According to 2024 Savills UK Garden Centre Market report, the market is likely to see further consolidation, where regional operators and larger groups purchase smaller, family-run garden centres struggling with ongoing operational pressures and find the running thereof to be an increasingly “less feasible lifestyle”.

The surveyor adds, that as out-of town retail market remains strong, paired with the government’s plans to overhaul the planning system, demand for land to furnish retail and drive-through space will lead to more smaller garden centres selling up.

According to Savills, the market will likely to see expansion through mergers and acquisitions as opposed to new build sites, due to the time lag involved in opening new development sites coupled with a rise in construction costs of +30% since the pandemic. In 2024 for example, Yorkshire Garden Centres for example, acquired Dean’s Garden Centres in February, and Blue Diamond acquire Woburn Sands and Willington from the Frost’s Garden Centre in August. There are exceptions such as Blue Diamond, which is developing its site on Scotch Corner, North Yorkshire which is expected to open in 2026.

With garden centres becoming more of a destination space, larger garden centres will continue to diversify, incorporating various leisure activities to increase footfall, expand client base and take advantage of the synergy between the different uses.

Market overview

In the report, the surveyor states that following the Covid-influenced years, garden retailers accumulated an abundance of excess stock, the legacy of which continues to burden operators in 2024 due to the erratic weather. As George Hillier, Chairman of Hillier confirmed at the HTA’s Horticulture, the Conference, the poor weather meant that key sales periods were simply lost. Summer temperatures slowly (but hardly) increased which even though led to a pickup in sales from non-gardening categories, outdoor continued to struggle due to poor weather.

The Savills researchers report to seeing the initial signs of economic recovery, with consumer sentiment beginning to stabilise. “The climate for major purchases saw a 7-point uptick between June and July, and a 16-point increase overall since July 2023. This will likely be positive for operators as it could translate into increased footfall, in particular for garden centres due to the coupling of warmer weather in July and August”.

Blue Diamond became the UK’s number one garden centre in 2024, based on turnover at £308m (excluding VAT), compared to Dobbies at £278m. “This has brought benefits to the operator with regard to buying power, but also partnerships such as with the National Trust have resulted in a high profile, particularly at the RHS Chelsea Flower Show in May”.

Cost of doing business

Garden centres and retailers continue to struggle with high operational costs, such as energy costs (expected to increase further due to 10% increase in the energy price cap), staff shortages and increasing wages – all of which hamper financial and operational efficiency. According to Savills, since 2021, operating costs have increased by 5+%.

Based on their research sample of 20 UK garden centres, Savills revealed that the largest operational costs for garden centres included staffing, business rates, utilities and repairs/maintenance. Wages typically consumed circa 21% of turnover in 2023, a 3% increase since 2021. Following the National Living Wage increase in April 2024, the HTA predicts that wages will consume closer to 30–40% of turnover following this increase. Gross profit margins varied by centre and were largely influenced by the mix of goods and concessions and in particular by the size of the food and beverage offering, when run in-house.

Gross retail margins were typically around 40–50% and had improved since 2021, but food and beverage margins were much higher, in some instances up to 76% – evidence of how a large and successful restaurant or café improves the blended gross margin.

According to the Savills sample, although gross profit margins had increased, net profit margins had decreased by circa -3.5% over the same period – due to heightened operational costs and the challenging macroeconomic environment eroding profits. “That said, we are seeing signs that this is beginning to ease in 2024,” added the surveyor.

Growth recommendations

Where premises/leases allow, enter into strategic partnerships to either use vacant space but above all save on business rates and utility costs – for example, veterinary practices and children’s day nurseries.
Diversification through concessions. Though income from concessions is typically lower per sq ft, for larger centres, diversifying the offering will bring in new audiences and create a destination feel to a centre. “The top concessions by total count include Maidenhead Aquatics, Cotton Traders and Pavers Shoes,” cites the report. Interestingly, Savills report that Holland & Barrett are trialling concession space in garden centres in 2024, with the first site in Oakham, Leicestershire.
Cafés are reported as being the number one concession and can account for a significant proportion of turnover. Food and beverage typically has a higher gross margin than retail, and offerings can add over £3,000 turnover per cover on average. Savills adds, that bringing the catering back in-house can ensure these profits are captured by operators.
Introducing renewable energy to centres to reduce utility costs and generate power on-site. “At Golden Hill Community Garden (Bristol), solar panels are used to power a water pump and provide electricity for lighting”. Even on small sites, solar panels fitted to roofs can generate energy requirements for the centre without losing valuable retail space.
Site diversification such as the inclusion of a sculpture park or well-being gardens can help increase “customer dwell times” and provide a social quality to centres, improving ESG and community engagement. Such activities provide an appeal of a destination, with Visit Britain reporting tourism days visits were up 7% in 2023 compared to 2022. Reportedly, Blue Diamond added a play barn, butchers and food hall to Fosseway Garden Centre, and Ruxley Manor Garden Centre in Kent, has submitted a planning application for £1.5m of leisure activities, including an 18-hole adventure golf course and high ropes zip-line course.
With heightened consumer focus on quality, garden centre upgrades though potentially costly can increase footfall and onsite spend. At the HTA conference, Hillier warned about the dangers of “paralysis of infrastructure” where centres dilapidated premises can result in failing to entice the changing expectations of consumers. For those whom are members of the HTA, they have access to the Business Improvement Scheme where small to medium sized independent retailers share knowledge, feedback, support and business development opportunities – including upgrading premises efficiently.
Luxury product ranges: Despite the cost of living squeeze, luxury goods have often proved to be inflation-proof, and millennials’ connections to brands should not be underestimated, says Savills.
Changing customer expectations. Savills report of a poll by Drapers revealed that 54% of 18–24 year olds would rather go to a garden centre than a nightclub. Ensuring attractive product ranges for these groups, such as indoor plants or balcony-friendly plants – especially as this demographic more commonly resides in rented accommodation without access to a garden. The RHS also predict ‘houseplants’ and ‘greening of grey spaces’ (including balconies and windowsills) to be a continued theme in 2024. Engagement in community projects, pubic gardens and spaces – which are gaining momentum could also demonstrate an avenue towards attracting a new client base, says Savills.