Lawn and garden is fertile ground for big boxes

Home Channel News, July 17, 2000 by Don Longo

Home Depot leads in category sales, but Wal-Mart makes gains

NATIONAL REPORT -- Home Depot, Wal-Mart, Lowe's and Kmart are the leading purveyors of lawn, garden and outdoor living products in the United States, according to NHCN' s second annual survey of top lawn and garden retailers.

Home Depot, the world's largest home improvement retailer, generated more than $5 billion in sales from its garden departments last year, according to NHCN estimates. The chain's 28,000-square-foot garden centers are a magnet to consumers looking for quality plants and supplies at a low price. And the retailer's success with the lawn and garden category at its big-box warehouse stores is being duplicated at its smaller, convenience store concept, Villager's Hardware, and provides a hint of what kind of success the Atlanta-based giant might have if it spun off a lawn and garden-only specialty chain.

Although Home Depot has not given any indication that it is considering such a spinoff, the retailer's acquisition of a lighting specialty chain, Georgia Lighting, last year and its launch this month of a new specialty flooring store in Dallas, illustrate Home Depot's ability to create a category-killer concept out of one of its existing power departments.

With a little over $3 billion in lawn and garden department sales last year, Wal-Mart was second to Home Depot in the category. However, WalMart doubled its share of purchase incidence in 1999 to surpass Home Depot, according to the latest figures released by the Home Improvement Research Institute. HIRI's survey asks consumers where they shopped for 14 different lawn and garden products, but does not track dollars spent on any of those products.

Wal-Mart's improvement in purchase incidence likely came from its fast-growing supercenter division, which added sales at a much faster rate than its traditional discount stores. However, a new Wal-Mart discount store that opened in Tampa, Fla., earlier this year featured a lawn and garden department nearly identical to that found in its larger supercenter food/general merchandise combo stores. The department featured an 8,000-square-foot covered area for live plants. New signage identified areas where outdoor power equipment, chemicals and fertilizers could be found. The lawn mower display was upgraded with new cardboard signs, containing feature and benefit information, that attached to an off-the-floor fixture displaying various lawn mowers.

According to the HIRI survey, Home Depot increased its share of total purchases in the category, as did Lowe's, which surpassed both Sears and Kmart last year. In sales growth percentage, Lowe's lawn and garden business expanded faster than any other dealer's, probably because a larger percentage of its stores opened as big-box warehouse outlets with full-fledged garden centers.

Sears, Ace Hardware and Menard had noticeable increases in purchase incidence, according to the HIRI study. Sears, which saw its purchase incidence peak in 1995, plans to test a new prototype this summer in three markets: Cincinnati, Milwaukee and Indianapolis. According to one stock analyst, the format will attempt to leverage Sears' strongest categories: home decor, tools, and lawn and garden.

Less than 1 percent of consumers said they went to Target for lawn and garden products last year. Yet the upscale discounter ranked sixth in total category sales in 1999. With Target's emphasis on fashion, both in apparel and home furnishings, it should come as no surprise that the chain continues to pare down basic hardlines offerings. Target merchandises for home and apartment dwellers who are undertaking a simple DIY task, not the serious handyman embarking on a major project. In this category, the discounter fares much better on fashion-oriented products like patio goods.

Through its sheer size Kmart ranked third in total lawn and garden sales last year. However, as the HIRI study shows, the discount store chain's share of total lawn and garden purchase incidences has declined steadily since 1989, when it garnered 11.2 percent of all purchases. Last year, Kmart's share of lawn and garden purchases slipped to its all-time low of 4.5 percent.

Western United States-based home improvement chain HomeBase made the top 10 list in sales for the first time last year. The dealer could climb higher in 2000 if its new House2Home concept -- which in September will feature outdoor living as one of its core categories -- is successful.

NGA survey details lawn and garden category data

Long before Martha Stewart and Home & Garden Television arrived on the scene, the National Gardening Association has trained its spotlight on consumer tastes in lawn and garden products.

Now in its 27th year, the association's National Gardening Survey, conducted in conjunction with the Gallup Organization, offers specific data on industry trends, demographic profiles, and sales estimates for 18 different categories of lawn care, green goods, outdoor power equipment, hardlines and bagged goods. The 320-page report also tracks where households purchased these products by type of retail outlet.