Brexit uncertainty and online developments could be two trends heading into 2017 in garden retail, after a 2016 season that started badly but turned out fairly well. Verdict Research's latest report says the UK gardening market is predicted to grow by 8.2 per cent from 2016-21, despite any Brexit concerns.
Garden Centre Association chief executive Iain Wylie says garden retailers are yet to implement price increases caused by exchange rates and Brexit but wholesaler price rises from autumn 2016 will kick in from the start of 2017. There is still uncertainty around exchange rates, particularly since Donald Trump's election as US president and falls in the value of the dollar. "There will be changes afoot and rises to deal with, but I don't think garden centres have to deal with them yet."
Christmas sales started early and "money was in the bank" with trade four-to-five per cent up year to date overall after a trade recovery from a slow start to have steady gains later in the season across the board, Wylie points out.
But he adds: "The challenge is the uncertainty. There doesn't seem to be a clear direction with currency post-Brexit and Trump." Wylie says garden centre buyers will have a "more challenging job" in 2017 because they may have to look "further afield" for product "if certain products don't meet the right price to sell at the volume and margin they require".
Hillier purchasing head Andrew West is "well aware of inflationary pressures in the market", which Hillier is resisting. "Companies should not increase prices just to reassure their investors," he says.
Managing director Chris Francis sees houseplants as home accessories and the "return of the British nursery" as trends in 2017. "We've got to capitalise on Brexit in the UK and think about how to appeal to the market."
Many garden centres tweaked their offer in 2016, particularly in catering, which is the big growth area. Another potential place to add sales is online and Wyevale is finally entering the market in 2017.
YouGarden managing director Peter McDermott says a "challenge" for all bricks-and-mortar retailers going online is their "methodology of offering their in-store range online" and how to manage price competition and supply. He says the customer journey is very different online, with service, price and quality all "prerequisites", adding: "Quality and service have been the major challenges for new entrants."
McDermott welcomes Wyevale entering what he calls a "stagnant" direct-to-consumer gardening market, where he predicts further consolidation. It has been slower than most other retail sectors to embrace online. "Some businesses have not been financially thriving in our sector and some are marginally profitable," he adds
"If Wyevale brings in more online consumers and creates more traffic, that's a good thing. Then it's a question of where their loyalty is." He says many garden centres have "dramatically" moved from selling gardening as "the be-all and end-all" to just a "feature" over the past 10 years and the online garden market is also being hit by "cyclical" changes after a peak with Alan Titchmarsh's Groundforce and Gardeners' World 15 years ago. Customers buy fewer smaller plants and more medium-sized instant ones.
McDermott adds that the online consumer has never been served better and they have never had it easier to compare prices and review product quality. This means online quality, service and price is even more important.
He says 2016 "feels like an average year. There are no indications to say 2017 will be drastically better or worse. But I think euro pressure is an increasing factor unless it steadies. Price and margin pressure are the biggest concerns." There is nothing anyone can do about exchange rates and spring prices may rise sharply, he warns. Even the "catastrophic consequences" of the last crash may be replicated.
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