NURSERY INDUSTRY POISED FOR GROWTH
01 Mar 2010
The nursery industry in NSW has come through the global financial crisis without too many scars. It is generally felt that our industry is impacted more by weather related issues - and spring trading was not very kind in that department.
The nursery industry in NSW has come through the global financial crisis without too many scars. It is generally felt that our industry is impacted more by weather related issues – and spring trading was not very kind in that department.
Looking towards the next 12-36 months, we see three key areas of growth for the nursery industry:
1. The landscape market is poised to lift to new levels. In the last 12 months we have seen projects delayed, a lack of commercial development and less domestic landscaping. I am confident that this trend has turned and that quotations have reached new levels for 2010. The nursery industry has watched the growth of this sector over the last five-seven years and we are very aware that more gardeners are having recommendations made to them by landscapers and landscape designers than by retailers.
2. The recently announced $30m Green Street program by NSW Housing Minister David Borger will create new opportunities for the landscape industry. Social Housing is set to go greener and cooler under the tree planting and landscaping program designed to improve quality of life for thousands of tenants across the state. This will mean:
• Planting trees will reduce carbon dioxide in the atmosphere and clean the air because trees absorb carbon dioxide during the day and let out oxygen at night.
• Planting trees will create shady streets. This makes it more comfortable for all residents and reduces the heat island effect.
• Planting trees will improve the look and environment in the area. This will lift the appeal in the area.
• More trees will encourage wildlife to an area, especially native birds.
3. Large retailers are seeing growth opportunities in the nursery industry. These include:
• Bunnings who are surging ahead in the hardware market. They love the garden market because it brings females into their stores. I estimate that they now have in excess of 60% of the greenlife market and it is growing. With a new competitor coming into the market, they have lifted their new store openings and some of our members are supplying $100,000 of product per new store per year.
• Woolworths have joined Lowes USA to capture a share of the market that Bunnings dominates. They plan to have 150 stores over the next five years and they have just announced that the first 12 will be in Victoria. This will expand the nursery market and create new opportunities for growers nationally. This will also increase pricing pressures for some categories because both Bunnings and Woolworths will want to have a low cost pricing policy and image.
• Metcash are planning to buy 51% of the Mitre 10 group and this will bring a new level of professionalism to their marketing and distribution. Mitre 10 have been trounced by the larger Bunnings stores and we can expect their new ownership to have the same impact on the hardware market as we have seen them achieve in grocery.
The nursery industry has had an extended period of drought and water restrictions in all states which has restricted market growth. The good businesses have survived and now we can look forward to a larger market for landscapers, retailers, growers and suppliers to our $6 billion market nationally which also employs over 15,000 people throughout Australia.
Chief Executive Officer
Nursery and Garden Industry Association, NSW & ACT