Nursery and Garden Stores in the US Industry Market Research Report from IBISWorld has Been Updated

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Nursery and garden stores have faced strong competition from home improvement stores and mass retailers over recent years; unfortunately, the next few years will be no different, according to IBISWorld research. Despite improving disposable incomes and expanding home-improvement budgets, consumers will increasingly favor large, low-cost retailers to specialty garden stores for their competitive prices and convenient one-stop-shop formats. To stay afloat, some operators will source more of their inputs from low-cost countries to improve profit, while others will focus on developing their own exclusive plant varieties. For these reasons, industry research firm IBISWorld has updated a report on the Nursery and Garden Stores industry in its growing industry report collection.

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Continuing competition from low-cost home improvement retailers will stifle growth

External competition, low household incomes and fewer gardens have spelled disaster for the Nursery and Garden Stores industry over the five years to 2012. The period has been defined by declining revenue, dwindling profit margins and exiting operators. According to IBISWorld industry analyst Justin Waterman, “prior to the recession, competition from alternative retailers, including home improvement stores and mass merchandisers, had already been pulling customers away from traditional nurseries and pushed retail prices down.” When the recession took hold in 2008, the industry suffered further, facing drastic drops in revenue. A rising number of home foreclosures, escalating unemployment and little spending cash diminished downstream demand. Even as the economy continues to recover, IBISWorld anticipates revenue to decline 0.5% to $27.1 billion in 2012.

With industry revenue expected to fall at an average annual rate of 4.0% during the five years to 2012, participants have found it difficult to sustain profit margins and operations. Because the majority of businesses in the Nursery and Garden Stores industry operate on a small scale, targeting only specific geographic markets, priced-based competition can only go so far before businesses start operating at a loss. Therefore, “under anemic consumer demand and intense price competition from mass merchandisers that benefit from economies of scale, many nurseries and garden stores have closed up shop,” says Waterman. From 2007 to 2012, the number of industry participants has declined steadily.

In the coming years, the declining unemployment rate will lead to higher disposable incomes, spurring demand for home improvement projects and purchases. Nevertheless, budget-minded and time-pressed consumers will continue shopping at lower-priced, one-stop-shop retailers like the Home Depot and Walmart, sapping revenue away from nursery and garden stores. Rising external competition from these mass merchandisers will largely contribute to the Nursery and Garden Stores industry's dismal financial performance; revenue is anticipated to decline in 2013, setting the stage for what the industry should expect over the next five years. And, in addition to a steady decline in revenue over the period, businesses will continue exiting the industry. For more information, visit IBISWorld’s Nursery and Garden Stores in the US industry report page.

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IBISWorld industry Report Key Topics

Stores included in this industry are primarily engaged in selling a broad range of nursery and garden products, including trees, shrubs, plants, seeds and sod. Also included in the industry are stores retailing farm supplies such as animal feed (excluding pet food). This retail industry not only serves households but also satisfies the needs of the farming community.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
IBISWorld
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