The latest post on the Savills blog looked into the impact of high inflation, rising fuel and mortgage costs in 2023 on consumer spending and subsequent effect on garden centres.
Just as other companies, garden centres are struggling to find staff, wages offered are increasing to attract applicants and increased minimum wage requirements, and purchasing stock remains expensive. Current financial results comparison with the bumper lock-down expenditure surges suggest that 2023 fortunes are approximately 20% lower in turnover terms compared to pre-Covid-19 levels (inflation excluded). Subsequently budgets for 2024 are cautious with little growth forecast, but according to Savills there are green shoots on the horizon.
Spring is set to see energy prices decrease, reportedly by 10-15% boosting consumer disposable income. Likewise, rate rises seem to be at an end, with potential for “drops later in the year”. According to Savills, most garden centres are concentrating not on growing company revenue (gross sales should rebound slightly in 2o24 given the improved economic picture) but that it’s on on cost control where they can make a significant difference to their bottom line (net income).
“However, we have been here before – spending at garden centres has continued to increase through every recession since the 1970s – so as we become used to life being a little bit more expensive it remains reasonable to expect customers to continue to shop at garden centres and maintain their profit levels over the longer term, assuming agile management”, reports Savills.
Agile management is key. Between 50% and 62% of 30 to 44 year olds own a home and this target market – the millennials, are now considered the biggest spending and consuming group in the population. Garden centres must work to find ways to attract this audience to garden centres, which according to the commercial expert at Savills “is a route to business longevity”. Understanding this market to satisfy the demands of these younger consumers in terms of stock ranges, concession choices and appearance is essential.
“Millennials’ interests and spending patterns differ from those of the older generations. Novelty and experiences are strong drivers, their food preferences can vary from what is served in a traditional garden centre café, and they are very brand focussed”, explain Savills.
Strong business branding, stocking well-known brands and offering ‘experiential’ offers such as events and theme weekends appeal to this vital target market. In addition, increased emphasis on sustainable business practices such as efforts to reduce waste, peat-free growing, use of renewable energy use, reduced use of pesticides, local/British product sourcing and carbon footprint awareness and management will further enhance appeal. If possible, visual upgrades to the garden centre for a more modern appeal and offering healthy food options will help bring the younger visitors to gardening.