How does your garden grow?

America’s growers and nurseries have been reeling from lack of activity, both on the consumer and commercial fronts.

“The lawn and garden industry is suffering, with business off 20, 25, 30 percent, depending on what region of the country you’re in,” said Gary Blondell, owner of Gary’s Garden Mart, an eight-year-old nursery in Severna Park, Md. “There’s the lack of new home sales, of course, and if the market is such that people are not selling their homes, then they’re not going to be doing anything to enhance curb appeal.”

Blondell said his business was down 10 percent to 11 percent in 2008, and he considers himself more fortunate than many. Because he runs a small operation, he has been able to adjust to changing conditions quickly and reach out to the budget-conscious consumer. For example, if Gary’s Garden Mart used to sell one unit of a certain product, the store now offers specials on buying three units of that product at a reduced rate. Blondell also said consumers are downsizing—where he normally would sell a lot of eight- to nine-inch mums, he sold more six-inch plants this year “because people could get two or three for the same price.”

“It was definitely about squeezing the dollar,” Blondell said.

According to Bob Dolibois, executive vp of the American Nursery & Landscape Association (ANLA), the hardest-hit sector has been tree growers. He said they are suffering from a lack of demand for product in the short term, while also having to make a difficult choice about the long term. Should they make room for new plantings by destroying ready-to-market inventory, or should they hold on to the inventory in the hopes of an eventual return? That’s one of the questions they face.

A third alternative is to deep discount larger plant material to clear inventory and take the hit in long-term profits, he said. But that only works for those businesses that have the capital to take the hit, and many growers—especially newer ones—don’t have that kind of capital.

“In short, the downturn in housing hits the tree growers the hardest because of long-term inventory pipelines,” Dolibois said. “Foundation shrubs and the perennial/annual market are less hard hit because of shorter inventory turns and some customers buying extra to spruce up their yard because they aren’t going on vacation.”

However, he added, “Regardless of plant type, tough economic times do affect plant sales because of the discretionary nature of the purchase.”

In Florida, one of the hardest-hit states in terms of the housing crisis, growers and landscape firms saw anywhere from a 20 percent to 50 percent decline in sales in 2008, according to Jennifer Nelis, director of public relations and marketing for the Florida Nursery, Growers and Landscape Association (FNGLA). Nelis said many nurseries have gone out of business, while others have sold out to larger companies. The fact that Florida’s population and housing stock grew so rapidly in the early part of the decade has made the situation even more dramatic.

“People were making sales left and right, and the money was flowing easily,” she said. “We’re coming down from the hill, and we didn’t even realize we were on the hill.”

Nelis went on to say that many nurseries have changed their business model, appealing more to homeowners staying home—also called the “Staycation” trend. A lot of companies are going to commercial landscape and residential maintenance. “Many business owners are broadening their areas of expertise to service other industry markets such as existing residential and perhaps even taking on smaller jobs that—when times were good—they might have turned down,” she said.

Steve Newton, executive vp of the Southern Nursery Association (SNA), said most growers in his areas reported sales declines of 20 percent to 30 percent in 2008. “It was a perfect storm of several factors coming together, including drought, the housing situation and no new plantings going on,” he said. To top things off, a group of Louisiana growers were hit with a freak snowstorm in December, and hundreds of greenhouses were lost. “It couldn’t have come at a worse time,” he said.

New home construction has slowed to a crawl in the SNA’s region, which includes Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia, and new commercial development has decreased as well.

“No office complexes are going in and no new retail establishments. Replacement planting has also slowed,” Newton said. In his territory alone, Pike Nurseries in Duluth, Ga., went bankrupt, and Hale and Hines Nurseries of McMinnville, Tenn., had to reorganize.

The housing crunch hasn’t been a drag on all nursery related businesses, however. Stanley Brown, co-owner of Alameda Wholesale Nursery in Englewood, Colo., says his company—which caters to small and medium design-build landscape professionals—came within 5 percent of its best year in 2008.

“These professionals have not been as nearly adversely affected as those in lower-income production housing, which has come to a screeching halt,” Brown said. “The market for landscapers of homes in the half million to $2 million [range] is still good.”

According to Blondell, growers have a lot of inventory on their hands going into 2009, so it will be a buyer’s market. For garden centers, that means having their pick of inventory, better pricing and better terms—all of which helps cash flow. “You pass that savings along to consumers, because they’re looking for it,” he said. “It goes right down the ladder rungs.”