Garden Centre Leaders Make 2023 Predictions

2022 was better than many garden centres feared.  Product sales were about -10% lower than 2021, which had been an exceptional year.  The return of restaurant catering compensated for much of this, so total garden centre incomes were only -1% to -3% below last year and margins appeared to have held up.

Confidence seems to have been boosted by a resilient last quarter and a strong run-up to Christmas.

Forecasting 2023

Forecasting 2023 is a challenge with household incomes under pressure, the minimum wage increasing by +32% since 2019, energy costs up and inflation in raw material costs.

Alan Roper, the managing director of Blue Diamond believes whatever happens this year will set the tone for the next 5 years.  He expects that interest rates will not increase much further and inflation will come down as global demand weakens. 

In this sector he says cost price pressures have gone.  This is partly because container rates that were $18,000 a year ago have fallen to as little as $1,800.  In particular there are better prices on garden furniture.

A return to just-in-time buying

Stock levels are high in many imported categories especially, garden furniture.  This is both at retailers and in the supply chain. 

David Yardley, the CEO of Klondyke said, they had not bought so much pre-season stock because they are no longer worried about lead times from suppliers.  There is a lot of stock still in the supply chain so they have gone back to ordering weekly.

Hillier Garden Centres cleared much of its stock in January, “So now it is back to just-in-time buying,” said director Chris Francis.

Forecasts

Chris Francis shared the views of others when he said, “For 2023, we have planned for a small amount of growth.  But if we hold on to 2022 levels it will be a satisfactory result.”

Andy Bunker of Alton Garden Centre said, “I have heard a lot of people saying they are not going away this year so that must be a positive for our trade… 

“While its getting a little repetitive it’s still for me all about the weather.  One glimpse of sunshine and the temperature rises a little and sales will go up.  March as we all know is crucial to kick start the trade in all depts, they’ll be out buying compost asking for seed potatoes and where’s your cucumber plants LOL – no honestly.”

David Little of Poplars Garden Centre said, “We won’t match 2022 sales for the first 6 months – garden furniture was too strong in the first half of last year – but take this out and sales values should hold up well.”

It’s harder to make money out of restaurants

Restaurants sales remain strong but margins are under pressure.

Restaurants are trading well even in January.  But with the cost pressures margins are under pressure. 

David Yardley said, “It is harder to make money out of restaurants, but they are important for footfall.  They have been good in January which shows footfall is holding up.”

David Little agreed, “Costs are making catering finances very uncomfortable. Gone are the days of a strong financial contribution to the overall bottom line from in-store catering. We will have to accept that for some months breaking even will be a good result.

“I expect average transaction values in catering to fall a little as buying habits change. Customers are already buying regular hot drinks instead of large ones. They are buying one piece of cake to share rather than a slice each”

Plants

Chris Francis reported that the biggest price increases this year are in plants, because of raw material and energy costs.

Andy Bunker is hoping for a better year on all categories of plants although he is very concerned with the retail prices of pots and compost.

“I feel it will be a great year for plants – recession years are always good for impulse plant purchases,” said David Little.  “There are losses from the Summer of 2022 that will need replacing.”

Must work harder for growth

Garden centres are going to have to work smarter to continue growing in the stagnating economy that could prevail in the next few years.

Blue Diamond will be making step changes to product ranges to stimulate demand.  Alan Roper said, “We can’t sit back and let the economy dictate the rate of growth.  Our stores must look vibrant and new.”

Poplars will also be looking for growth.   David Little said, “We will seek out new income streams, some are already in the pipeline. EV charging presents a huge opportunity for garden retailers who are close to motorway junctions and busy A roads… 

“We need to make sure every square inch of the garden centre is delivering the best return possible.”

Source : Reproduced with permission from George Bullivant at Gardenforum

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