Industry Sector: Garden Centre
Introduction
You have decided that you want to run a garden centre - now you need to decide on how
you will achieve this. Will you:
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buy an existing business
start up a new business from scratch
The course of action you choose will affect the costs you will incur and may also affect how
soon you start to receive income from the venture.
This Business Guide will help you to complete your cash flow. The topics listed under
Income and Expenditure relate to fields in the cash flow section of the Business Plan.
Cash sales
'Cash sales' means all income from your main business activity which is received at the time
of sale. While some customers will pay you in cash, remember that Cash sales can also
include:
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debit and credit card payments
gift tokens (if you accept these)
cheques
To prepare your cash flow, you will need to estimate how much income you'll receive over
the next 12 months (including VAT if appropriate). To do this you will need to estimate how
many plants and related items you are likely to sell and at what price.
There are a number of things to consider when you make your estimates:
Type of business
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who will your customers be? Will you target members of the public exclusively or
will you also aim to supply other businesses such as landscape gardeners or
forecourt retailers
will you sell by mail order and over the internet
where will your premises be? You may need to have a main road frontage to attract
large volumes of customers
how large will your premises be? This will affect the range of plants and other goods
you will be able to stock
what security measures will you put in place to protect your stock
how many outlets will you have
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what will your opening hours be
Your product ranges
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will you grow any plants yourself
will you target a particular type of customer - for example, young families
will you aim to stock a wide range of plants or will you specialise - for example in
herbs
what other non-plant ranges will you stock
will you offer services such as garden design
will you allow other businesses such as swimming pool installation, conservatory or
shed erection to operate from your site on a concession basis
will you offer any catering to customers
how will you make sure your plants are healthy and disease-free
what will you do with 'leggy' unsold plants past their peak
how will you minimise wastage
are you prepared for seasonal variations - most of your sales are likely to take place
between March and June or July
Pricing
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what will your pricing policy be (don't forget, you must be able to cover your costs,
overheads and drawings)
how often will you review your prices
will you offer special prices if customers buy more than one of a particular item
will you try to offer plants in all price ranges
how much discount will you offer your trade customers (if you have any)
Staff
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will you be able to find experienced and knowledgeable staff locally
what will be your policy on staff discounts
Competition
Independent garden centres face strong competition from supermarkets and from the
national garden centre and DIY chains, which operate from very big sites, stock vast ranges
of plants and non-plant products and offer customers an enjoyable day out with plenty to
see and do.
This can make it hard for the independent to compete. It's very important to make sure that
your garden centre will offer something special that will attract customers to you rather
than to your competitors.
Buy an existing business
You might decide to buy an existing garden centre rather than start your own venture from
scratch. Buying a going concern can mean that:
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the premises, shop fittings and equipment are already in place
there are established customers
the business can generate income immediately
suppliers have been identified and relationships established with them
the business has a track record which can help if you are looking for finance
staff may already be in place
However, look critically at any business that you are interested in to make sure that the
price you negotiate with the seller is a fair one. Try to establish why the business is for sale for example, is the owner keen to retire or is there another personal reason for selling up.
Your market research into the sector as a whole and the locality in particular will help you to
establish whether or not the owner is selling because he or she can no longer generate
enough income from the business. This may not necessarily deter you - many business
people are confident that they can turn a failing business around. The important thing is to
have established the current position so that the price you pay for the business is not too
high.
Other matters to consider include:
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the state of the premises, equipment and so on. Will you have to spend money
refurbishing or replacing assets
the condition of any stock you are buying - particularly plants. Check this over
carefully before agreeing a price
existing staff rights
how to retain key personnel once you've taken over
does the business owe money that you will be responsible for
if you are paying for goodwill, to what extent does this depend on the skills and
personality of the seller
Ask your accountant to look critically at the business accounts for the past three years and
discuss with him or her, the selling price in the light of what the accounts reveal. Make sure
you budget for other professional fees such as legal fees and valuation and survey costs.
Market research
Estimating demand
As a first step, give some thought to who will buy your products. Bear in mind that your
business is likely to be very seasonal, with high demand in the spring and early summer and
a much lower level of demand during most of the rest of the year.
As far as possible, match your perishable plant stock to the level of demand you estimate
you will have. To achieve a reasonable level of sales, your 'catchment area' must contain a
sufficient number of potential customers and not too many competitors.
Catchment area
Although the majority of your customers will visit you by car, most will not want to travel
too far to reach you. Ideally your garden centre should be located in, or very close to, a
major centre of population with many residential areas.
Identify the different types of housing within, say, a 15 mile radius of your garden centre.
You could even try to estimate the number of households there are. Make a note of the
size, nature and appearance of the gardens. This will help you to decide on the range of
plant and other products you might sell. For example, you might do well to concentrate on
bedding plants for patios, window boxes and hanging baskets if your catchment area
includes many flats or houses with very small gardens.
Checking out the competition
Plants, seeds, bulbs and other garden products are available from many different sources
such as:
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other nurseries and garden centres - many of these are part of garden centre chains
and offer customers a very comprehensive service
florists
DIY 'sheds'
supermarkets
petrol filling stations
mail order and internet retailers
greengrocers, variety stores and even convenience stores
So you will need to decide whether there is room for another outlet selling garden products
in your area. Count how many competitors there are already and identify the range of goods
they sell. If some of these are garden centres note down whether they are independent or
part of a chain. Think about the range of plants they stock - is it a little bit of everything or
do they specialise, for example in herbs. Make a note of the condition of the stock too.
Trade sales
You might be planning to supply plants and other products to other businesses, such as:
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landscape gardeners
petrol filling stations and other local retailers
hotels and nursing homes
your local authority (for parks, municipal gardens and so on)
building contractors
If you plan to target trade customers you could:
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count the number of suitable businesses and other organisations in your area
work out what product ranges to offer them
decide on the discount you will offer them
approach them to see if they would be interested - if they are already being supplied
by someone else you will have to give them a good reason to change. This might be a
wider product range, better quality plants, lower prices or a better service
Sector trends
What has been happening in the garden products sector
Over the last 10 years or so there has generally been a steady increase in demand for
garden products, for a number of reasons:
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there was a lengthy period during which the housing market was buoyant, with
many new properties being built
gardening has become one of the most popular leisure activities and enjoys
widespread coverage on TV and the radio, in magazines and newspapers
container grown plants and pre-planted pots make 'instant gardening' possible people do not have much time to spend growing plants from seed
spending on garden items such as water features, garden furniture, barbecues, patio
heaters and lights, paving, decking, boundary fencing, ornaments, planters and so on
has grown significantly
growing demand for 'green' and 'eco-friendly' products like water butts and
composters
the recent increase in interest in home-grown vegetables
This has benefited the garden centre sector but has also seen other retailers, such as DIY
'sheds', entering the market. Although the specialist garden centre sector still consists of
many small independents, there has been an increase in the number of large outlets run by
the big national garden centre chains.
In common with other retailing sectors, garden centres were affected by the economic
downturn during the late 2000s - but demand for smaller, cheaper items such as plants and
seeds held up reasonably well. Sales of vegetable seeds, plants and gardening tools
increased considerably as people decided to save money by growing their own veg.
However, sales of 'big ticket' items such as outdoor furniture are likely to have fallen.
In the longer term the market for garden products is likely to remain strong, but smaller
independent garden centres may find it difficult to compete in what is now a very
competitive industry.
One problem that the sector has faced in recent years is a shortage of good, well trained
staff. Knowledgeable and friendly staff are particularly important to a successful garden
centre, where many customers will have lots of questions about the plants on display and
some will just want to chat.
Keeping up to date with developments
The Horticultural Trades Association (HTA) represents the interests of all types of businesses
in the garden products industry including growers, landscapers, wholesalers and
manufacturers as well as retailers. The Association offers members a range of services and
can be contacted at Horticulture House, 19 High Street, Theale, Reading, Berkshire RG7 5AH.
The Garden Centre Association (GCA) also offers members a range of services including an
annual Yearbook, regular newsletters and trading trends reports for members. Members are
listed in the GCA online directory, with links to their own websites. More information is
available on the GCA website.
Haymarket Media Group publishes trade journals for the horticultural sector, including
Horticulture Week. You can contact them at 22 Bute Gardens, Hammersmith, London W6
7HN.
Trade Shows
You can get a lot of useful information at trade shows and exhibitions for the gardening
sector. One of the main exhibitions is GLEE, held at the NEC every September. You can find
out more about this event on the GLEE website.
What to sell
The range of products and services that you decide to offer will depend on:
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how much space you have available
whether you are targetting a 'niche' (specialist) market
whether you are growing plants yourself
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whether you will invite other businesses to operate from your site on a concession
basis
If you have a large site you'll probably have room to offer a wide range of plants, plantrelated products and leisure items such as:
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plants (seeds, bulbs, houseplants, bedding plants, container grown stock and preplanted containers)
Christmas trees
gardening tools and equipment
furniture, barbecues, ornamental items
hard landscape materials and decking for patios
boundary fencing, gates and trellises
pots and containers
miscellaneous garden products such as bamboos, artificial turf and so on
pet and aquatic products
buildings and greenhouses
garden chemicals such as fertilisers, pesticides, herbicides and so on (don't forget to
include some organic ranges)
a range of composts, including peat-free products
'green' and 'eco-friendly' items like water butts, composters, domestic wind turbines
and so on
gift vouchers
Christmas decorations, books, gifts and sundries
miscellaneous food items such as fresh fruit and vegetables, honey, jams, handmade
biscuits and so on
craft items and cook shop ranges
Services that you might offer include:
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hanging basket supply and maintenance service
garden design
a café
swimming pool installation and maintenance
conservatory installation
solar panel installation
Some of these might be offered by concessions - separate businesses that 'rent' space at
your premises.
When thinking about what to sell, be sure to tailor your stock to your customer base. If most
of your potential customers have only small gardens it makes sense to have plenty of
bedding plants and smaller shrubs and perennials. Don't forget to stock ancillary items like
potting compost, tubs, planters, window boxes, hanging baskets, irrigation systems and so
on.
Think too about current trends - for example during the economic downturn customers are
keen to save money by growing their own vegetables. Even flat-dwellers with a small
balcony can grow a few items in pots so it makes sense to encourage this by stocking a good
range of different varieties of vegetables and planters.
Although it is important to have a big enough site to be able to stock a wide range of stock,
one of the most essential things for any garden centre is the quality of your plants. They
should be healthy, vigorous, weed free and well maintained so that they thrive when
transplanted into the customer's garden.
Make sure also that plants have colourful and informative point-of-sale material and are
displayed to the best advantage. You could tailor displays and promotions to different times
of the year, or to coincide with the content of television gardening programs. Don't forget to
stock a good range of herbs - the popularity of TV programs featuring celebrity chefs has
boosted sales of culinary herbs considerably.
Customer profile
Your market
You might have several different types of customer, depending on the nature of your
business. For example:
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members of the public, either in person or via mail order or the internet
other garden centres, to whom you might supply plants you have grown yourself
gardening clubs
landscape gardeners and local builders
organisations such as local authorities, colleges and hospitals
local businesses such as petrol filling stations and convenience stores
businesses such as hotels and nursing homes or retailers with grounds that need to
be maintained - for example those located on retail parks
Estimating the average spend
When estimating your income, think about the number of households who will buy from
you and how much they are likely to spend each time they come in. Your market research
may have helped you to estimate how many households are located within your 'catchment
area' and to consider how many of these you might reasonably have as customers.
Estimating how much they will spend is more difficult because:
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they may spend significantly more in the spring or summer than at any other time of
the year
each customer's requirements will be different, reflecting the different sizes of
garden and the extent to which they grow from seed or buy plantlets. Remember
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too that customers with young families may want a low maintenance garden, while
older gardeners have more time to devote to gardening activities
you may have to offer discounts because the weather has deterred customers from
buying your stock, or because local competition has increased
You might decide to base your estimate of the average spend on your own spending pattern
and that of friends and relations. You could also observe closely in other garden centres the
quantities in which customers buy and the price they pay.
Trade sales
If you are planning to sell to trade customers, try approaching some as part of your market
research and establish:
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what range of products and services they would want
how frequently they would want them
whether they are happy with the prices you would charge
This will help you to estimate your trade customers' average spend.
Cash or cheque
Although some customers may pay you in cash, particularly if they are buying just a few
items, many will prefer to pay by credit card or a debit card. Some may also pay by cheque,
but this is becoming less commonplace. Your trade customers will probably pay by cheque,
and if you supply local institutions and organisations on a regular basis they might pay you
by electronic payment direct to your bank account.
You'll probably offer your trade customers discounted prices, for example 10% or 20% off
the normal retail price, as well as credit terms of, say, 30 days.
Advertising your business
Whoever your customers are, it's essential that they know about your business. The garden
centre itself is potentially one of your best advertisements - ideally it'll be very visible to
passers-by and always have attractive and well-tended displays of seasonal plants. Many
garden centres use colourful flags to attract attention.
There are a number of other things you can do to promote your business:
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set up your own website including images of your displays, details of any special
offers and promotions and possibly an online ordering facility
have leaflets printed outlining the products you specialise in and, perhaps, including
plant care tips
advertise in your local newspaper and any other local publications and directories
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set up a local gardening club and try to get some editorial on your local TV or radio
station. You could offer club members a loyalty card scheme so they can build up
points towards the cost of plants
have a regular stall in a local market, selling just a few of your seasonal ranges and
displaying information about your main retailing outlet
make sure all your vehicles, packaging and other literature carries an eye-catching
logo
Quality standards
Whatever plant ranges you decide to stock it is essential that they are disease-free healthy
specimens. You will need to make sure that the staff you employ are experienced and well
trained with extensive plant knowledge. As well as keeping your stock in top condition,
they'll be able to answer customers' queries.
The weather can have a very dramatic impact on demand. For example, a cold wet spring
may mean that customers don't buy bedding plants as early as usual so that your stock
becomes 'leggy' and unappealing. Very hot weather can mean that plants lose too much
moisture and become limp and bedraggled. Although it seems hard to do, it is better to
throw poor stock away before it damages your reputation. You might be able to discount
the stock and sell it before it has deteriorated too far. Don't be tempted to use this sort of
stock for your own displays - the plants won't thrive and the whole purpose of the display
will be lost.
Make sure that your whole site projects a well cared for image. Keep pathways clear and
weed free, stack non-plant products tidily and make displays as attractive as possible. Ideally
you want your customers to spend a long time at your centre so it's essential to make sure
all the different areas are pleasant and enjoyable to be in.