Slight gains drive L&G dealers to innovate

Home Channel News, July 19, 1999

The industry's 50 leading specialty lawn and garden retailers realized modest sales gains in 1998, as a number of the larger players moved toward reinventing themselves in the face of mounting competitive pressure from warehouse home centers and discounters.

NHCN research found these 50 companies generated $1.48 billion in retail sales from 1,135 stores. That sales figure represents a 4 percent increase over the same period in 1997, but it needs to be placed within a broader context of the industry at large. Commerce Department data estimate that 11,156 lawn and garden outlets nationwide produced $9.79 billion in sales in 1998, a 21.7 percent gain over 1997. National Gardening Association data show consumers spent more than $30 billion on lawn and garden products at all retail outlets.

The liquidation of Sunbelt Nurseries last year, and the divvying up of its 59 stores among four different dealers, served as a wake-up call for specialty retailers as if they needed one - about the competitive damage being wrought as more home improvement dealers and suppliers encroach on their turf. Lowe's support of the gardening- and lifestyles-oriented cable network HGTV is only the most visible evidence of this trend. Another example found the buying, group Do it Best Corp. and its strategic partner Purina Mills planning to expand their America's Country Store format to 30 stores over the next three years. And Stanley Works is trying to break into the gardening tools field through a private-label deal with True Temper Hardware.

Nineteen ninety-eight became a transitional year for several leading specialty chains that repositioned their stores, product assortments and marketing campaigns to better compete in this new world order.

With a new owner and more aggressive management, Troy, Mich.-based Frank's Nursery & Crafts, the largest of the specialty chains, sought to reverse several years of declining sales. In 1998 the company launched a $22 million, multi-year store-refurbishing campaign. And the retailer announced in April 1999 that it will devote S30 million to capital expenditures in 1999 nearly double what it spent in 1998 one-third of which will go toward opening up to 10 new stores this year. The rest will be used to refurbish existing outlets.

In December 1998, Syracuse, N.Y.-based Agway opened a home and garden 'boutique" called Cultivations, in the Philadelphia suburb of North Wales, Pa. The prototype - which, if successful, could be expanded to 50 stores over the next five years -- is comprised of a 4,000-square-foot retail store that includes everything from garden tools to scented candles and gourmet coffee, a 4,000-square-foot nursery and an 8,000-square-foot outdoor garden area. The store which doesn't use Agway's name anywhere in its signage represents the company's attempt to angle its way into the gardening and home decor markets with suburbanites at a time when its conventional stores have struggled to make money. During the past two years, Agway has been upgrading or relocating existing store locations, building new, more attractive-looking units, and improving its merchandising and marketing. In that period it also stopped selling outdoor power equipment.

Through the nine-month period that ended March 31, 1999, Agway's Retail Services division, which includes its company-owned and franchised outlets, reported an operating loss of $18.6 million. On April 8,1999, the company combined its Agricultural and Retail Services divisions, which will eventually affect its contractual relationship with franchisees.

(At the end of its most recent fiscal year, June 30, 1998, the company had 178 company-owned and 313 franchised stores. Sixty-five of its company owned outlets have a heavier emphasis on farm supplies than lawn and garden.)

Smith & Hawken was stout enough to keep from crumbling under the weight of its failed parent company, CML. Under new ownership, the retailer is poised to continue its ambitious plans to open 15 to 20 stores per year over the next several years.

The growing popularity of Smith & Hawken's stylish, upscale stores and the emergence of Cultivations and Calloway's "Stonegate" format show the need for specialty lawn and garden dealers to go beyond their conventional product assortments to appeal to a wider range of customers with deeper merchandising, better services and more attractive in-store aesthetics. For example, Earl May Seed & Nursery last year debuted a prototype that was 50 percent larger than its typical stores, which it plans to either remodel or move to better locales.

                                                               SALES
                                                        ($ millions)
RANK COMPANY                                                    1998     1997
  1  Frank's Nursery & Crafts, Troy, Mich. [1]                $250.0   $257.4
  2  Agway Retail Services, Syracuse, N.Y.                     224.0    238.0
  3  Smith & Hawken, Mill Valley, Calif. [2]                   110.0     88.0
  4  Bachman's, Minneapolis                                     75.0     71.0
  5  Pike Family Nursery, Norcross, Ga.                         75.0     71.0
  6  Stein Garden & Gifts, Milwaukee                            56.0     56.0
  7  Armstrong Garden Centers, Glendora, Calif. [3]             48.0     45.0
  8  Earl May Seed & Nursery, Fort Worth, Texas                 47.0     56.0
  9  Calloway's Nursery, Fort Worth, Texas                      28.0     27.6
 10  S.K.H. Management, Lititz, Pa. [4]                         27.0     26.0
 11  Meadow's Farms, Chantilly, Va.                             26.0     24.0
 12  SummerWinds Garden Centers, Boise, Idaho [5]               25.1       NA
 13  Waterloo Gardens, Exton, Pa.                               25.0     24.0
 14  Green Thumb International, North Hills, Calif. [6]         22.8     22.8
 15  Mahoney's Rocky Ledge, Winchester, Mass.                   22.0     19.0
 16  English Gardens, Dearborn Heights, Mich.                   21.0     25.3
 17  Wolfe Nursery, San Antonio                                 20.0     20.0
 18  Molback's Woodinville, Wash.                               18.6     16.7
 19  Bordine Nursery, Rochester Hills, Mich.                    18.5     18.0
 20  Adams Fairacre Farms, Pouquerque, N.Y. [7]                 16.3     15.0
 21  Stovall & Co., Austell, Ga.                                15.6     15.6
 22  Rowland Nursery, Albuquerque, N.M.                         15.0     15.0
 23  Chalet Nursery & Garden Shop, Wilmette, Ill.               14.7     14.0
 24  Kasch's Garden Centers, Milwaukie, Ore.                    14.0     12.0
 25  Porter's Nursery & Crafts, Ocala, Fla.                     13.5     13.0
 26  Amling's Flowerland, Hinsdale, Ill.                        13.5     13.5
 27  Cornelius Nurseries, Houston                               13.0     10.3
 28  Homestead Gardens, Davidsonville, Md.                      13.0     11.7
 29  M. Goldfarb My Florist, West Babylon, N.Y. [8]             13.0     13.0
 30  Country Market Nursery, Mechanicsburg, Pa.                 12.4     11.0
 31  Sloat Garden Center, Sausalito, Calif.                     12.0      7.2
 32  Lyndale Garden Center, Richfield, Minn.                    12.0     11.2
 33  Roger's Gardens, Corona Del Mar, Calif.                    11.9      9.9
 34  Petitti Enterprises, Bedford, Ohio                         11.6     10.0
 35  Strader's Garden Centers, Columbus, Ohio                   11.5     11.5
 36  Behnke Nurseries, Beltsville, Md.                          11.3     11.0
 37  Valley View Farms, Coickeysville, Md.                       9.9      9.9
 38  Green Arrow Nursery, North Hills, Calif. [6]                9.5      9.5
 39  Hicks Nurseries, Westbury, N.Y.                             9.2      9.2
 40  Watson's Garden Center, Lutherville Timonium, Md.           9.0      9.0
 41  Houston Plants & Garden World, Houston                      8.7      7.2
 42  McDonald Nurseries, Hampton, Va.                            8.6      8.6
 43  Capital Nursery, Sacramento, Calif.                         8.6      9.0
 44  Vinny's Home and Garden, Wallingford, Conn.                 8.5      8.0
 45  Young's Nurseries, Wilton, Conn.                            7.7      6.3
 46  Paulino Gardens, Denver                                     7.5      7.5
 47  Dundee Nursery & Landscaping, Plymouth, Minn.               7.5      7.5
 48  Village Green Nurseries, Rockford, Ill.                     7.4      6.4
 49  Teas Nursery, Bellaire, Texas                               7.3      7.3
 50  Prairie Gardens, Champaign, Ill.                            7.2      7.2
     Totals and Averages                                    $1,479.7 $1,142.3


             STORE       SALES PER
     percent COUNT       STORE [*]
RANK  change  1998  1997      1998
  1     -29%   254   258     $0.98
  2     -5.9   481   505      0.47
  3     25.0    37    25      2.97
  4      5.6    24    25      3.13
  5     5.6.    27    26      2.78
  6      0.0    12    12      4.67
  7      6.7    36    26      1.33
  8    -16.1    53    56      0.89
  9      1.4    16    15      1.75
 10      3.8     3     3      9.00
 11      8.3    21    20      1.24
 12       NA    16    NA      1.57
 13      4.2     2     2     12.50
 14      0.0     6     6      3.79
 15     15.8     7     7      3.14
 16    -17.0     5     7      4.20
 17      0.0    11    11      1.82
 18     11.4     3     3      6.20
 19      2.8     4     4      4.63
 20      8.7     3     2      5.43
 21      0.0    12     8      1.30
 22      0.0     6     6      2.50
 23      5.0     1     1     14.70
 24     16.7     9     8      1.56
 25      3.8     5     4      2.70
 26      0.0    13    13      1.04
 27     26.2     4     3      3.25
 28     11.1     1     1     13.00
 29      0.0     4     4      3.25
 30     12.7     2     2      6.20
 31     66.7     9     8      1.33
 32      7.1     3     3      4.00
 33     20.0     1     1     11.88
 34     16.0     6     6      1.93
 35      0.0     4     4      2.88
 36      2.7     3     3      3.77
 37      0.0     1     1      9.90
 38      0.0     2     2      4.75
 39      0.0     1     1      9.20
 40      0.0     1     1      9.00
 41     20.8     3     3      2.90
 42      0.0     3     3      2.87
 43     -5.0     3     3      2.85
 44      6.3     2     2      4.25
 45     22.2     2     2      3.85
 46      0.0     1     1      7.50
 47      0.0     2     3      3.75
 48     15.0     3     3      2.45
 49      0.0     6     6      1.22
 50      0.0     1     1      7.20
        4.0% 1,135 1,120     $1.30