Staycation trend bolsters outdoor living categories
Jesse Burkhart -- Home Accents Today, December 22, 2011
As consumers continue to operate with less discretionary income than they did three years ago, American families are trading in their vacations for "staycations." Now more than ever, consumers are investing in their outdoor spaces in an effort to create a vacation experience in their own backyards, simultaneously extending the living space of their homes to create a permanent, fully functional outdoor room to serve as an entertainment area and personal paradise.
And as several suppliers of outdoor accessories and garden products reported, the staycation concept has spelled stability - and the promise of future growth - for outdoor living categories.
"As a whole, we never really suffered as severely as other businesses," said Bianca Orlandi, director of sales and marketing for Orlandi Statuary. "Sales have fluctuated, however, people still seem to take care of and spend money on their backyards, especially when they can't afford that trip to Italy, new house or new car."
Proof of that growth potential shows in the greater survival rate of garden centers compared to home accent and furniture stores amidst the economic turmoil of the last three years.
"As a category, furniture chains and stores have had a tougher time since 2009 than have the garden centers," said Jerry Cunningham, CEO of Napa Home & Garden. "The garden centers have been impacted, too, but my impression is that they have been less impacted than have home accent stores or furniture stores."
Cunningham said he believes garden centers have been able to keep their doors open for business because garden products are less subject to the whims of the housing market than home décor products.
"For example, we used to do a lot of business with decorators, and they have vanished from the marketplace because decorators are not getting jobs anymore," he said. "I don't see our garden center customers going out of business. They seem to be hanging on - they haven't been disappearing the way that furniture stores have."
Brad Gullion, vice president of sales and marketing for Melrose International, observes outdoor accessories and garden products growing more popular with gift outlets that are searching for an additional revenue stream.
"(Garden and outdoor products) is the fastest-growing segment of our business," Gullion said. "Our forecast is very strong for the winter shows in our home and garden category. Our pre-booking for spring and summer was a record breaker. And we are starting to focus on that with our mailers and email campaigns. We have a news link on our website that I try to give even coverage to both our gift stores and our nursery and garden centers. The lines are starting to blur on who is selling what."
Napa, which was acquired by Teters Floral Products this past summer, plans to launch a new division on Jan. 1, that will specifically target gift retailers looking to delve further into outdoor living categories. According to Cunningham, the new division will be positioned at a lower price point and will sell a range of accessories and garden products in addition to incorporating floral and seasonal components.
"Our plan is to use that as a vehicle to reach a broader market base," Cunningham said. "There are something like 65,000 gift companies and they don't come into the Napa showroom very often, so we're going to have a broader array of products that will meet price points that will appeal to gift shops."
However, unavoidable economic realities such as the rising cost of raw materials continue to impact business for outdoor vendors.
"All the supplies are going up," Orlandi said. "Everything around the country is going up, and it's getting to the point where you can't retail (the product) for any more than you already are. We are putting more money into the product that we can't sell for a higher price.
"We're just making less money - there's no way around it," she continued. "You can only sell the piece for a certain price. If we up the price of a certain item based on size and volume and such, we won't sell it. So we're just making less margin with all the increases."
Still, vendors are transacting business, but not as much as they were since the country was beset by recession.
"People are still buying. It doesn't seem like the world is ending," Cunningham said. "I think everyone is holding steady and still doing business and still buying some things. It's not terrible the way it was in 2009, but it isn't great like it was in 2008."
Present economic conditions have forced manufacturers to cover all bases in improving their business operations in order to remain competitive. Palm Springs Rattan and Garden Classics has augmented its marketing strategy in order to maintain and increase market share.
"We shop our competition to make sure we understand competing product lines, benefits, features and price points," said Tami Newton, sales manager for Palm Springs Rattan. "We have the full spectrum of price points - a clear story and understanding of good, better, best with the comfort, value and selection consumers are looking for.
"We have focused in on our advertising to have a clear message and feature product that will attract attention and interest," Newton continued. "We have spent more time and attention within our organization on efficiencies and training as well."
Melrose International has prioritized the supplier-retailer relationship.
"We have focused all of our energies on our customer service, shipping and fill rates," Gullion said. "Our retailers have enough on their plate to deal with without having to worry about a vendor. I am loving all the stories coming from the road about how pleased our customers are with our customer service. We have a great office, shipping department and representatives who will go the extra mile for every customer."
Staying current with the latest product trends have helped Orlandi Statuary, which does about 80% of its business in outdoor accessories and garden products, remain competitive. Orlandi said she follows trends by reading trade publications to gauge what her customers are looking for and what their customers are looking for. She said the consumer is placing special emphasis on functionality and versatility of use right now.
"Anything that's functional seems to do better for us," Orlandi said. "It's almost like things that have multiple uses do better because (the consumer) will say, ‘Oh, I can use it here and I can use it there.'"
Napa has seen increased demand for composite pots - lightweight pots made of a combination of fiberglass and other materials - at the expense of traditional terra cotta and stone, according to Cunningham.
"We focus more than anyone in the market on composite pots," Cunningham said. "I believe that the market has moved in that direction because there has been a great deal of innovation in that category, and every year you see different materials and different finishes.
"We're seeing a growing array of fiberclay and fiber-stone products," he continued. "They look real, but you can put them under your arm and take them up to the elevator of your condominium. So we continue to focus on that and broaden our product offerings in that category because we have had success there. In fact, we've quit selling traditional stoneware products altogether. That product has been commoditized and you can get it at Home Depot or Wal-Mart."
Although the adjustments vendors have made to their business operations have helped them remain profitable, those adjustments may be more permanent than anticipated.
"What we are experiencing is the new way of business," Gullion said. "The secret is to adapt and find a way to work within the new business. I think more wholesalers and retailers are figuring this out. We are living in the ‘new normal.'"
Still, amidst changes and adaptations, optimism seems to be a common denominator in their survival.
"You never know for sure, but one thing we are seeing from reading the papers is that although the unemployment rate hasn't gone down, consumer debt has gone down and saving rates have gone up, and spending has actually begun to increase," Cunningham said. "It appears our consumers are in a better position to spend than they have been in the last two or three years, and that would be a reason for some cautious optimism."
"We are just not focusing on the negative," Newton said. "It's important to keep your mind focused on moving forward. Once the momentum is there, most would find it hard to slow down. Optimism is contagious. We have the enjoyment of working in an industry with fun people and quality products that will withstand the elements and give years of enjoyment in their home. I still believe if the look of the product is unique, the perceived value is there and the product knowledge is expressed - customers will happily buy."
Uttermost and Surya at the Dallas Market Center