Filling the Void

Chris Beytes

The decision by Target to give up its garden center business got me to thinking about others who’ve come and gone from our industry, and what the future may hold.

Suppliers had an advantage with Target. They’d already downsized their garden business way back in 1993-1994 to just four states, leaving relatively few players to still supply them. So the handwriting was somewhat on the wall, even if it was a bit smudged: Target could get out of the plant business altogether.

I give all the credit in the world to Target for 1) notifying their vendors well in advance of the September close date and 2) not doing the ignoble but all-too-common practice of selling through the spring plants, then shutting down and leaving growers holding a stack of receivables. Then again, that only works with a bankruptcy, such as with Frank’s and Hechinger.

How does the loss of Target affect the industry as a whole? The first thing I consider is the number of retail outlets we lose—about 260. If 260 independents suddenly closed their doors, it would be a tremendous blow to our industry’s morale and psyche, as well as to quite a few small growers who supply them. But the financial ripples wouldn’t spread very far or for very long. Other retailers, both independent and chain, would pick up the displaced customers, and the growers would eventually find new customers.

In the case of Target, I don’t think the loss of one of its garden centers in a community will cause much concern among local consumers. When I talk to anyone about Target’s garden departments, the comment I hear most often is, “They’re nice, but there are never any people in them.” Which was the reason they didn’t make any profit from plants—folks simply don’t think of plants when they think of Target. And it will be so easy for the Target garden customer to instead stop at another big box or a grocery store or an independent to buy their flowers.

As for the impact on the grower segment, I know of at least two growers who lost a good-sized chunk of business. Altman’s, especially, has lost a major customer, and they’re now working to replace that business, which could have some impact on Altman’s competitors. Then again, it could result in some contract-growing opportunities, too, so it might turn into a win-win.

While I reported the official “why” in the news coverage in the front of the magazine, the rest of the Target story involves profitable categories and store square footage. It’s well documented that Target is pursuing a strategy called “P-Fresh” (Prototype Fresh), in which they’ll now be selling food in all of their stores, not just Super Targets. P-Fresh stores will carry 60% of the food SKUs of a Super Target. They’re doing this because food is a year-round business. And it’s a category that consumers shop for much more frequently—and more frequent store visits means more opportunities to sell them other merchandise.

To add food to a store, Target needs space. But for zoning reasons, they can’t expand a store without having to expand its parking lots, too—expensive, and even impossible in many cases. But they can take existing garden center space, enclose it, knock out a wall, increase their indoor selling space and get around the parking issue for little money.

So now the big question: Will some other retailer do like Target and drop our category? Despite ongoing speculation by pundits, I don’t see any of the current big players doing that—at least not without sending some obvious warning signals first.

No, what I’d be worried about is a chain to which plants are a marginal or seasonal business, and where traffic and sales seems to be low compared to the competition. Think back to Sears, which never seemed to be really serious about the category. That, to me, points to smaller regional chains, both general merchandise and grocery. Those are the customers I’d be keeping my eyes on.

One thing is for sure: As margins get tighter and profits shrink, retailers will be casting much more critical eyes on what our category offers in terms of revenue and image.