A slight step back

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Last year, companies were bursting at the seams with work. Yes, there were challenges like lack of labor and supply chain delays, but overall, business was good for those in the landscape and lawn care industry. The numbers this year are still solid, but the percentage of companies that made a profit declined. This year, 79% said they turned a profit, while 87% said the same last year. As far as revenues, the mean increased to $1.29 million compared to $1.03 million in last year’s report. The median took a slight dip, falling to $273,000 — which was also the median revenue in Lawn & Landscape’s 2019 report — from $297,000.

But confidence in growth next year for the industry overall is trending up. Only 3% are not confident the industry will grow in 2021 compared to 10% last year. But landscape and lawn care professionals aren’t as confident in their own business growing with 8% percent responding they aren’t confident at all that they will grow. But that is still an improvement compared to 11% last year.

Labor is still a top concern for landscapers, but for the first time in years, fuel costs ranked slightly higher.

Zack Stratton, CEO of Stratton & Bratt, says the Utah-based company’s fuel bill is reaching $20,000 a week. However, Stratton says he isn’t too worried about the expense.

“For a company of our size, our fuel costs are really just a marginal part of $20 million in sales,” he says. “Even a $100,000 bump in fuel costs doesn’t really move the needle much for us.”

Stratton & Bratt’s fuel spending goes to power the fleet and equipment needed for crews to be operating at peak performance. Years ago, the company developed a strategy for implementing fuel surcharges when prices began to creep up too high.

“We thought about it six years ago when there was another big spike in fuel costs. We got together with the team and added at the bottom of all our contracts the opportunity for us to come back and give a surcharge if fuel costs rise above a certain amount,” Stratton says. “At the end of the year, we sat down and made that mark. Last year, we decided that for anything over $3.25 a gallon, we reserve the right to add a surcharge to the bill.”

So far in 2021, Stratton says they’ve been selective in utilizing the surcharge.

“We’ve exercised it on a handful of our larger accounts that use a lot more fuel and a lot more equipment,” he says.

And while some might think that a surcharge would be a surefire way to upset clients, Stratton says his customers have been surprisingly empathetic.

“I think by and large our client base has been pretty receptive and understanding to price increases,” he says. “Just because of the overall competitive landscape of what’s going on... Obviously, they have their limits, but a 3% increase hasn’t been much for them to swallow.”

COVID concerns

The State of the Industry research indicates most contractors are worrying less about COVID than they were in the year prior, but as phrases like “Delta variant” and “booster shot” become more common, so does the precariousness of the pandemic.

When you compare 2020 and 2021 survey responses, you can tell COVID concerns are diminishing. In 2020, 19% more landscapers said they were “very concerned” about COVID’s effect on the industry. In the 2021 survey, nearly 35% of landscapers surveyed said they were “not at all concerned.”

The estimated 18 million new gardeners who flooded the market last year continued to hit garden centers this spring, driving spring 2021 sales over spring 2020 sales for nearly three-quarters of IGCs that participated in this year’s State of the Industry survey. Despite the challenges of staffing, supply chain issues and the always unreliable spring weather, 95% of garden centers are expecting to turn a profit this year. The increasing customer base was the biggest positive factor for garden centers over the past year, followed by the economy but staffing, as always, was the biggest challenge, followed by availability of product.

Garden centers are not only dealing with product shortage, but increased shipping costs for the materials they are able to get. In fact, only 7% of IGCs indicated that they are not impacted by rising shipping costs and only 11% said they are not experiencing plant or product shortages. Plant shortages and shipping issues are likely bumping up the number of grower-retailers, which has been steadily rising over the past five years but jumped by 10 percentage points this year alone.

Last year, only 15% of independent garden centers were paying $15 an hour or more, while this year, more than a quarter are offering a starting wage that high. The impact of increasing minimum wages is also a bigger factor in why garden centers are having trouble hiring, rising a full 10 percentage points this year over last. However, the lack of available or qualified employees continues to be the biggest hindrance in hiring, which is one thing that hasn’t changed in the past few years.

However, even combining the increased cost of materials, shipping AND labor, garden centers are coming out on top. Projected profits are up over last year and despite the fact that spring sales skyrocketed last year, three-quarters of IGCs reported an increase in spring sales again this year. Those spring sales increases are smaller than last year, but considering the COVID sales boom, it speaks volumes to the industry’s success with new gardener.

Page 28, sales chart, just the left side: “Which one area saw the biggest increase in sales at your garden center this spring?

Supply chain problems

In the wake of the global supply chain disruption, IGCs are getting creative with alternative stocking strategies and pre-planning purchases.

Nearly a year and a half after adapting to the demands of COVID-19, garden center owners have to rethink their business tactics once again as they face a different challenge: servicing the steady rate of customers with barriers to inventory. Now, as the industry fights the global tide of continued pot delays and plant scarcities, many owners have had to shift their strategies to prepare for the coming year and beyond.

Jeff Jones, owner of Great Gardens in Torrington, Wyoming, says that the industry as a whole has been hit hard with tree and shrub shortages. Great Gardens grows many annual plugs and dormant and young perennials to finish. Luckily, he says, they’ve had no issues receiving plant materials. And while his supplier has reported seed shortages, Jones says it wasn’t a significant percentage of product. Occasional shortages and substitutions happen every year, which is expected.

Instead, he worries about plastic goods, specifically, 2.5-, 3.5- and 4.5-inch growing pots for plugs. Jones fears he may not acquire enough growing pots for plant materials. In addition, he says rumors are swirling amongst his industry friends that suppliers that accepted orders may not deliver pots until April — far too late in the season.

If there’s room, please run both supply chain graphs from pg. 28

Jones says that 4.5-inch pots, which he sells the most of for annuals, have increased nearly double or triple the cost.

“We’re not talking about 10% inflation; we’re talking about crazy inflation,” he says. “I ordered a pallet and I got that cost down to 15 cents per pot, which is double what it was one or two years ago. But I’m in a situation where I think, ‘Well, I don’t care what it costs. I just need to have it.’”

Rick Thomas, who co-owns Bethany Plants and Produce with his wife, Tammy, says they’ve had a tough time getting pots, perennials, Proven Winners varieties and hostas. Some of the plant materials they ordered earlier in the year were so delayed that Thomas didn’t receive them until October. He almost didn’t accept the shipment but decided against it because it’s a gamble to see what, if anything, will be available in the spring. In his experience, vendors take three to six months to fulfill orders, so Thomas purchased large volumes early this year.

One of his Michigan suppliers, Mast Young Plants, provided retailers with a discount if they placed orders by Nov. 1, which has helped keep costs down. Thomas notes that ordering early helps ensure the arrival of a consolidated shipment, which allows him to capitalize on shipping.

Located in the rural town of Reidsville, North Carolina, Thomas is hesitant to raise prices, considering they compete with other businesses in the Greensboro market. While they have increased prices a little, the business is eating some of the cost.

“You have to keep your price points at a certain area. Otherwise, you’re going to price yourself out of sales,” he says.

Thomas has had to get creative with substitutes for Proven Winners’ flowering shrubs and notes that most of the variations are selling tremendously well, along with shrubs with unique foliage. Of course, it helps that customers now are looking for different varieties instead of standard options.

“The thing I love about the Proven Winners line is you have lots of different flowering shrubs that are takes on some of the older shrubs,” he says. “For example, a lot of the old yards here have the old-fashioned sweet shrub and the newer varieties of it sell really well.”

Survey methodologies: The 2021 Lawn & Landscape State of the Industry survey sample included 17,240 readers with the titles of owner, president, partner, executive or general manager at a landscaping company. lawnandlandscape.com/magazine/issue/october-2021/

Garden Center surveyed more than 300 independent garden center owners, operators and managers in the U.S. and Canada about their IGCs, their markets and trends in their areas. gardencentermag.com/ magazine/issue/november-2021/

Garden Center editor Kate Spirgen and associate editor Julianne Mobilian and Lawn & Landscape editor Brian Horn and associate editors Kim Lux and Jimmy Miller contributed to this report.