Nurseries should prepare for next recession, economist says
PORTLAND — There’s no reason to panic, but nursery producers should begin preparing to weather the next downturn in the U.S. economy, according to horticulture economist Charlie Hall.
Several indicators suggest the economy will continue slowly chugging along for the time being, but based on historical data, the country is overdue for a recession, Hall said at the Oregon Association of Nurseries Farwest Show in Portland, Ore.
“We don’t have a lot of red flags over the next 18 to 24 months, but we will go into recession at some point,” he said.
Nursery producers should consider this current time frame as a reprieve and develop a game plan for dealing with various financial scenarios, said Hall, a professor at Texas A&M University.
“We need to start right now informing our contingency plans,” Hall said. “There’s nothing holding us back but ourselves.”
Sales of nursery products and services surged for years as the baby boomer generation married, had children and bought houses, but they began slowing in the 1990s and are now flat, he said.
Because they’re in a mature industry, nurseries are prone to disruptions — as evidenced by the large number of companies that went out of business during the last financial crisis, Hall said.
“The interesting thing about this stage is that any disturbance will cause a shakeout,” he said.
At this point, housing starts are getting back to normal and there’s growth in the number of mortgages, both of which are positive for the nursery industry, he said. People are also quitting jobs to take higher-paying ones, and members of the millennial generation — known for delaying marriage and family — are beginning to form more households.
Lower fuel prices also provide consumers with more spending money, though they won’t necessarily spend all of it on nursery goods and services, Hall said.
Only 42 percent of consumers buy plants in an average year and 25 percent spend money on landscape services, he said. While these numbers aren’t great, they do imply the industry has the potential to increase sales frequency, he said.
Nurseries tend to emphasize prettiness and newness in plants, while they should be focusing on their functionality, Hall said. For example, studying in the presence of plants has been shown to improve students’ academic performance and test results.
Other research has indicated that plants and landscaping increase property values, building occupancy rates, improve water quality and reduce healthcare costs.
Pet-related sales have grown despite the recession, which shows people are willing to spend money to feel happy, he said. Nurseries should find a way to tap into this dynamic.
“We will pay whatever it takes to improve the quality of our lives,” Hall said.
Nurseries can appeal to the altruism of the millennial generation by promoting the environmental benefits of plants, such as helping butterflies and pollinators, said Brie Arthur, “green industry communicator” who writes and speaks about horticulture.
“I want the world to be a better place with how I spend my money,” she said.
Selling rare or heirloom varieties of plants can also help nurseries stand out from the pack, Arthur said. “You should be differentiating yourself through the plants you carry.”