COLLEGE STATION – The multi-billion-dollar U.S. floriculture industry is maturing, and suppliers will have to be creative to retain a youthful growth pattern, according to Dr. Charles Hall, University of Tennessee Extension agricultural economist.
“The crystal ball may be somewhat fuzzy in terms of the growth and nature of consumer demand, but there is little doubt that innovativeness will continue to be a requisite skill in ensuring the survivability of profitability of floriculture firms,” Hall said.
Hall presented “The U.S. Floriculture Industry: Structural Changes, Marketing Practices, and Economic Impacts” Tuesday for the inaugural International Floriculture Distinguished Lecture series at Texas A&M University.
Floriculture, often referred to as the “Green Industry,” includes production, distribution and services associated with plants, landscaping, supplies and equipment, according to Hall. In the United States, he said, the industry accounts for almost 2 million jobs and an economic impact of almost $148 billion a year, making it one of the fastest-growing sectors in agriculture.
“Environmental horticulture often experiences growth and expansion even during recessionary periods,” Hall said. “The nursery and greenhouse sector has experienced considerable growth in the last two decades. The outlook for the Green Industry is promising, yet there are several challenges that will increase competitive pressures.”
Hall noted that both growers and retailers have consolidated in recent years. That has created marketing opportunities for growers and new retail services for consumers, he said.
One mass marketing retailer, for example, provides a computerized gardening and landscaping course – written by a university horticulture department – to help their employees provide better information to customers, Hall said.
“These trained salespeople, in turn, offer workshops on such topics as weed control and garden planting much like the store’s clinics on laying tile or hanging wall paper,” he noted.
Another large retailer is working with selected breeders to devise exclusive plant varieties for its own premium plant brand, he said.
But many independent garden centers, nurseries and smaller landscape companies – supplied by small- to medium-sized growers – still thrive, he added.
“Proximity and premium product quality are more important to these smaller-sized buyers than low price because their targeted end consumer is more interested in quality and the breadth of retail selection,” Hall explained. “Keeping plants alive and healthy is a challenge for many consumers, and smaller retail operations typically have more knowledgeable staff than mass retailers to assist customers with expert plant care advice.”
He said new gardeners are attracted to the smaller retailers because of the specialized service available and unique selections of plants.
“Some garden centers are adding cafes, coffee bars, meeting spaces or other amenities. Others offer extensive how-to workshops or provide free landscaping advice,” he said. “And should a plant have problems, in-house ‘experts’ will assist in diagnosing what went wrong.”
Hall said the long-term outlook for the industry – whether the mass marketing or small retailers will continue to coexist – is uncertain.
“It’s imperative that we continue to recognize and closely monitor consumer expectations, tastes and preferences,” he said. “Keeping the consumer intrigued and sufficiently motivated is important.”
Still, a trend toward maturity – moving from rapid growth to significantly slower growth – is evident in the floriculture industry, Hall said, citing:
- Slowing growth in demand leading to stiff competition for market share.
- Buyers becoming more sophisticated, often driving a harder bargain or requiring additional services in order to repeat purchases.
- Competition producing a greater emphasis on cost and service.
- Growers experiencing a topping-out problem in adding new facilities.
- Product innovation and new end-user applications becoming harder to come by. – Increasing in international competition.
- Industry profitability being influenced by tighter margins.
- Stiffening competition leading to mergers and acquisitions among former competitors, driving out the weakest firms.
“Perhaps the biggest strategic mistake a company can make as the floricultural industry matures is steering a middle course,” Hall said. “Such strategic compromises typically result in … an average image with buyers and little chance of springing into the leading ranks of the industry.”