Melbourne, Australia (PRWEB) October 01, 2012
The Plant Nurseries industry in Australia grappled with the lingering effects of severe drought, which severely reduced water availability over the last decade. This forced producers to focus on water conservation and efficient irrigation to remain viable. It also reduced demand for the industry as consumers who had not installed water tanks cut back on plant and garden expenditure due to increasing water restrictions. These negative factors were compounded by falling average garden sizes and the fall in consumer confidence and spending due to the onset of the global financial crisis. On the brighter side, the general rise in dwelling approvals and the broad range of downstream consumers helped offset the fall in demand for the industry's products. Moreover, improved rainfall and the easing of drought conditions across eastern parts of Australia during 2010-11 provided a welcome boost to difficult trading conditions for many operators. According to IBISWorld Industry analyst Suzannah Rowley, “all these factors combined caused the industry to decline at an annualised 1.7% over the five years to 2012-13 to reach $1.17 billion”. However, greater water availability and a rise in demand from garden supply retailers are expected to increase industry revenue by 4.1% over 2012-13.
The Plant Nurseries industry will continue to grow over the next five years thanks to the ongoing rise in demand from major retailers of garden products, greater water availability, a marginal increase in dwelling commencement and annual rainfall levels overall. The main factors inhibiting revenue growth over this period will be declining consumer sentiment, which may cause consumers to keep reducing discretionary spending on garden products. “However, this could also work in the industry's favour”, says Rowley, “as people may resort to gardening and other home-based activities to cut spending on other leisure and recreation activities”.
Fragmentation within the Plant Nurseries industry can be attributed to low barriers to entry and the nature of predominantly family-run businesses. Low capital requirements for establishing a nursery means that industry entrants can continue to enter the industry freely.
The number of businesses operating in the industry has fallen considerably over the five years through 2012-13 as competition increased with the incorporation of garden centres in downstream hardware retailers such as Bunnings. The fall in establishment and enterprise numbers has coincided with the overall decline in industry revenue and profitability over the last five years. While market share concentration will remain especially low, falling revenue is proving a strong deterrent for potential business entrants. The two largest players in the industry are Anco Seed and Turf, and StrathAyr Turf Systems.
For more information, visit IBISWorld’s Plant Nurseries report in Australia industry page.
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IBISWorld industry Report Key Topics
The industry consists of businesses growing and propagating ornamental plants, bulbs and turf to be transplanted into gardens. Businesses sell to retail or wholesale establishments, as well as landscapers, local government and councils, and production horticulturalists, such as orchardists.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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