Retail Nurseries, Lawn and Garden Supply Stores

SIC 5261

Industry report:

This category covers establishments primarily engaged in selling trees, shrubs, other plants, seeds, bulbs, mulches, soil conditioners, fertilizers, pesticides, garden tools, and other garden supplies to the general public. These establishments primarily sell products purchased from others, such as plant wholesalers, but may sell some plants that they grow themselves. Establishments primarily engaged in growing trees (except Christmas trees), shrubs, other plants, seeds, and bulbs are classified in the major group for agricultural production--crops. Establishments primarily engaged in growing Christmas trees are classified in SIC 0811: Timber Tracts.

Industry Snapshot

Retail nurseries and lawn and garden supply stores operate under a variety of names and offer a wide range of products to serve the need to cultivate, trim, embellish, and control a small plot of greenery. According to industry statistics, the number of nurseries, garden centers, and farm supply stores totaled 21,568 in 2009 with 114,277 employees. These firms generated over $10 billion in revenues in 2009.

Organization and Structure

Nursery and garden stores were either single-unit establishments or branches of multi-unit establishments. Single-unit establishments were primarily individual proprietorships or establishments with fewer than five employees, many of which concentrated on providing hard-to-find products to local or mail-order consumers, and often cultivated a variety of unique seeds and plants in-house. Roughly two-thirds of the inudstry's firms had fewer than five employees in 2009, and 96 percent had fewer than 25 employees. These larger multi-unit locations commonly situated themselves in conjunction with a larger outlet, such as Builder's Square stores alongside Kmart stores.

There are a number of professional or industry-related organizations for the nursery and garden supply business. The American Association of Nurserymen (AAN), now the American Nursery & Landscape Association (ANLA), dates back to 1875. In the late 1990s, most states had individual ANLAs with member rosters that included individual owner-operators of small nurseries, growers of trees and shrubs, and plant wholesalers. They provided a multitude of small-business services to their members. The ANLA's retail division is the 600-member Garden Centers of America, founded in 1972. Its stated aim is to meet the daily needs of garden center managers.

Background and Development

Retail nursery and garden supply stores have been in existence since the nineteenth century, but only in the decades following World War II did this segment of the retail economy flourish into a profitable business. To meet the postwar housing shortage, new communities filled with single-family homes grew exponentially as a result of expansion into suburban and rural areas. The availability of open acreage in the United States meant that every family could hope to own a modest plot of land surrounding their home--a front yard buffeting the home and occupants from the street, and a more private back yard for children's playtime, barbecues, and small vegetable gardens. In many of these newly created bedroom communities, a holdover from the area's more rural beginnings could be found under the awning of the local feed store. These family-owned businesses had served the needs of the area's farmers in previous decades, but with the influx of new homeowners into the community in the postwar years they soon adapted to changing demographics. They began stocking items less suitable for maintaining a large tract of cropland than for keeping a small lawn. More successful businesses purchased competitors, making major lawn and garden supply retail chains common, especially in midwestern states.

The retail nursery and lawn and garden supply industry added products and services to meet changing consumer demands over the years. It stocked chlorine and other swimming-pool maintenance items as family recreational facilities multiplied in suburban back yards in the 1960s and 1970s. Retail centers began carrying less seeds and more bedding plants in the 1990s as busy two-career households found less time to cultivate a garden plot from scratch.

Retail nurseries and lawn and garden supply businesses witnessed phenomenal growth during the 1980s and 1990s. Most of this gain was attributed to changing demographics in the United States that placed more consumers in the age and income category that has traditionally spent money on gardening. The overall industry was transformed by two important trends during this period of growth. The first was the dominance of larger, multi-unit retail chains that are usually regional in scope but often provide outlets from coast to coast. This shift brought a more corporate strategy to what had for many decades been a rather localized industry. Computers to track inventory and uniformed cashiers became common in even smaller establishments. The second major change in the industry was the increased segmentation of the nursery market.

Smaller companies, faced with the threat of competing against well-stocked chain stores whose products were bought in volume and sold to consumers at a discount, found that narrowing their focus kept them afloat in the industry. Many specialize in a certain variety of plants, which are cultivated on the premises, or aim to capture the more environmentally conscious gardener with specialized products. Another means of coping with profit losses has been the development of a segment to provide landscaping services. The industry has also been affected by the increase of large discount lawn and garden supply departments in warehouse-style home centers such as Builders' Square and Home Depot. Such stores offer an immense selection of standard lawn and garden products, and their entry into the market introduced greater competition.

Homeowners in the 1990s came to view sprucing up their lawns and shrubbery as a relatively low-cost way to boost property values as well as spirits. According to some leisure-time experts, gardening became one of the most rapidly developing hobbies among Americans in the 1990s. Not only did the larger, corporate-based retail nursery and garden-supply centers benefit from the boom of the 1980s, but small, individually owned firms also flourished. These latter establishments were able to provide specialty plants, rare seeds, and unusual implements and accessories for new legions of dedicated gardeners. Smaller enterprises often cultivated their own varieties of one certain plant, such as lilac or rose bushes, or geared themselves toward gardeners interested in producing their own fruits, vegetables, and herbs. Savvy consumers recognized the distinction in knowledge and expertise provided by these independents, who thrived by catering to the growing legion of buyers educated in the wares they were purchasing.

In 1991, the retail nursery and lawn and garden supply industry was hit by a disaster with costly repercussions. The problem stemmed from the use of a fungicide called Benlate, manufactured by the chemical giant DuPont. The pesticide had been on the market for two decades and was known by nursery growers to be a quick-acting cure for minor blighting diseases affecting fruits, vegetables, and ornamental plants. However, nurseries and growers in 40 states soon began reporting problems in the spring of 1991, complaining that their plant stock was rapidly dying or failing to reach maturity. The company began investigating the disaster and months later were still baffled. Scientists speculated that unknown interactions between the chemical compounds in Benlate may have created a undetectable toxic element. They believed the culprit may have been an inert ingredient that was suddenly aggravated by greenhouse conditions. Growers began treating the diseased plants with activated charcoal, which seemed to ameliorate some of Benlate's effects, but some experts believed that the wayward chemical compound lingered in the plants. DuPont began paying millions of dollars in settlements to growers faced with bankruptcy, particularly to nurseries and growers in Florida. The scandal also raised an ethical issue among nurseries--although some owners were fully aware of the Benlate-diseased plants, they sold them anyway in an attempt to reduce some of their losses. Naturally, the plants quickly died when removed from the greenhouse setting.

In 1996, approximately 12,000 establishments operated retail nurseries and garden stores in the United States. With the exception of the large home centers, the majority of these were small establishments, with the average employee count per establishment at about seven, compared to the average of 12 for all retail industries. The total number of employees reached an estimated 92,000 in 1996.

According to a survey conducted by the National Gardening Association (NGA), consumers spent an average of $466 per household, or $39.6 billion total, on their lawns and gardens in 2002. Survey results concluded that 23.8 million consumers used mail order to purchase their gardening supplies in 2002. The survey also concluded that 7 percent of total industry purchases were completed via mail order.

Further results concluded that 50 percent of consumers who purchased their nursery, lawn, and garden supplies by mail order or online was because of its convenience. Furthermore, mail order and online shopping offered items that were not found in retail nurseries or garden centers. The favorite items were seeds, live plants, bulbs, gardening books and magazines, gardening tools, fertilizers and insect controls, seed starters, watering products, and composting supplies, and gardening gifts or decorative items. The mail order and online method of alternative shopping generated additional sales for retail suppliers.

The NGA reported total sales of $38.4 billion in 2003. Lawn and garden retail sales decreased slightly for five consecutive years through the early to mid-2000s. According to the 2007 National Gardening Survey, 2007 broke that string with an increase of 3 percent over 2006 to a total of $35.1 billion. An estimated 82 million households, 71 percent of all U.S. households, participated in at least one type of lawn and garden activity in 2007. The average spent per household was $428.

As evidenced by the Environmental Lawn and Garden Survey, Americans have become increasingly concerned with maintaining eco-friendly lawns. Households using only all-natural fertilizers, insect controls, and weed controls increased to 12 million in 2008, roughly double the number doing so in 2004.

Current Conditions

As most industries in the United States, the nurseries and lawn and garden centers in the United States were negatively impacted by the economic recession that gripped country during the last years of the 2000s. Consumers, looking to spend less, cut back on nonessential items, which included lawn care and improvements. According to a survey by the NGA, the average consumer spent $363 on their lawn and garden supplies in 2009, down from $444 in 2008. Total retail sales dropped over 16 percent, from $36.1 billion in 2008 to $30.1 billion in 2009.

However, the industry was helped by an offsetting trend that was prompted by the recessionary conditions; namely, more and more Americans were creating their own backyard gardens to grow their own food. According to data from the NGA, the number of Americans who indicated that they planned to grow their own food--fruits, vegetables, herbs, or berries-- in 2009 increased by 7 million (19 percent) compared to 2008. According to the NGA, U.S. consumers spent $2.5 billion on supplies such as seeds, plants, fertilizer, and tools to grow their own food in 2008.

General retail nurseries and garden stores accounted for about 28 percent of the industry's firms with 5,945 establishments, 31,676 employees, and $2.2 billion in revenues. Businesses that provide lawn and garden equipment such as tractors, tillers, and lawnmowers accounted for 22 percent of the industry's firms, 22,136 employees, and $3.14 billion in revenues.

Lawn and garden supply centers, which provided such products as sod, top soil, lawn ornaments, fertilizer, and other garden supplies and tools, accounted for another 22 percent of firms with 4,964 establishments, 28,379 employees, and $2.46 billion. Retail nurseries had a 16.5 industry share of firms with 3,551 establishments, 15,227 employees, and $993.7 million in revenues. Firms that specialized in nursery stock, seeds, and bulbs numbered 2,161 (10 percent market share), had 15,397 employees and had $1.1 billion in revenues. Finally, firms that specifically sold natural Christmas trees totaled 413 (2 percent market share), had 1,462 employees, and generated $102 million in revenues.

Industry Leaders

The industry continued to be highly fractured in nature as many local companies provided for the individualized needs of their local patrons. Thousands of small providers continued to dot the industry's landscape. Only big box stores such as Walmart, Lowes, and Home Depot had made inroads. These home improvement giants maintained highly competitive lawn and garden departments from coast to coast in the early 2010s.

Workforce

The majority of employees in retail nurseries and lawn and garden centers tend to fit the profile of the average retail or service industry worker. They often have little more than a high-school education and hold jobs that pay poorly and lack benefits such as health care and pension. Since many of the firms are seasonal in nature, layoffs during the winter months present additional financial setbacks to workers in the field.

The nursery business is unusual in that it is extremely susceptible to negativity among employees. Low wages and a lack of benefits often correspond to a general malaise among workers in any industry, but in a retail nursery it is a relatively simple matter for one person to stealthily damage thousands of dollars worth of plants, with the undetected crime resulting in severe financial losses. Workers in the industry face additional problems from the daily exposure to pesticides. The U.S. Environmental Protection Agency (EPA) imposed stringent standards for acceptable pesticide levels for farm workers.

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News and information about Retail Nurseries, Lawn and Garden Supply Stores

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