- Natural Resource Report - http://naturalresourcereport.com -

How to survive the next recession

Hall: Recession offers lessons for the future

[1]By Daily Digger
Oregon Association of Nurseries [2]

As Dr. Charlie Hall began his Farwest seminar presentation this morning, one of the first things he told the green industry professionals in the room was that they were all survivors. He could tell that simply because they were present in the room and not in another line of business now.

“How many of you in this room grow low quality plants?” he asked. “Raise your hands.” None went up.

According to Hall, those who survived the recession did enough things right, and there were some who even profited despite the bad economy. But he cautioned that it’s not enough to emulate what’s been successful thus far. “The competitive advantages that allowed you to survive are not going to be the same competitive advantages that allow you to survive into the future,” he said.

Hall, an economist who serves as the Ellison Chair of horticulture at Texas A&M University, spent 90 minutes talking about the horticulture industry has been during the Great Recession, and where it is going. A running theme throughout was that people will find a way to afford the things they want, so the horticulture industry needs to focus on making consumers want their products and services. “Flowers, shrubs and trees are discretionary purchases,” he said. “We’ve not convinced people that what we do is essential in their lives. We’re still considered a luxury.”

More people need to be aware, he said, that green material is the only kind of home improvement that generates more than $1 in increased value for every dollar invested. It’s $1.09, to be exact. Home or kitchen remodels, by contrast, generate 73 cents of home value for every dollar invested. Selling these economic benefits of gardening — as well as the environmental and health benefits — would help the green industry be more competitive against other industries such as pets or video games for the wallets of today’s consumers (particularly the 18-34 group).

But since today’s environment is highly competitive, it’s not enough to make the industry more competitive, Hall said. Individual businesses need to focus on their own operations.

Growers need to better manage their brands and their product lineups and study what their customers want, dropping products that aren’t demanded. They also need to make their production and distribution plans more efficient.

Service providers such as landscapers need to price their services more appropriately, taking into account the value they truly create. They also need to sell themselves as experts in water management, because water supplies and prices will only become a bigger issue over time.

Retailers need to work harder to understand the consumer and adapt to the fact that more people will be living in urban environments. They also need to learn to sell effectively where people live, work and play (he was not bullish on the future of the large, destination garden center).

And all three of these need to adapt to new and innovative marketing techniques such as social media.

According to Hall, it’s important to focus on younger consumers, but boomers still consider themselves young and are far from done spending on their gardens.