State of the Industry - Hardy nursery stock Part 1

The first of a two-part look at hardy nursery stock examines how changes in the retail supply chain will affect the sector.

Rhoddodendrons - hardy nursery stock
Rhoddodendrons - hardy nursery stock

The twin challenges of unpredictable weather and radical changes to the garden centre sector have given growers plenty to think about this season. But the mood in the hardy nursery stock industry is far from downbeat, with an upward sales trend last year likely to continue through 2007 .

Retail changes

The arrival of City investors and supermarket giant Tesco into the garden centre world is changing the conditions for suppliers to this sector. It is also likely to put the squeeze on independent retailers — the main market for many smaller growers.
HTA business adviser Tim Briercliffe says: “The impact of Tesco may be to bring more people into the gardening market. But the high-volume buying approach may serve to reduce margins further and lead to more stock being imported. On the other hand, if Dobbies and the others are true to their environmental credentials, they will emphasise local sourcing from the UK.”
Not every grower views the trend adversely. Nursery manager Philippe Parageaud at Northamptonshire-based retail grower Plantation Nursery says: “It has shaken up the market, and will bring a higher level of professionalism to the industry.”

According to Northern Liner Company general manager John Billington: “The garden centre market is polarising. The retail nursery sector gets ignored, yet it has expanded at the expense of the traditional garden centre and now accounts for 25 per cent of the retail market. [Retail nurseries] are increasing orders from us each year.”
Wiltshire-based West Kington Nurseries nursery manager Mark Jackson agrees that plant-based outlets are holding up. “For years people have said the independent market is getting eroded, but in fact it’s getting stronger and stronger. People want to go to a plant-based outlet.”

Weather

The wet summer may have hit the “outdoor living” end of the retail market, but otherwise most growers put a positive gloss on the year so far, especially with the late revival of the weather extending the retail season.
There is no room for complacency though, says Briercliffe: “A good season means there’s less pressure to change, but those pressures never entirely go away.”
He takes heart from the effect of the season’s early spring sunshine. “We have worried in the past that people might be losing interest in their gardens, but the early season shows that when the sun shines, they will come out,” he says. “It remains very weather-dependent, though.”

Indeed, such was demand for plants earlier in the season that Danish trolleys were in short supply.
The damp summer has extended the planting season, according to containerised tree supplier Barcham Trees sales manager Andrew Dunkley. “Usually people plant through to the end of March, but this year it’s gone on longer,” he says.
And the gradual retreat of frosty winters from much of the country is extending the growing palette of what is otherwise a fairly stable market, he adds. “You see trees like Lagerstroemia (crape myrtle) in central London that you never used to see.”

Pricing

Another unfortunate aspect of the sector’s stability is that prices on many lines have changed very little for 10 years or more. Yet at the retail end at least, customers will pay more, if recent trials are anything to go by.
“Customers perceive the value of a plant based on its appearance, rather than the cost of production,” says Briercliffe. “Better promotion and marketing can help here.”


Garden & Leisure Group operations director Carol Paris has spoken on the theme of pricing under the HTA banner. “There’s clearly room for prices of certain plants to increase if they’re of good enough quality and in flower or in bud,” she says.
“Retailers often get prices wrong by simply adding a set mark-up to the grower’s price. That can give you a price that’s either too cheap or too expensive compared with what the customer perceives as its value.”
Paris speaks from experience. “We’ve found that customers don’t want cheap, poor-quality plants,” she says. “We trialled selling standard Camellia at our garden centre at £12.99, next to better-quality ones
at £14.99. The second type outsold the first by 14 to one. People will pay more if the quality is there.”
She adds that hardy nursery stock has more potential for improved margins than bedding, which she describes as “very price-competitive”.
Retailers and growers need to work together to resolve the issue, she says. “There are a lot of growers making very little money, and it’s not in the retailers’ interest for there to be fewer of them.”

Marketing

Retail guru John Stanley believes growers need to supply retailers with more than just quality plants. “You need a story about a product to sell it,” he says. “Growers think that retailers already know the story, but you can’t assume the customer will get it from the plant manager.”
Lincolnshire-based conifer grower Golden Grove Nursery aims to inspire customers with its new design of shelf-edge labelling, launched at this year’s Glee trade show, which suggests suitable positions in the garden for its trees and shrubs.
Marketing, though, is a specialist business for which not all nurseries, particularly smaller ones, have the resources, says Briercliffe. “Given the cost of sales and marketing, [co-operation] will have to happen,” he says. “The larger growers have their own sales forces and the smaller ones are more pursuing a niche, but the medium-sized growers are seeing the need for it.”
The HTA is currently running a pilot project among several South East growers to look at the feasibility of joint marketing campaigns. Co-operation between growers has already borne fruit for growers in other areas of their business. The Linc-Up association of South Lincolnshire growers has been going for 20 years. It sends a monthly newsletter to its customers, to whom it promotes plants from its eight member nurseries collectively, who also share a website.
Others have co-operated in buying materials and on sourcing labour and training. But the area that appears to show the greatest potential for collaboration is in delivering plants to customers.

Distribution

According to one agent for a continental nursery: “British nurseries grow plants that are as good as, if not better than, the continental suppliers. Where they fall down is on the delivery. If you’re a garden centre in Newcastle, they might not get a delivery to you until next Friday, if they’ve got space on that run. They’re getting better though, and co-operation will help that.”


Northern Liner Company’s Billington says: “We run two vehicles, which are always sent out full, but then our customers are growers and are more flexible about delivery time than a garden centre would be.
“The idea of collaborating has merit, though. If there was an efficient national distribution network, we’d be happy to say goodbye to our own. There’s a lot of red tape in keeping a wagon on the road in terms of safety and servicing. There’s an opportunity for a national carrier to specialise, but for now it’s a Catch-22 — they don’t have enough volume, so the prices stay high, so delivering your own is still cheaper.”
Aiming to prove otherwise, the Midland Regional Growers (MRG) group, an association of 20 growers in the West Midlands area, was the first in the country to collaborate on logistics last year.


The logistics firm MRG engaged, Worcestershire-based Rick White, increasingly specialises in plant delivery. With a fleet of 60 vehicles, it has expanded into this market significantly over the past two years, investing over £1m in facilities and equipment at its Pershore distribution hub, and has since undergone a yearly doubling of turnover.
Rick White deputy managing director Tom Stracey says: “Plants are now a big part of our business. With a live cargo, you want them in one day, out the next, though that’s not always possible for the further away parts of the UK.”
Stracey has some stern words for growers. “A lot of them should sit down with their accountants and work out how much their own transport is costing them,” he says. “They need to change the way they think to move forward. The most successful customers of ours are the ones who’ve completely switched over. They can then fit in better with our delivery schedules. Those who just use us as a stop-gap won’t do so well.”

Foreign competition


The efficiency of continental growers’ logistics operations has been key to their growing success in importing stock to the UK . As their economies of scale kick in only at higher volumes, they tend to dominate the bulk end of the market, leaving the more specialist end to UK suppliers.
Barcham Trees’ Dunkley asserts: “We can compete with the continentals on price, quality and delivery. People like the Italian growers are looking for larger orders. We do smaller quantities which we can turn around quicker — we’re more flexible.”


And the nature of the British market helps support the independent grower sector, according to Billington. “The British market demands variety,” he says. “The continental growers do a good job — they grow huge volumes and we can’t compete on price. But they tend not to have the range of the British growers, and have a conservative approach to new products. The UK market is hungry for new, different and unusual plants, and UK growers are meeting that need.”
Many believe that, as consumers become more environmentally aware, they will tend to favour locally grown stock that has not required huge expense of fossil fuels to bring it to market.
West Kington Nurseries aims to capitalise on the trend by branding its plants, including the Barbara Austin Perennials range, “UK grown” from next year. “More and more consumers are taking notice carbon footprints and plant miles,” says Jackson.

Labour and pay

The HTA’s recent salary survey shows reasonably healthy rates in what is often seen as a low-paid industry. Workers in the South East in particular have benefited from tight labour market conditions. Sales managers at larger nurseries can now look at salaries upwards of £30,000, while nursery managers’ average pay rose over seven per cent over the past year to nearly £24,500.


“Salaries are gradually going up, especially at sales and managerial level,” says the Briercliffe. “Good people are hard to get, and you have to pay accordingly, which is hard in an industry where margins are low.”


Nurseries are also generally holding up when it comes to seasonal labour, despite the reported preference of migrant labourers for less physically demanding jobs.
“The availability of labour is always a concern, but most nurseries have built up good working relationships with labour suppliers,” says Briercliffe.
“They will still rely heavily on migrant labour, though. Meanwhile, the Agricultural Wages Board adds to costs, as do environmental and plant health legislation. These things are always a concern.”

Vox Pop

Sheila Bickford, co-owner, Plantation Nursery, Northamtonshire

Multiples

“Supermarkets are very good at selling. Tesco has so much money, and knows so much about you. I think we can take the better aspects of that, with things like three-for-two promotions. The multiples will also reject a delivery if the quality’s not there — we shouldn’t be afraid of doing that.”

Marketing

“People want instant impact. We aim to inspire people with plants, so we arrange them by colour rather than by A to Z, with regularly changing displays round the front door.
“For promotion, an A5 flier doesn’t work — people won’t read it. Instead we use postcards. Word-of-mouth works but is a little slow.
“Supplying two of the show gardens at the RHS Chelsea Flower Show was a nice pat on the back.”


Foreign competition

“I used to work for a big Dutch company whose plants travelled through several different hands. Now people are more interested in where plants come from — plant miles are becoming a concern just as food miles are.”

Andrew Richardson, joint managing director, Johnsons of Whixley, York

Multiples

“Each year we lose three or four independent garden centres. But the arrival of Tesco should bring us confidence from the fact that people are prepared to invest in the industry.”

Foreign competition

“At places like he Four Oaks Trade Show you see a lot of foreign growers — the Italians get government funding to exhibit. But there’s been a bit of a backlash from garden centres against foreign-grown stock, which hasn’t the shelf-life of UK plants in the tougher conditions we’ve had this year.”

Market

“We’ve had a fantastic year — the best in a long time, particularly on the amenity side. On the garden centre side, we’re limited by the amount of stock we have.”

Pricing

“We’ve done a lot of work on driving down costs. We know our production costs per plant and will only supply at a price that meets our requirements for profitability.”

Simon Hill, nursery manager, A Hill & Sons, Tyne & Wear

Foreign competition

“It’s obviously a concern — though it can be a good thing by making you keener to do a good job. We mostly do larger pot-grown trees and shrubs, and [in this sector] the Dutch and Italian growers are hampered by logistics and transport costs.”

Distribution

“We have our own transport as well as contracts with professional hauliers, and can cover any part of the country.
“I see the logic of British nurseries working together on transport, though — Dutch growers work well together, after all.”

Roger Ward, partner, Golden Grove Nursery, Lincolnshire Consolidation

“The arrival of Tesco doesn’t overly concern me. We don’t supply the multiples — there’s still an independent sector for us to service, and I think we can offer them something different. With them we can try small quantities of a plant and then build up if they’re successful.”

Distribution

“Buyers have no time to collect plants so most get delivered, and that means having an efficient transport system. There is some scope for co-operation, but we can still fill our own trucks.”


Foreign competition

“I’ve lived in competition with Dutch growers for 15 years — we’ve built our business alongside them. They can compete on the smaller pots, which have lower delivery costs. But we’ve a wider range. In fact we’re selling to the Continent — our blue spruces can compete on price and quality, and are already selling in Italy, Germany, even Hungary.”


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