Knowing your enemy
While there are many challenges facing ornamental plant producers today, the strategic planner will be thinking of the army that has not been met yet and the battle yet to be fought. Of course, we cannot say for definite which challenges will turn out to be the most important in five, 10 or even 20 years' time, but there are quite a few clues if we stop to look. The challenges of the future can be grouped as follows:
Potential competition exists in many places: cheap imports, other UK nurseries and, fundamentally, the competition from other leisure pursuits that could turn the attention of the consumer from gardening and buying plants.
The end consumer is changing in the way 'she' behaves. She has higher service expectations, demands quality and value and, if she is going to buy your product, it has to be just what she needs to enhance her lifestyle and to be accessed in a way that does not cramp it; that could well be online. Direct business customers will also have new demands as retail standards are raised in line with the broader world of retail and as the garden retail industry consolidates to fewer and larger chains.
It is safe to assume that things generally do not decrease in price. In a global market, there are undoubtedly businesses somewhere that could do what you do and it would cost them less. While devaluing product is the last thing you want to do, it will nonetheless be essential to be relentlessly identifying and delivering cost savings. There are some easy wins to be had, but the rest require tough business decisions.
Whatever you think about climate change is irrelevant as there is no doubt that environmental challenges will only increase. Drought will become more frequent and water use will be questioned more and more. Sustainability of production will matter more and, like it or not, that will impact the use of peat. Energy and pesticide use will also have to be tackled as prices increase and availability decreases. Sinister and unknown challenges also lurk in the form of as-yet-unknown pests, diseases and weeds.
Production horticulture is not grabbing the attention of school-leavers or graduates, college courses are falling away and so, not surprisingly, it is now more difficult than it was to get the skills needed in a modern nursery. This will only get worse and is a serious challenge facing the sector.
Just in case the pressures from the market and the environment weren't enough, there is no doubt that the sector will face more regulation. Despite the well-intended deregulation mantra of successive governments, the European wheel of regulation is still turning just as fast. We will see this affecting crop protection, water and soil management, plant health and growing media.
As we need air in order to breathe, so innovation is necessary for business survival and growth. If you do not innovate, you suffocate. With a decline in horticultural research and development, the underpinning for innovation is disappearing. UK nurseries will have to think smarter to keep up.
Preparing for battle
The wise strategist analyses strengths and weaknesses and is not too proud to collaborate if it increases the chances of success. The ornamental plant production business that survives will be one that takes the same approach. In the areas in which it specialises, it can concentrate its efforts independently, but in areas where it is not the expert, collaboration will make sense.
Some areas where collaboration will be essential in facing the challenges are outlined below:
Supply chain management
Maximising sales and profitability is a shared objective between both grower and retailer. Successful businesses will be those that work together to achieve this. This will mean a change in relationship, a building of trust and a sharing of information. Product category sales plans need to be agreed between grower and retailer and be based on all available, real customer data, rather than gut feelings. This reduces risk and enhances the chances of success for retailer and grower.
Growers do not have enough control over the way their product is sold to the consumer. With many garden centres sourcing from up to 40 nurseries, that leaves each supplier with insufficient business to justify close involvement with the retailer. This contrasts dramatically with almost all other categories within the garden centre. The supplier of wild bird-care products, for example, would not dream of leaving the sales of its products to the retailer alone. They get involved in ordering, merchandising and promotion and are heavily relied on by the retailer for these services. For various reasons, the relationship works differently for plant suppliers, but the result is that plant sales are not maximised and both grower and retailer lose out to products that are given greater attention by the supplier. The real competition for garden centre plant suppliers comes from bird seed, candles and lawn feed. Plant producers need to collaborate to be able to work more closely with retailers to drive sales.
Transport and logistics
The current delivery system of plants to independent retailers is simply inefficient, but while growers hold on to traditional practice, it will not change. The current exchange rate with the euro has given UK suppliers a breathing space, but it is well known that European competitors have mastered the art of efficient logistics and take the profit that goes with it. UK growers need to seriously embrace collaborative working on transport — while growers hold back, dabble with it and yet retain their own fleet (and associated overheads), it does not work. This European model of working is not one that UK growers typically feel comfortable with, but it makes business sense and will become increasingly important for servicing a more demanding and consolidated retail market.
Understanding the end consumer is as crucial for growers as it is for retailers. Gaining that understanding can involve sophisticated research and expense, but through collaboration, the knowledge gained in pooling resources on market intelligence will put the businesses that engage with it ahead.
Marketing and promotion
Unlike other product sectors, the producers of plants are largely not in control of the promotion and marketing of their products. With the lack of brand and scale, this is difficult to achieve, relying on external bodies like the BBC or the RHS to do the job. The trade association can support in a generic way, but producers really need to work together to reach the consumer and drive sales of specific products. New technology, through the internet and mobile phones, provides a platform for doing just this, and there must be scope for collaborating on the core content and the technology to develop a promotional tool that works for an entire industry.
To attract the kind of people the industry needs for the future requires working together to define the career path available, and demonstrable commitment from employers to training, development and career progression. This is not easy for one business on its own, but collectively it can be achieved. A publicised commitment to training and development will also help. E-learning is part of the solution to this future challenge.
Maintaining a firm base for horticultural R&D is crucial for the underpinning of innovation and to prevent the UK from losing ground to foreign competitors. We can fight for more government funding for this, and we do, but the industry also needs to take charge of its own destiny by supporting collective R&D as well as promoting innovation within businesses.
Frequently, the environmental arguments for regulatory pressures are weak, but not even proving that is going to change the trend for more regulation. The prudent grower will be looking seriously at growing crops with fewer pesticides, less fertiliser, less water and with demonstrably sustainable growing media. There is no blueprint for this, however, and the nursery that wants to do these things will just have to try them out, as well as 'seek and share', of course.
The forward-thinking producer will also be doing whatever it can to develop its unique selling points, to differentiate itself, giving the prospect to move from commodity production to premium product. New plants and genetic improvements lie at the heart of this.
Through close working with growers in the sector, the HTA has sought to address these issues as outlined in its strategy and action plan for the sector. On improving the supply chain, a relatively new HTA group has been working with Kent University to identify areas for improvement in the plant supply chain and how these can be tackled. On skills, we are working on the development of a new e-learning resource for growers. All these initiatives help in raising awareness of the issues that need to be addressed and present potential solutions, but the decision on what to do lies only in the industry itself.
The industry has a choice. It can either continue as it is, hoping for good weather, positive media coverage and a favourable exchange rate, or it can tackle the big issues that threaten the sector in the future. All indications are that the garden market can be strong in the future, but the challenge for UK plant producers is: will they be the ones supplying this market?
A culture change is required to avoid the spiral into commodity, low-margin production that leaves the sector vulnerable to market changes and competition. The entrepreneurial spirit that has made the sector as strong as it is today will need to be applied even more in the future through collaboration and innovation. The whole is greater than the sum of its parts and if, as an industry, we work with that in mind, it can only serve us well.
Tim Briercliffe is HTA business development director.
The IPPS is an international associationof plant production professionals whose primary purpose is to advance and share the art and science of growing plants. See www.ipps.org.uk.