Lawn and Garden - market data - Brief Article - Statistical Data Included

Home Channel News, May 21, 2001

Mother Nature was in a bad mood in several parts of the country last spring, an unanticipated wrinkle that hurt lawn and garden retailers and suppliers alike. Inclement weather in the South, Midwest and Northeast kept gardeners indoors and hurt profits at two of the largest garden-center chains. Calloway's Nursery, the 17-unit Texas-based dealer, reported a 14 percent sales drop in the last quarter of 2000. The retailer's wholesale and growing divisions also felt the effects of reduced consumer demand.

Frank's Nursery, the nation's largest lawn and garden chain, began the year with an ambitious remodeling schedule. But by December, the Troy, Mich.-based retailer put 44 of its 218 units up for sale. By February 2001, Frank's had filed for bankruptcy protection, announced it would close another 24 stores, and put its plans to remodel its others stores and then eventually go public on permanent hold.

As a whole, independent retailers continued to lose market share to home centers and other retail channels. A National Gardening Association/Gallup Organization survey released last year showed that of the 64 million households that bought a lawn and garden product, 41 million had shopped in a big-box store, compared to 29 million of 63 million in the previous year's survey.

Smaller independent nurseries -- particularly those in upscale neighborhoods -- found other sources of revenues in landscape design and construction. The growing popularity of water gardens, patios (instead of decks), accent lighting and walkways also presented opportunities to specialty retailers like English Gardens in West Bloomfield, Mich., and Waterloo Gardens on Philadelphia's Main Line. Landscape maintenance, which has moved beyond mowing the lawn, is another value-added service: garden centers are offering seasonal "tune-ups" to time-starved homeowners.

While customers may prefer shopping for garden products in larger stores, hardware stores continue to prosper in this category, which outperforms any of their other departments, based on average tickets, according to a recent survey conducted by the National Retail Hardware Association.

Love of the outdoors

Outdoor power equipment manufacturers focused on research and development activities last year, as state and local municipalities attempted to muzzle noisy blowers and choke off emissions from gas-powered devices. Ryobi got out

of the business altogether when it sold its North American outdoor products division to Cleveland-based MTD Products in June.

Despite bad seasonal sales, the lawn and garden category continued to attract retailers and manufacturers hoping to capitalize on the outdoor living craze. HomeBase launched a new retail format last September that's devoting a considerable amount of real estate to patio, nursery and garden related items. The Irvine, Calif.-based retailer is now in the process of converting 42 of its retail locations into House2Home units, where outdoor living represents the single largest percentage of the stores' selling space.

Market research conducted by Coleman, the camping equipment and barbecue manufacturer, divided consumers of outdoor living products into seven "clusters" that include Upscale Outsiders (their backyards are showcases for entertaining friends) and Upscale Non-Social Grillers (they cook outside but eat inside). According to Coleman's estimates, consumers in 35 million households spend over 22 hours per week in their backyards and, not surprisingly, are the key purchasers of outdoor products. Hoping to cash in on these golden calves, Coleman released a line of backyard products last year that includes fumiture, furniture accessories, lights, heaters and sun shelters.

Lifestyle overachiever Martha Stewart had her brand placed on 1,000 lawn and garden products sold at Kmart, which is expanding the selling space of garden centers in 200 stores by 40 percent.

Supermarkets and other out-of-channel retailers made more room on their shelves for gardening products, especially live plants and growing medium. Potting soils took on new convenience and versatility as manufacturers devised new formulas last year. Miracle-Gro, a division of the Scotts Company, expanded into garden soils with several products, including Miracle-Gro Moisture Advantage, a growing medium that retains water. Bayer-Pursell also moved into soils with a potting mix that protects against insects.

Bayer-Pursell, a new player in the pesticides category, was one of the few manufacturers not affected by last year's government crackdown on insecticides. Under pressure from the Environmental Protection Agency, chemical suppliers withdrew Dursban, a widely used bug and grub killer, from the market in December. That same month, the EPA announced a similar agreement with the makers of Diazinon, which will be phased out from consumer use over the next three years. Dursban and Diazinon were both considered highly effective -- and also highly toxic -- pest control products.

Garden.com, the dot-com darling that was going to revolutionize the way gardeners shop, ceased operations in November 2000. The Austin, Texas-based e-tailer spent nearly $100 million over a five-year period but never reached profitability.