” outdoor lighting, tree installation and interior decoration. All signs of a more relaxed consumer.

So, does this mean a fabulous year ahead as consumers spend like fools? I am not sure about that, remember that the media giveth and the media taketh away, but the signs are very good. Garden retailers can bet on a consumer who is much more open to persuasion than even two or three years ago.

“Your wage rise is my price rise”

Another factor in the mix is the national conversation about the increase in minimum wage either by legislation or just through simple market forces. What this means is that most customers know someone in their circle of family or friends who is getting a raise, so they should not be shocked to see prices increase as a consequence. As one garden center owner said, “For the first time in years, my customers are expecting me to raise my prices, so I am not going to disappoint them!”

What’s your price rise strategy?

So in the spirit of “Sharing is Caring”, who among you has added 4%, 8%, 10% or more to some lines (which lines?) you will be carrying? Most of our blog readers are not in competition with each other, so let’s hear what you are looking for in your price increases this year. Who’s going to start the bidding? Do I hear 5% to start please….?

Photo Credit: Ian Baldwin, taken inside the classy new expansion at Lowe’s Greenhouse and Florist (Chagrin Falls OH),

showing the owners’ confidence in the next few years!

  1. John Heaton
    Feb 15, 2017 at 6:53 pm

    Prices will continue to go up. We are high to start with. It could average around 5 % to cover the increased wages Ian mentioned. Yes we are paying employees a little more in both pay and year end bonus.
    In the North Land (Chicago suburb) it is way to early for real shoppers. Our very early seminar attendance is double what we had last year. A real good sign.
    We all need to be ready for the busy times. Peak the peaks. Lets be even busier on the busiest days. We will all be crazy then so take in a few more thousand dollars each day. Always sounds good when we are slow, but I do want to go that way.

    Reply
    1. Ian Baldwin
      Feb 15, 2017 at 7:58 pm

      John, always good to hear from you and thanks for starting this conversation! You are correct about the signs of a good year ahead, so let’s see what else people are saying about their pricing policies this year. Thanks again for taking the time.

      Reply
  2. Jeff Ramert
    Feb 17, 2017 at 8:24 am

    After spending the last few months researching our competition we raised our prices overall about 10%. Our annual/edibles department had the largest increase at 25%. Most customers have not even batted an eye at the increase.

    Not sure it is because of our growth or the current economy but from waterers to department heads everyone is asking for more money.

    Currently we are running about 5% ahead of our customer count and 15% over our projected budget. Looks like this weekend is the start to our spring season.

    Reply
    1. Ian Baldwin
      Feb 17, 2017 at 10:44 am

      Jeff, great to hear from a GCU grad down in sunny Texas.

      I am please to hear of your price rises, ’tis the year to do it, no question and I will talk about that in my next blog.

      Meanwhile, have a great spring sir and thanks for joining the conversation, let’s see what other numbers we get on readers’ price-rises. It’s a conversation we must have.

      Take care.

      Reply
  3. Ernest Wertheim
    Feb 17, 2017 at 10:39 am

    Ian:

    Thank you for your newsletter. It is always interesting to read your comments and those others such as John Heaton are writing.
    Are you also looking at the Internet purchases. Have those prices increased in the nursery business?

    I am sorry that I am unable to give a report since I am still on the recovery list. All I can say is that medical costs are constantly going up. If you go to the hospital to the emergency room it is a much higher cost then if you doctor enrolls you for treatment at he hospital. Before you get treated you have to sign all kind of papers that relate to payment and guarantees. If you go to an emergency room most likely you are sick and not clear in your mind and most likely you will not read what you sign.

    It is amazing what one learns as time goes on.

    For your information I did have some reversal as far as my health is concerned, but I am alive and still have my spirit .

    Keep up the good work.

    Yours,

    Ernest Wertheim

    Reply
    1. Ian Baldwin
      Feb 17, 2017 at 10:56 am

      Ernest,

      How nice to hear from you! Readers will be very glad to know that you are still working with and observing this great industry. I don’t think anyone doubts you still have your spirit!!

      I recall my Emergency Room visit, they gave me a tranquilizer before I signed a paper, so yes it could have been anything.

      FYI, many on-line plant prices are more than in-store for instance, the last time I checked, Bonnie Farms veggies were over a dollar more on-line than in my local Home Depot – not sure why.

      Thanks again for your note and your very welcome health update, take care!

      Reply
  4. Mary Lynn, Lowe's Greenhouse
    Feb 20, 2017 at 9:55 am

    First, thanks for the great photo!

    We have had more people than ever request/demand pay increases, and we are raising prices too. Our 3″ annuals/veggies/herbs have been $2.99 for years. This year they are $3.99 each. Our 4″ are going from $5.49 to $5.69. All annuals are buy 10 or more of same pot size and get 10% off (we stole that from Gardener’s Supply – Thanks Pat!).

    Reply
    1. Ian Baldwin
      Feb 21, 2017 at 7:14 pm

      Mary Lynn, Great photo of a great new addition, Upwards and Onwards!

      Glad to see you raising prices, the remodeling and new building ambiance has surely set expectations anyway. Glad you pushed through $3 price point on 3″ but I am a little surprised at the 3.6% increase in 4″ – probably less than your overheads are going up. Maybe that line has a Known Value in your market or there could be other reasons I don’t know about and you can making bigger gains in other categories or items I am sure.

      Thanks for sharing, see you two soon!

      Reply
  5. Harold Dambly
    Mar 7, 2017 at 10:22 am

    If the Scotts 4 Step Programs and Seed Pack sales are any indication of the future of spring it’s going to be great!!! We are up 175% in program sales over last year ( yes the weather has generally very good for this time of year) Seed packs sales are up 20% YTD.

    Reply
    1. Ian Baldwin
      Mar 10, 2017 at 12:34 pm

      Harold, excellent news, thanks for sharing. Do you mean to say that you will sell even more Scotts 4 Steps this year than the 900 programs you have been running at lately? That’s a WOW!

      Reply

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