Lawn & garden departments bloom with competition

Discount Store News, August 4, 1997

Kmart has dropped national brands of power mowers and now exclusively carries just KGro mowers, both riders and walk behinds. All outdoor power equipment including string trimmers now carry the KGro brand, which has become a national brand in fertilizer. The big question is whether Kmart can extend the KGro brand franchise to power mowers. Kmart's model for the line extension is Sears, and Sears invested lots of time (years) and plenty of advertising dollars to build Craftsman and Kenmore into the national brands they are today.

Kmart also extended its KGro private label program into a line of four gas grills. Both moves are part of Kmart's decision to winnow down its more than 100 private labels and focus and develop just a small crop of labels that really mean something to consumers. According to the retailer, the initial results of the program in barbecue grills produced outstanding results.

Still lacking cash, Kmart has proceeded, albeit slowly, on expanding its Jackson prototype lawn and garden center in order to maintain its leading market position in lawn & garden. The layout features a computerized automatic watering system and a sunscreen over the live plant display area, as well as a heated and air-conditioned L&G display room that can be used for other seasonal programs, such as trim-a-tree. All new stores, including Super Ks, feature the Jackson center, but Kmart is opening only three discount stores and three Super Ks this year. The retailer was going to add such a center to its West Long Branch, N.J., store, for instance, when it was remodeled to the Big K concept. But since plants were burning up in the July sun, the L&G manager had to move all green goods from an outside display area to the front of the store, where they could find shade under the veranda.

Wal-Mart is moving slowly with its test of permanent greenhouses and now operates just 100 more than it did two years after it first introduced them. The heated greenhouses mean that Wal-Mart can offer live plants year-round, such as foliage house plants. But the watering system, as seen in the Quincy, Ill., store, consists of good, old-fashioned garden hoses, with convenient faucets throughout. Still, that is an improvement over the Tom's River, N.J., Wal-Mart, which added a sunscreen over its live plants in an effort to protect them from scorching in the sun. Even with the sunscreens, both Kmart and Wal-Mart, and certainly other chains with similar programs, find the program difficult to maintain in the blistering summer heat.

Home center chains such as Home Depot and Lowe's are forging ahead in L&G by adding permanent greenhouses to many of their stores. The greenhouses, of course, permit year-round sales of live plants, even in cold climates. By pumping major investment into L&G, Home Depot now has forged ahead of Kmart as the largest L&G purveyor in the country, with revenues of about $1.2 billion.

At about 120 western stores in California and Arizona, Target has added permanent, year-round garden centers. The prototype design is based on its Greatland store in Encinitas, Calif.

At a number of stores elsewhere, Target has joined Wal-Mart and Costco in putting up temporary parking lot garden centers that include a mobile, plastic-covered greenhouse. That was the case in May, at Target's Bloomington, Minn., store, the temporary center occupied an otherwise unused space alongside the store and a sidewalk.

In all stores, Target features an impressive year-round offering of live house plants, merchandised inside the store on both sides of a 24-ft. gondola. It deserves high marks for carrying high-quality, healthy plants and giving them excellent care and feeding.

While many discounters have opted out of lawn & garden, particularly in the live plant area due to the high labor costs required in managing and upkeep of the department and in product loss due to improper care, there is new competition in the sector from Sears. Sears got into the live plant business last year when it acquired the Orchard Supply Hardware chain, which derives about one-third of its sales from green plants and the tools, chemicals and fertilizers needed to make them thrive.

Lawn & Garden Productivity

Department size         2,289 sq. ft.
Sales per sq. ft.             $311.92
Turns                            3.50
Initial markup                 33.86%
Gross margin                   25.32%