What a heady few weeks for the humble world of backyard horticulture. First Alice Waters on 60 minutes talks about raising fruit and vegetables on the White House lawn. Then we're treated to story after story about the new victory gardens sprouting up across America, with many positive references to Eleanor Roosevelt's.
On March 20 First Lady Michelle Obama's new kitchen garden broke ground. NBC News that night chimes in about skyrocketing vegetable seed sales. Even Federal Reserve Bank Chairman Ben Bernanke, sounding a bit like Chauncy Gardener from Jerzy Kosinski's Being There, jumped on board. He observed on 60 Minutes that the economy is now showing some "green shoots."
So as a horticulture professional and lifelong avid gardener, I'm thrilled that gardening is cool, and has become a big part of the national conversation. As a bedding plant supplier, though, from our point of view in the supply chain, it's not all good. Deflation has stuck its foot in the door of the low-profile greenhouse business, and The Home Depot is in the thick of it.
March 19 in the Portland Oregon area The Home Depot saturated the radio airwaves, even the lefty talk station KPOJ-AM, with ads promoting a 3/$1 special, through Sunday, on 4" color spots. At 33 cents, those items are priced about 10 cents below the average cost of production. Typical wholesale cost on them is 65-80 cents.
But I visited three local Home Depots and the stock of color spots was a sorry sight. Much of it was half-dead. Selection was pathetic--weeks old pansies and primroses--as you would expect when the killer price is limited to stock on hand. In this case, tired, picked-over stock not even worth the 33 cents charged.
In effect, Home Depot wanted its customers to pay to haul away Home Depot's trash. Given Home Depot's right-wing leanings--the CEO's apocalyptic vision of the Employee Free Choice Act is a case in point--such an absurd "cash for trash" plan is hardly surprising.
There was no fresh product to support the promotion. No other bedding plants, at least at the three stores I visited and the two I heard about. It's early season, granted, but a number of bedding plants, such as alyssum and snapdragons, could be safely planted now. Lack of hardiness has seldom stopped any nursery from selling something before the last frost date either. "Protect from frost" is our industry's "caveat emptor"!
In normal years a promotion this aggressive would be unthinkable. Even as late as January, I did not think such price wars would occur, as growers were cutting back on production and demand on certain items was holding up. But this is not a normal year, with deflation lurking behind most every economist's forecast, and growers still overproducing on non-edible items.
My impression is that this loss leader was not working so well, even with decent seasonal weather to boost foot traffic. None of the stores was particularly busy for a late Saturday morning, in the nursery or elsewhere. Those shopping in the nursery were clearly focusing on basics--horticultural lime, moss control, lawn fertlizer, hand tools, foundation shrubs. Few shoppers were picking through and buying the cheap pansies and primroses, and they did not seem to be enjoying it--lots of frowns as they moved dead plants aside to find some salvagable ones.
This strategy of dumping excess inventory at heavily advertised below cost pricing gives loss leaders a bad name. It could conceivably backfire. Any customer looking for a great deal on 4" annuals was rewarded with poor quality and selection and could see Home Depot was just trying to clear out old stock and cut their losses on early season annuals. Moreover, such a low ball promotion smacks more than a little of desperation. The low price was not the result of their buying power, but of weak sales. Perhaps in recognition of this appearance of weakness, this weekend's ads are focused on lower prices on "thousands of items through out the store," so customers can "experience the power of The Home Depot."
Of course, plenty of healthy items, in bloom and at full price, were prominently displayed as impulse items, with few takers. The zonal geraniums, while a bit small for their pots, were not selling well at the attractive price of $2.99. This was a surprise for the first day of spring after an unusually hard winter-during which no one without a greenhouse overwintered any zonals. At this rate they could be the next target of below cost pricing.
Veggies, notably, were well-shopped, but with limited selection. Here is where independent garden centers have a remarkable advantage. As a grower who supplies only independents, we have added new and unusual items and increased the depth and breadth in our plantings of veggie starts in 4-inch and gallon pots. We grow in small crops that can be monitored for quality. The mass merchants can't hope to have such selection and quality, though God knows they spend a fortune to convince customers to think so.
Indeed, I also visited two independent garden centers that were just as busy if not more so than the Depots. Though the mix of purchases was about the same: basics, not much more, and lots of veggie seeds and starts.
Now Home Depot has the right to make or lose as much money on their products as they wish. The problem lies in the shopper who concludes that any color spot must cost no more than 33 cents to produce. This notion is plain wrong, and reinforces the deflationary mindset.
As many on Daily Kos have noted, deflation is deceptive: while lower prices look good at first glance to the buyer, those lower prices lead to lower profits, leading ultimately to cuts in jobs and business investment and further declines in personal investment and spending. Not what the country needs right now.
And it's not unheard of for suppliers to declare bankruptcy or go out of business trying to feed the Home Depot empire's constant demands for lower costs, but that's a subject for another time.