Business and Marketing Practices of U.S. Green Industry Ariana Torres, Ph.D. Assistant Professor Marketing Specialist Purdue University torres2@purdue.edu January 17, 2018
Business Category Type of Business Crop production Greenhouse, nursery, and floriculture Lawn and garden equipment manufacturing Lawn and garden equipment manufacturing Landscape services Landscape and horticultural services Landscape and architectural services Wholesale trade Farm and garden equipment merchant wholesalers Nursery and florist merchant wholesalers Retail trade Lawn and garden equipment and supplies stores Florists Food and beverage stores with floral, lawn and garden sales Gasoline store with floral, lawn and garden sales General merchandise stores with floral, lawn and garden sales Non-store retailers with floral, lawn and garden sales (online and mail orders) Golf courses are included in the Other Amusement and Recreation Services by the US Census Bureau
Indiana Green Industry Facts 6 th ranked agricultural commodity in the state Output in $ billions 4 th ranked state in the Midwest in job and added value creation 0.981 $3.524 billion in total sales impact 39,260 full-time and part-time jobs $2.113 billion in value added impact direct sales indirect sales 2.542 2013 IMPLAN model and data from the Green Industry Research Consortium
Indiana Green Industry Facts 6 th ranked agricultural commodity in the state Number of Jobs 4 th ranked state in the Midwest in job and added value creation 7,463 $3.524 billion in total output impact 39,260 full-time and part-time jobs 31,798 $2.113 billion in value added impact direct indirect 2013 IMPLAN model and data from the Green Industry Research Consortium
Indiana Green Industry Facts 6 th ranked agricultural commodity in the state 4 th ranked state in the Midwest in job and added value creation $3.524 billion in total output impact 0.191 Impact in $ billions 0.499 39,260 full-time and part-time jobs $2.113 billion in value added impact 1.423 Labor income Tax on production and imports Other property 2013 IMPLAN model and data from the Green Industry Research Consortium
Not all businesses are equal
1,800 1,600 Sales 592 1,400 1,200 226 $ M 1,000 800 600 400 200 0 95 Crop Production 14 127 118 Lawn and garden equipment manufacturing 1,080 54 919 299 Landscape services Wholesale Trade Retail Trade
$2.542 billion in direct sales Landscape services, retail trade, and wholesale trade generated most of the sales (90%) The other 10% was generated by other types of businesses
25,000 20,000 Jobs in Industry Jobs outside industry 4,456 Number of jobs 15,000 10,000 16,688 1,771 5,000 0 723 Crop Production 86 1,035 238 Lawn and garden equipment manufacturing 12,390 427 1,447 Landscape services Wholesale Trade Retail Trade
31,978 direct jobs Landscape services and retail trade generated most of the direct jobs (92%) The other 8% was generated by other types of businesses
1,200 1,000 800 Labor Income Impact Other property Impact Tax on Production and Imports Impact 34 258 $ M 600 400 200 0 Crop Production 5 1 34 24 13 61 113 15 759 121 Lawn and garden equipment manufacturing Landscape services Wholesale Trade Retail Trade 117 144 415
$2.113 billion in value added contribution to the GDP (value of sales intermediate purchases of goods and services from other sectors) Landscape services, retail trade, and wholesale trade generated most of the value added contribution (92%) The other 8% was generated by other types of businesses
What are landscape businesses doing to achieve this impact?
2014 Trade Flows and Marketing Survey List of over 104,000 growers and plant dealers in the US Target 32,000 firms Online and mail 120 businesses that generated at least $10,000 in yearly sales Landscape only businesses Landscape and retail Landscape, retail, and grower Number of businesses in the Green Industry 22 59 39 Lanscape Landscape, retail Landscape, retail, grower
Landscape only Full Sample Landscape and Landscape, retailer, retailer and grower Indiana 27 20 5 2 Florida 22 11 5 6 Washington 13 8 5 0 Wisconsin 12 4 5 3 Georgia 11 5 4 2 Nebraska 7 3 4 0 Oregon 7 3 3 1 South Carolina 5 0 2 3 Kentucky 4 1 0 3 Tennessee 4 2 1 1 New York 3 1 1 1 Mississippi 1 0 1 0 Oklahoma 1 1 0 0 Rhode Island 1 0 1 0 Utah 1 0 1 0 Vermont 1 0 1 0
By business integration Landscape only Landscape and retailer Landscape, retailer, and grower
Full sample Responses [no. (%)] Landscape only Responses [no. (%)] Landscape and retailer Responses [no. (%)] Landscape, retailer, and grower Responses [no. (%)] Large firms 34 (28%) 12 (21%) 13 (39%) 9 (41%) Medium firms 63 (53%) 35 (59%) 19 (49%) 9 (41%) Small firms 23 (19%) 12 (20%) 7 (18%) 4 (18%) Total 120 59 39 22 Small = $10,000 to $124,99 Medium = $125,000 to $749,999 Large = $750,000
Most landscape only and landscape/retail businesses are medium size Most grower, landscape, retailer are either large or medium Most landscape businesses in the sample are from Indiana and Florida
Product sold (%) Full sample Landscape Only Landscape and retailer Landscape, Retailer, and Grower Herbaceous perennials 17 15 16 23 Deciduous shade and flowering trees 12 12 8 17 Deciduous shrubs 11 13 11 7 Bedding plants and flowering annuals 11 13 12 4 Broad leafed-evergreen shrubs 7 8 7 5 Evergreen trees 7 7 7 6 Vegetable, fruit, and herb bedding plants 6 4 8 5 Narrow-leaved evergreen shrubs 5 5 6 3
Product sold (%) Full sample Landscape Only Landscape retailer Landscape, Retailer, Grower Roses 4 4 3 6 Flowering potted plants 4 3 5 4 Other plant types 4 3 4 5 Sod 3 5 3 0.5 Vines 3 3 4 3 Azaleas (Rhododendron sp.) 2 2 2 3 Fruit trees 2 3 2 1 Tropical foliage 2 1 2 3 Propagated material (liners, cuttings, plugs) 1 1 0.5 3 Christmas trees 0.5 0 1 0.3
Top 4 sales across all firm types Herbaceous perennials Shade and flowering trees Deciduous shrubs Flowering bedding plants Landscape only top 50% of sales Herbaceous perennials Bedding flowers Deciduous shrubs Shade and flowering trees Landscape, retail top 50% of sales Herbaceous perennials Bedding flowers Deciduous shrubs Bedding plants (fruit, veg, herbs) Shade and flowering trees Landscape, retail, grower top 50% of sales Herbaceous perennials Shade and flowering trees Deciduous shrubs Roses or evergreen trees
The product mix shifted slightly when retailer and/or grower functions were integrated into landscape firms Increase in the sales of deciduous shade and flowering trees for growers Decrease when businesses were only landscape or landscape/retailers Valuable space for products that turnover faster or have higher profit Decrease in sales of deciduous shrubs for growers Increase in sales of propagation material by growers Increase in sales of Christmas trees for retailers
Purchase of flowers/plants % households participating in gardening
100 90 80 Percentage of product form 70 60 50 40 30 20 10 0 Full Sample Landscape Only Landscape and Retailer Landscape, Retailer, and Grower Container (P=0.937) Balled and burlapped (P=0.509) Pot-in-pot (P=0.185) Bare root (P=0.748) Field grow (P=0.379) Balled and potted (P=0.375) Other forms (P=0.204)
Percent of advertising spent on 11 types of methods Full sample Advertising spent (%) Landscape only (%) Landscape and retailer (%) Landscape, retailer, and grower (%) Internet 32 34 28 38 Other 27 34 20 26 Yellow Pages 11 12 12 9 Social media 9 11 11 4 Newsletter 6 2 13 3 Radio/TV 6 1 10 10 Trade show 3 2 5 2 Catalog (print/cd) 3 2 2 6 Billboard 2 3 1 0 Trade journal 0 1 0 0 Gardening publications 0 0 0 1
Top advertising expenditures Internet (32% of sales) Other (27%) Yellow pages (11%) Newsletters (6%) Landscape only Internet 34% Other 3% Word-of-mouth reliability Landscape, retail Internet 28% Other 19% Newsletters 13% Yellow pages 12% Tv and radio 10% Landscape, retail, grower Internet 39% Other 26% Tv and radio 10% Yellow pages 9% Catalogs 7%
Advertising with social media
3 out of 4 Americans use social media Tell them about your business
Align your priorities Connect with existing customers Gain new customers Get public to know your business, name Consumers want to buy products that have a direct impact on their communities Using social media is not equal to using social media EFFECTIVELY Connect with the right people and the right message to benefit your business? Strengthen your social media with simple practices Create a brand for your social media pages Logos and imagery Company description Vision and mission
Every account starts with zero followers Look to accounts you adore for inspiration and mimic them Content, posting frequency, imagery, photo filters Inspiration Pick your crops First assignment: Facebook Begin on the oldie-but-goodie Fill your page Make pics look good Use their easy-to-understand analytics and ad tools
Diversify Expand to other platforms Test the waters with Instagram and Twitter Give it time and consistency Post at least once per day Respond promptly and politely to comments Keep it real Pose meaningful questions Share your observations and mistakes Ask for opinions Deliver expertise 140 characters Use #hashtags for keywords, buzzwords Share information, discuss ideas Tell your business/family story Photos, captions, and filters Tell your story
Hashtag: a hash or pound sign (#), used to identify a particular keyword or phrase in a social media posting (Oxford, 2010) Can give you 2x more engagements
1 1. Cover photo 2. Profile photo 2 3. Tabs 4. Page interactions 5. Call-to-action buttons 6. Community 3 4 5 7. About 6 7
Percentage of businesses indicating the following factors are important for growth and development Full sample Landscape only) Landscape and retailer Landscape, retailer, and grower Market demand 88 83 89 100 Own managerial expertise 80 76 85 81 Weather uncertainty 77 69 80 91 Labor 75 75 81 68 Ability to hire competent hourly employees 66 66 78 50 Competition/price undercutting 58 50 69 59 Other government regulations 56 59 50 57 Environmental regulations 54 61 46 48 Water supply 51 50 50 55 Ability to hire competent management 51 54 55 36 Debt capital 44 40 47 50 Equity capital 44 37 49 52 Land 41 29 44 64
Top factors affecting business growth and development Market demand Own managerial expertise Weather uncertainty Labor Landscape only Market demand Managerial expertise Labor Landscape, retail Market demand Managerial expertise Labor Weather Landscape, retail, grower Market demand Managerial expertise Weather
Resorts, schools, retail centers, corporate campuses, and other spaces incorporating green areas Multifamily structures: apartment buildings incorporating landscape areas
Percentage of businesses indicating the following factors are important for price determination Full sample Responses (%) Landscape only (%) Landscape and retailer (%) Landscape, retailer, and grower (%) Plant grade 94 94 95 91 Market demand 81 78 83 86 Product uniqueness 80 73 92 77 Cost of production 77 70 76 96 Other growers prices 67 66 69 64 Inventory levels 55 55 51 59 Last year s prices 54 56 56 48 Inflation 45 52 47 27 Other 35 36 50 0
Top factors affecting prices Plant grade (size) Market demand Product uniqueness Production costs Landscape only Plant grade Market demand Product uniqueness Landscape, retail Plant grade Product uniqueness Market demand Landscape, retail, grower Production costs Plant grade Market demand
By business size Small Medium Large
Large and medium firms had almost 2 time the sales of Evergreen trees Broad-leaved evergreens Sod Small firms sold 4 times Flowering potted plants Propagation material Those selling sod tend to be larger
100 Percentage of product form 90 80 70 60 50 40 30 20 10 0 Full Sample Small Medium Large Container (P=0.062) Balled and burlapped (P=0.559) Pot-in-pot (P=0.004) Bare root (P=0.972) Field grow (P=0.377) Balled and potted (P=0.980) Other forms (P=0.825)
Plant material in containers accounted for most product sales for all sized firms Medium 3/4 Small 2/3 Small firms tend to sell more pot-in-pot But, 2 out of 38 firms grow exclusively, may have skewed the findings
Landscape businesses spent on average 6% of sales on advertising Larger firms spent 2 to 3 times more Small businesses do not spend any money on advertising via Billboard Catalogs Trade journals No main differences on advertising expenditures across size
The ability to hire hourly employees was more important for larger business Larger businesses were more concerned about labor impacting business growth Weather uncertainty was more important for large and medium firms than for smaller
Last year s prices are more important for Medium Small
Thank you very much for your attention