Garden industry stays in the green despite economic turmoil

The U.S. economy continues to struggle, with financial and housing markets taking major hits that are directly impacting discretionary consumer spending. But according to some garden accessory manufacturers, there is still room for success in the growing garden category.

“With the current difficult economy, we feel more people are spending time at home with family and friends, and their disposable income is being channeled into comfort at home,” said Andrew Joyce, director of sales and business development for PTMD USA in Naperville, Ill.

As a new company in the U.S. marketplace (launched here in July 2007), PTMD is experiencing a strong growth period contrary to other market indicators. “We feel there is positive energy within the garden segment currently, and sales of our outdoor products support our observations,” Joyce said. PTMD saw strong sales from its outdoor product line nationwide during the last half of 2007 and is off to a strong start in 2008, he said.

Peter Cilio, creative director for Campania International of Pennsburg, Pa., said he thinks the garden segment is continually evolving due to baby boomers aging and new, younger customers with first homes and apartments becoming interested in the category.

“While many believe the category is tied to the housing market, our sales were up in 2007 over 2006,” Cilio said. “We find that home improvement sales continue to drive the category despite the slump in new home starts, as long as you provide product that attracts and excites the style conscious, more sophisticated buyer.”

Keith Turbett, vice president for Scheurich USA of Kleinheubach, Germany, said the biggest challenge facing the garden industry is getting younger people interested in the hobby. “Generation X does not have the same perspective on gardening as the baby boomers had,” he said. “This does not mean they are not interested; just approach it in another way.”

Other challenges facing the garden industry include unfavorable or unseasonable weather and the rising cost structure in Asia, some vendors said.

However, manufacturers also cited several key factors that contributed to sales growth, including affordable pricing, aggressive product introductions and outstanding customer service.

Garden vendors say they are working to break the chain of events that feed dwindling profits. When there is economic uneasiness, many vendors cut back on spending by limiting their introductions, but those who stay on top of trends and keep their lines fresh are still making the sales.

“We feel the majority of customers are looking for something new rather than dealing with the same tired lines,” Joyce said. “With the economic pinch being felt by many consumers, a value and quality proposition needs to be delivered, which we certainly do high quality items at an affordable price.”

By introducing 40% new SKUs in one year, Scheurich is able to keep looks that are refreshing and fashion forward for retailers, said Turbett. “This is the greatest advantage they enjoy when buying directly from the manufacturer.”

Garden centers have to continually refresh their merchandise and displays to keep their existing customers engaged and excited and to attract the newer, younger consumer to the category, said Joseph Cilio, president of Alfresco Home in King of Prussia, Pa. “It's only the garden centers that are being progressive and creative that are going to survive the next 10 years,” he said.

Retailers should not only target their ideal demographic, but also distinguish themselves from their competitors, said Campania's Peter Cilio. “Our job is to be the best partner we can be to our customers by providing them with an innovative, beautifully designed good quality product and provide effective sales support to allow them to achieve their sales goals and a competitive edge,” he said.

Campania introduces more than 200 designs each year, Peter Cilio said. “Gardening is a lifestyle, and it is important to keep your target consumer in mind when creating or buying products,” he said. “As demographics change, products must appeal to the next generation of gardeners both stylistically and conceptually.”

Part of Scheurich's strategy is to have a simple expressive product at a maximum retail price of $20, so that consumers can buy without feeling guilty, Turbett said. “We have kept our costs down to keep attractive retail prices,” he said. “We continue to assist our customers with ideas on merchandising to maximize the purchase a consumer makes in a store.”

PTMD is mindful of shipping costs and pricing in general, said Joyce. “We have maintained a very low price on both fronts, to ensure that not only can our customers recognize a high margin per item, but to be able to do this and have a retail price to the consumer, which is evident in the number of reorders we are seeing,” he said. “We also go the extra distance in ensuring we continually deliver only the best level of customer service to all of our customers.”

Campania has “made special efforts to be a better partner to customers by focusing our sales representatives on customer challenges in their territory and creatively addressing these challenges, including assistance with displays and marketing,” said Peter Cilio.

Martyn Fernambucq, director of merchandising and marketing for Napa Home & Garden in Duluth, Ga., said the company's sales continue to rise each year, due in part to the fact that the company stays away from trendy looks. “We do not follow trends or anything catchy,” he said. “We only design and sell what we really like, which are standout elements for home and garden.”