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Garden Centers and Nurseries

We have years of experience in this industry for the valuation of the business, equipment and real estate. Let us help you with our valuation consultation in all areas of the valuation of garden centers and nurseries. Below is a brief synopsis of the industry.

Description of Business

Retail nurseries, lawn and garden supply stores are engaged in providing agricultural products to consumers. These products are typically planted for aesthetic purposes on private land or in commercial settings. In addition to selling plants, flowers, trees and the like; stores also sell gardening tools, soils, sods, fertilizers, and other gardening related supplies.

General Industry Information

Operations in this industry generally fall under two categories. Single-unit stores tend to be individual proprietors whose buildings stand alone. These types tend to house harder-to-find seeds and plants for their customers rather than the typical fare. The other type usually is a multi-unit branch. These operations are closely tied to larger retail outlets and provide supplementary gardening supplies and services to their larger partners (i.e. Builder’s Square connected to a Kmart). Rather than carrying specialty products, these stores tend to focus on generic, high-demand goods.

Suburban sprawl following World War II really catapulted this industry into full gear as families began to landscape new homes. However, the industry took a turn in the 1990s and started to move away from providing seeds and began to carry bedding plants that were both easy to cultivate and less time consuming. The industry experienced phenomenal growth during the 1990s as more baby boomers began to fall into the age where people traditionally began to spend more money and time resources on gardening.

During the 1990s, the industry transformed greatly, following one of two trends. The first trend was the domination of larger multi-unit (franchise) operations that created a more corporate atmosphere. The second trend has been the increased segmentation of the market; smaller operations began to specialize and focus their product offerings in order to attract a more “elite” gardener.

Increased competition from large superstore retailers like Home Depot has strained the industry as well. To augment falling sales, smaller operations have begun to offer professional landscaping and consulting services in addition to plants and supplies.

The Midwest remains the largest patron of the industry, thanks to high home ownership rates, larger lot sizes, and a constituency that has been raised on or near farmland. According to a survey through the National Gardening Association, Americans spent $39.6 billion during the recent census on their lawns and gardens, an increase of $30.2 billion over the previous four years. Mail-order and internet purchases have become an increasingly popular option for consumers, having made up 8.4% of total sales. The majority of these operations are extremely small with five or fewer employees.

Red Flags and Risks

Competition has been the largest risk for operators over the past two decades. The industry has been marked by buyouts and the entry of large-scale operations like Home Depot into the market. Buyers looking to purchase smaller operations should be sure to find a niche market to operate within so that they don’t become overwhelmed by competitive pressure. Many successful businesses have achieved positive working relationships with professional landscapers, gardeners, and gardening clubs. Developing these networks can be critical, and knowledgeable employees can be valuable to maintaining such relationships. This industry is susceptible to environmental regulations, given the use of fertilizers and other soil additives that are derived from inorganic chemicals. Sales tend to fluctuate with the seasons. In addition, as well as many gardeners will purchase garden products during the spring and summer months than in winter. It would be wise to review at least one full year of financial records to gain a better understanding of the cyclical nature of the business.

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