Retailers use green goods to spur add-on L&G sales

Discount Store News, August 4, 1997 by Richard Halverson

The market for green goods--essentially, anything with roots--is growing at the rate of at least 10% per year (perhaps as high as 12%), and no slowdown is in sight.

Jumping on the growth curve is Sears, which got into the live plant business last year by acquiring Orchard Supply Hardware. Today, green goods is one of the top three merchandise categories for the chain.

This year, Sears is opening several test units of Orchard Supply in Columbus, Ohio, and if that concept proves exportable, consumers can expect more Sears Hardware stores selling live plants.

Target also has seen the light after getting out of green goods some years back. Now it has added permanent, shaded garden centers to about 120 stores in sunbelt states such as California, Arizona and Florida and setting temporary parking-lot garden centers in many of its stores. The parking lot centers feature temporary, plastic-covered greenhouses, but so far Target isn't venturing into permanent greenhouses.

Wal-Mart, following the lead of home center chains such as Home Depot, Lowe's and Ernst-Malmo, is slowly adding permanent greenhouses at selected stores and now operates an estimated 100.

However, home centers are setting the pace in green good sales, and discounters are keeping on eye on them and following suit, said Bruce Butterfield, director of research for the National Gardening Association, Burlington, Vt.

Indicating the growth in big box retailing of green goods, home centers and discounters now control about two-thirds of the retail market, leaving a third for independent garden centers.

That proportion was the exact reverse 10 short years ago.

Green goods account for 25% of total lawn & garden sales, said Chuck Greenidge, an Evergreen, Colo., consultant to the gardening industry. His data bank shows green goods sales of $17.8 billion in '96 out of a total of $71.2 billion, including power equipment, fertilizer, chemicals, tools, watering equipment, accessories, lawn furniture, trim-a-tree and snow removal. For '97, Greenidge estimates green goods sales will increase 6.8% to $19.1 billion out of a total of $76.5 billion.

Another handle on the size of the market: The United States Department of Agriculture pegged the wholesale value of annuals at $3.42 billion in its annual survey of growers. The USDA doesn't track perennial sales, including trees and shrubs, nor does it track retail dollar volume. The '96 total for bedding plants, house plants, cut flowers and potted plants rose 3% over '95 survey results of $3.33 billion.

As a rule of thumb, every dollar in green goods sales prompts three dollars in other L&G products such as tools and fertilizers, Butterfield said.

The annual survey of the NGA doesn't track retail sales of green goods. But the '97 survey did find that 65% of U.S. households, or 42.5 million, bought live plants last year, a 10.9% increase from 39 million, or 54%, of U.S. households in '95.

The most important buyers of nursery products last year, the survey reported, included consumers with the following demographic profiles: 30 to 49 years old; college educated; professionals; households in the Midwest and West; married households; and city and small town households with incomes of $30,000 or more.

With their greenhouse investments, home centers have been putting a major emphasis on green goods for the past several years, Butterfield said.

As for trends, "American consumers are continuing their love affair with perennials," he said. Perennials command higher prices and are less of a commodity than annual bedding plants, Butterfield said.

New varieties such as the Flower Carpet Rose, which is more user-friendly since it is more disease resistant and blooms longer, also are popular, he said. In addition, the Flower Carpet Rose is marketed by growers in a pink pot, instead of the usual black or green. Kmart offered them last month at its West Long Branch, N.J., store for $14.95.

In its garden centers, based on the prototype introduced at the Encinitas, Calif. Greatland store, Target developed a soft, feminine look, compared to the traditional home center and discount store, said Ian Baldwin, a nursery business consultant in Elk Grove, Calif. Target created the look by merchandising a lot of colorful perennials, and by introducing the European look with arbors, English tools, watering cans and gloves, he said. The outdoor shopping areas are covered to shade both plants and patrons.

"The Target prototype has reached a new level in search of the boomer generation," Baldwin said, in reference to the new standard store size of 20,000 sq. ft. Target has added garden centers to stores that didn't have them and is going back to refurbish earlier ones, he said.

All Target stores feature a year-round in-store department of live house plants displayed on both sides of a 24-ft. gondola.

Wal-Mart still is evaluating the results of its permanent greenhouse experiment, Baldwin said.

At wholesale prices, the green goods market is about $8 billion, Baldwin estimated. Traffic flow at big box retailers is gaining 7.5% a year, he said, while garden centers are losing traffic by 4% to 5%.