When I began as a consultant in the garden centre industry in 1980, Hurrans Roseacre near Kidderminster in Worcestershire was a typical good medium-to-large garden centre, turning over perhaps £300,000. Ten or so miles away was a competitor, Webbs Garden Centre, between Bromsgrove and Droitwich. It too was turning over a similar figure. Fast forward 35 years and Roseacre, as part of the Hurrans group of six centres, went under while Webbs is now estimated to have reached £12m in sales and now owns and runs Roseacre.
In the 35 years I have been in the industry we have seen the rise of the "destination" garden centre. This has largely been due to such centres being able to dilute their fixed costs as sales have risen and, from the larger profit created, re-invest in ever larger, all-weather covered areas, which in turn has led to increased retail spend and bigger profits funding innovative marketing campaigns, bringing bigger sales and yet more profit. Smaller centres, particularly chains such as Hurrans, became in effect cost centres, never producing enough profit to fund improvements, and languished as a result.
The traditional gardening market is worth some £5bn by value and consists of garden furniture and barbecues, bedding plants, hardy stock, seeds and bulbs, lawnmowers, garden equipment and fertilisers/weedkillers. This is the market, albeit smaller in value, that I analysed on my first garden centre consultancy at Hurrans Roseacre back in 1980. But today garden centres can make their money from a wider home/leisure lifestyle market including catering, Christmas decorations, giftware, home interiors, clothing, books and concessions.
If, as some industry experts believe, the traditional gardening market is now static, and the growth of alternative garden retail outlets is taking sales away from garden centres, then future garden centre growth must increasingly come from the home/leisure lifestyle market.
Garden centres are still the leading retail outlet for the traditional gardening market, at 35 per cent, but they face increased competition from DIY stores (23 per cent), supermarkets, and retail stores (15 per cent). Internet and mail order accounts for some 10 per cent of the market and will also be a growing threat. The major DIY operators - B&Q (£3.7bn turnover) and Homebase (£1.5bn turnover) - have significant gardening offers that are heavily promoted in the national media.
The new competitors are the supermarkets. Waitrose expanded its offer in 2014 with plans for 50 pods selling gardening goods, while Morrisons and Asda have begun to sell bedding plants in their car parks. Tesco, with its ownership of Dobbies, is trialling joint stores (Kings Lynn) and as its requirement for large-format supermarkets (Tesco Extras) reduces, it may have surplus space in existing large supermarkets for Dobbies gardening pods.
Many garden centre operators view the supermarkets as their biggest threat. The DIY stores are to some extent established and their gardening offer, though substantial, is well-known. But supermarkets have enormous potential to add gardening to their customers' grocery shop on a weekly basis. They are also well practised in dealing with fresh food and understand product care in a way that DIY stores without dedicated garden staff do not.
Next and IKEA have both begun seriously selling gardening and promoting their offers in the national media. Others such as Wilko sell bedding plants and Christmas trees off Danish trolleys on the pavement. The jury is still out on how big an impact internet sales will have on gardening. While there is no doubt that the internet is successful in selling known, branded products that are price-sensitive and deliverable, I believe that there will be limits to its growth as an alternative to shopping as an "experience" and where products need to be compared and handled.
The garden centre market is still fragmented. Wyevale, the largest operator, controls about 14 per cent by numbers. However, while Wyevale is by far the largest garden retail group by sales (£276m), it includes some individual garden centre outlets that are relatively small.
The largest individual garden centres by sales are still the independents and include the likes of Longacres, Scotsdales, Bents Garden & Home, Woodcote Green, Barton Grange, Van Hage, Webbs, Burford Garden Company, Chessington Garden Centre and Polhill Garden Centre.
Many of the leading independents are destination garden centres - the ones that have travelled furthest away from the traditional core gardening market and from what Hurrans Roseacre used to be. This is not to say that the large diversified garden/home/leisure outlet is the only successful model. There are still plant-oriented garden centres and many smaller niche centres that successfully sell a traditional garden centre offer, but they need to operate with tight cost control and an individual and personal offer to be successful.
Significant market factors
The biggest influences on the garden centre market are undoubtedly:
- The weather Wet weekends hit sales, but plant sales can be buffered by displays under extensive canopies. The 2012 wet season was so bad that most garden centres, particularly those with shareholders to please, began the quest to weatherproof their future business and move further away from plantand garden-related sales. This trend will continue to impact on garden centres and shape future ones.
- The economy The past few years following the 2009 recession have seen an unprecedented reduction in employed households' disposable income, which is only now recovering. But this reduction is also due to low interest rates in the paid-up mortgage/pensioner household income. The latter group is particularly important for garden centres.
- Media exposure There has been a significant reduction since the loss of high-rating garden makeover television programmes, such as those that featured Alan Titchmarsh.
- Changing perception of leisure time Do people with disposable incomes now want to actively garden or simply use the space for entertainment? Do people want their gardens designed and maintained by landscape gardeners - witness the enormous increase in landscape gardening companies over the past 10 years - rather than garden themselves?
- Housing starts and formation In the longer term, the falling level of homeownership among the under-35 age group will have an impact on garden centre sales. In 1987, 10 million under-35s owned their own home. Now it is nearer to six million. This poses a potential future decline in gardening sales unless garden centres make their retail offer relevant to this younger market. Allied with this is the fact that houses and gardens are getting smaller.
Products and services
There have been big changes in the range of products and services retailed in garden centres over the past 30 years:
- Huge growth in catering Van Hage managing director Chris Roberts told the 2013 HTA Garden Futures conference that outdoor plant sales at his £20m turnover centres are now just 15 per cent of overall sales. Plant sales have fallen from one-third of turnover 10 years ago to 18 per cent including houseplants. He said a zoo brings in 500,000 visitors, a railway 72,000, a circus 20,000, a Christmas Santa event 35,000 and an ice rink 43,000 along with £500,000 turnover including 17,000 hot chocolate sales. The plant market is static and "will never" get back to one-third of sales, said Roberts, but he added that catering has the potential to make up a quarter of turnover. Van Hage in Ware, Hertfordshire, is an upmarket large "destination" garden centre. Those that are smaller in both size and sales - say £1m per annum or less - are still likely to major on plant sales, which may account for 30-40 per cent of their turnover.
- Relative decline of plants In May 2014 The Garden reported that the value of plant sales through garden centres had fallen from £1.73bn in 2007 to £1.44bn in 2012. This drop in sales has been said to be a result of the economic conditions, a run of bad springs weather-wise and the trend for new homes to be built with smaller gardens - and fewer of them.
- Giftware and interior decor Garden centres are popular with women. They are perceived as safe retail environments and many have built on this attractiveness by upgrading toilets and baby change facilities as well as introducing large gift ranges to appeal to the feminine shopper.
- Furniture Many garden centres now blur the distinction between garden decor and home decor, so it was a natural step when centres began not only to import their outdoor wooden furniture from the Far East but indoor furniture too.
- Experiences These can include ice rinks and Christmas grottos during the holidays, vintage car rallies and coach trips for garden club members to gardens. In the largest garden centres such events are meticulously planned and marketed by a full-time marketing employee.
- Growth in concessions WHSmith, Costa Coffee, The Works and Edinburgh Woollen Mill alongside the more traditional aquatics, garden buildings and garden design etc can now be found on many large garden centres, subject to available space and planning approval. The attraction to garden centre owners is that where concessions are well run they provide a constant stream of income without the management costs and worry of employing more staff. The downside is the perceived lack of uniqueness by the customer in the retail offer. Too many concessions, particularly as most now demand to be located in prime front-of-house positions, mean an "anywhere" experience for customers.
Forecasting target areas
Looking to the future, we can make some predictions about the areas in which garden centres may look to increase their sales and where they will invest their resources:
- The experience More things that you cannot buy over the internet. The smell of real coffee, fresh baking and plants, the colours and atmosphere of seasonal displays, particularly at Christmas, and the education of seeing display gardens and features equals experiential consumption.
- The human response Outstanding service and staff product knowledge/information will always be more attractive to customers than a digital message. This surely will become a defining characteristic of the successful garden centre.
- Restaurants Bigger, better and more interesting - selling a wider range of home-cooked food.
- Coffee bars Express pods selling coffee, teas and tasty snacks will become common alongside the full restaurant offer.
- Farm shops and delicatessens These will be successful but only where they can sell genuine unique locally produced food that is different to the supermarket offer.
- Kitchenware Kitchen accessories sold alongside cookery demonstrations where garden centres can invest in a range and presentation to match the best of the specialists, such as Lakeland.
- Giftware, art and living accessories Where these have genuine unique appeal and are retailed with flair and commitment, such as at Burford Garden Company.
- More concessions Wyevale Garden Centres is committed to introducing more concessions to widen its appeal to a broader customer range, weatherproof centres to reduce the impact of wet springs on traditional gardening sales and create a strong income stream from high- covenant lessors. These now include such high-profile retailers as WHSmith, Laithwaite's Wine, Bonmarche and Lakeland.
What will garden centres look like in the future?
Increasingly I see that for garden centre customers in future it will not be so much the range of goods on offer that will be critical but the added fun and customer interaction. Future customers will want to share in a special, almost magical shopping experience. They will be the "experience" generation. They want attractive lifestyle features and brands. People increasingly want to treat themselves to things that make life more enjoyable as a counter to more demanding work and living pressure.
Over the past 30-40 years, garden centres have enjoyed retail success as a result of the exploitation of their unique retail characteristics:
- Plants and gardening These have become major hobbies for some homeowners and an expression of their lifestyle for others.
- Environmental awareness The increasing rise of the "green movement".
- Feminine and family friendly An increasingly recognised characteristic of garden centres.
- Car parking Easy, free and safe compared with the traditional high street.
- Eating out An activity that has seen an increase in public spending.
Customers divorced from plants
In many garden centres the covered heated sales areas have got bigger and the retail environment has greatly improved. But the customers have often been divorced from the plants, with the loss of their colour, smells and beauty. Too many garden centres have walled off nature and created an "anywhere" retail environment, selling services and products that do not fit in with the garden centre culture and could just as easily be bought from the high street or chain stores.
At Christmas time, many garden centres use the gift and goodwill theme through product displays, entertainment, music and staff response to create a genuine special shopping experience. But this does not last beyond the holiday period and the experiential customer experience breaks down.
Garden centres will always need a core part of the sales area for their traditional garden and lifestyle offer. But the opportunity should be taken to offer a new "shop in the garden" experience. Plants should not be located in walled-off glasshouses, separate during much of the year from the main customer route, but be integrated into the overall retail offer.
By being innovative with the construction and roof specification, houseplants, conservatory and tropical plants and bedding plants can be linked more directly with non-plant products. Would not soaps, candles and fragrances, for example, sell better if they were associated with aromatic plants? We created a new garden centre concept called "Live Plants Live Nature" that increases light levels and gives an integrated plant, garden, eating and lifestyle shopping experience (see box above).
The garden centre industry is maturing and as it does so it is segmenting between the big destination centres selling gardening/home/leisure and the small to medium-sized centres largely oriented to the traditional gardening market. A second split opening up is between the independents and the fast-growing corporate chains (Wyevale, Dobbies, Blue Diamond). This offers opportunities for new garden centre formats to emerge. No centre, whether an independent or chain, will want to lose the "magic" of plants and their universal appeal. But some centres may, in their race for profit, marginalise plants and gardening to an extent that ultimately loses their customer appeal.
This differentiation in garden centre retailing also has implications for trade organisations - the HTA and Garden Centre Association. How can they remain meaningful to their members and organise conferences that can appeal to a diverging membership? Will owners share ideas when the competition between garden centres inevitably becomes more intense?
From the customers' point of view there is now more choice of better places to buy plants and gardening, and enjoy real coffee and fresh food at a standard that would have been unbelievable in the 1980s. As long as garden centres adapt to customer change and retain their magic plant appeal, they can continue to thrive.
Malcolm Scott is managing director at Malcolm Scott Consultants.
TOP 10 GARDEN CENTRE RETAILERS (ESTIMATED ANNUAL SALES)
1. Wyevale Garden Centres Formerly The Garden Centre Group,
owned by Guernsey-based fund Terra Firma - 141 centres
across the UK £276m
2. Dobbies Owned by Tesco - predominantly in Scotland and
the north of England but now spreading south - 34 stores £137m
3. Notcutts 19 stores £54m
4. Klondyke North £47m
5. Blue Diamond £40m
6. Squire's London and the South East £38m
7. Frosts Midlands £31m
8. Haskins South £26m
9. Hillier South £25m
10. Barton Grange Including hotel and nursery £22m