Today, the Commerce Department’s retail-sales report showed an overall 0.2% decline BUT exhibited a 0.5% increase when auto sales were excluded.The resilience of the consumer seen in today’s report is particularly encouraging given that this number largely represents spending that occurred prior to the receipt of the economic stimulus rebates. While it’s conceivable that some spending may have been pulled forward in anticipation of the rebate checks, survey responses and historical experience suggest these outlays occur only after the checks have been received.
Mother's Day radio segment
Click here to listen to a short Mother’s Day radio story developed through the Texas Department of Agriculture.
Mother's Day Projections
Here is a scoop on a news release coming out today by our Texas AgriLife Communications Team:
Experts Say Things Looking Rosy for Texas Floriculture This Mother’s Day
Author: Paul SchattenbergWhile research shows U.S. consumers expect to spend a bit less on Mother’s Day this year, that likely will not affect the purchase of cut flowers and flowering plants for moms in Texas, according to industry experts.
According to the 2008 Mother’s Day Consumer Intentions and Actions Survey conducted by BIGresearch for the National Retail Federation, Americans expect to spend an average of $138.63 on Mom this year. This is slightly down from the 2007 average of $139.14.
But although a nationwide reduction in consumer spending for Mother’s Day is expected, those associated with the Texas green industry expect flower purchases to be as good or better than in 2007.
Dr. Charles Hall, Professor and Ellison Chair in International Floriculture at Texas A&M; University, said he expects the Texas floral industry to fare well this Mother’s Day due to a combination of timing and consumer confidence.
“In spite of the downturn in consumer spending for Mother’s Day predicted in the National Retail Federation survey, the same survey shows Americans intend to still spend more than $2 billion on flowers this Mother’s Day,” he said.
Hall added that the 2007 NRF study showed more than 72 percent of those surveyed purchased some sort of Mother’s Day flora at an average retail price of $27.59.
“Other gifts like jewelry, CDs, housewares and the like tend to be spread out among the holidays, but flowers are a traditional choice for holidays centered around women,” he said. Hall also noted that overall consumer confidence is still high in Texas and that the likelihood of consumers purchasing flowers and other floral items “directly correlates” to that confidence.
“Not only that,” he said, “but (economic stimulus) rebate checks are now being mailed out and that will give more impetus to spending. Some of that money will go toward Mother’s Day gifts, which would include flowers.”
“Even with the slowdown in the economy, the amount that will be spent on flowers for Mother’s Day throughout Texas probably will be as much or more than last year,” said Jack Cross, past president of the Texas State Florists’ Association and owner of Arthur Pfeil Florist in San Antonio. “Mother’s Day is a traditional holiday, and the Texas consumer is traditional about Mother’s Day gift purchases, especially when it comes to buying flowers.”
In addition, Easter came much earlier this year than in years past, giving more time for the consumers to “recover” before their Mother’s Day flower purchase, Cross added.
When it comes to cut flowers, Texans usually prefer buying roses, carnations, tulips and lilies for Mom from their neighborhood florist, he said. Azaleas, begonias and Calla lilies are among the most popular flowering plants purchased.
“If someone is going to buy from a garden center instead of a floral shop, then that purchase will usually be something like a rose bush or a hibiscus plant,” he said.
While the product mix between Valentine’s Day and Mother’s Day couldn’t be more different, the sales dollars generated from each are about the same, said Stan Pohmer, executive director of the national Flower Promotion Organization, based in Minnetonka, Minn.
“Mother’s Day accounts for about 25 percent of all floral holiday sales,” Pohmer said. Cut flowers represent about 46 percent of Mother’s Day floral transactions, outdoor bedding plants and hanging baskets represent about 37 percent, and flowering house plants and foliage represent about 15 percent.
Pohmer added that 64 percent of Mother’s Day flower purchases are made by women. However, he cautioned, floral sales in general may not be as sure-fire in the future as they have been in the past.
“While the floral industry has previously thought of itself as recession-proof, a more realistic term these days would probably be recession-resistant,” he said.
But in the Lone Star State, flower producers, greenhouse growers and retailers are all poised to make sure Texas moms gets their mums – or whatever floral they desire.
“Things look good this year for flower retailers and the greenhouse floral industry in Texas,” said Richard de los Santos, state marketing coordinator for horticulture with the Texas Department of Agriculture. “Flower growers are pretty well sold out of product and have made commitments to their retailers.”
“There seems to be a growing desire for people to give plants that continue to live and give,” said Marilyn Good, communications director for the Texas Nursery and Landscape Association in Austin. “Blooming potted plants are gaining favor, and the real up-and-coming gift plant is the orchid, which has a hard-to-grow reputation, but many are low maintenance.”
David Rodriguez, Texas AgriLife Extension Service horticulturist for Bexar County, agrees mothers often prefer potted plants or bedding plants to cut flowers.
“Some good choices for live plants for Mother’s Day might be Belinda’s Dream and Grandma’s Yellow roses, which are Texas SuperStar plants. This means, among other things, they are attractive, unique flowering plants suited to Texas. And they consistently perform well, regardless of a person’s gardening expertise.”
Other Texas SuperStar plants that may serve as good selections are the ‘Gold Star’ Esperanza and Perennial Hibiscus, he said. And the moth orchid makes a good choice for a beautiful, low-maintenance indoor flowering plant.
“But regardless of flower selection, there is always something unique about Mother’s Day,” added Hall. “Mother’s Day tends to supercede economic concerns in a ways other holidays do not. People know they can always rely on Mom during the tough times, so they aren’t going to forget that when Mother’s Day comes around.”
Good Advice Sid!
On the OpenRegister blog, Sid Raisch, president of consulting firm Horticultural Advantage, offers some tips for retailers to keep in mind during these tight economic conditions. Click here for his comments.
Mixed news regarding retail sales
According to the National Retail Federation, retail industry sales for March (which exclude automobiles, gas stations, and restaurants) dipped 0.9 percent unadjusted over last year and were down 0.3 percent from the prior month.
March retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.2 percent seasonally adjusted from the previous month and increased 0.1 percent unadjusted year-over-year.
“Unseasonably cooler weather created a challenging sales environment for many apparel retailers last month,” said NRF Chief Economist Rosalind Wells. “With the earliest Easter in 95 years, the calendar shift will likely impact April sales as well. In order to get a true picture of retail performance, we will need to look at both March and April sales combined.”
The weak housing market once again had a negative effect on the home furnishing and home improvement categories. Sales at furniture and home furnishing stores decreased 0.3 percent seasonally adjusted from last month and 10.2 percent unadjusted year-over-year. Building material, garden equipment and supplies stores sales decreased 1.6 percent seasonally adjusted from February and 9.6 percent unadjusted from last March.
In spite of the weak selling environment, there were still a few bright spots. Health and personal care stores sales rose 2.8 percent unadjusted from last March but decreased 0.1 percent seasonally adjusted from last month. Sporting goods stores sales also rose 1.5 percent unadjusted year-over-year and 1.4 percent seasonally adjusted month-to-month.
What does this tell us? Consumers will still buy the things that matter most to them! Stay the course. Reports from many parts of the country (undergoing good weather on weekends) points to a favorable spring thus far. Friends in the Northeast do report tougher times however (hurry up spring!).
The results show a cautious household sector, but not one in retreat. Available indexes of consumer attitudes have moved to very low levels — close to or below the lows in the prior two recessions — raising the prospect of a sharp adjustment to consumer spending. However, spending patterns, so far at least, have not softened to the same degree as attitudes.
Consumer preferences for container gardens
A recent article published by Dr. Terri Starman (TAMU) et al. in the April 2008 issue of HortScience is entitled Consumer Preferences for Price, Color Harmony, and Care Information of Container Gardens. The abstract of the article’s findings is below.
Retail sales of container gardens have increased dramatically in recent years, rising 8% from 2004 to 2005, to $1.3 billion. The objective of this study was to determine consumer preferences for three attributes of container gardens; color harmony, price, and amount of care information provided with the purchase. A hierarchical set of levels for each attribute was used in a 3 x 3 x 3 factorial conjoint analysis.
A Web-based survey was conducted on 18 Oct. 2006 with 985 respondents. Survey participants were asked to complete a series of questions on a 7-point Likert scale. Survey participants also answered questions about past experiences with and future purchase intentions of container gardens as well as demographics. The three attributes accounted for 99.8% of the variance in container garden preference. Relative importance decreased from price (71%) to amount of care information (23%) to color harmony (6%).
Survey participants preferred a container garden with a price point of $24.99, extensive care information, and complementary color harmony. A large portion (76%) of participants in this study indicated that they would be more likely to purchase a container garden if extensive care information was included with the purchase and 85% of participants said they would be willing to visit an Internet Web site that would provide more information on how to care for and maintain a container garden.
Results of this study show that there is a potential to increase the value of a container garden through providing educational material with the purchase.
The Home Depot "Index"
Home Depot Inc. said Tuesday that fourth-quarter profit fell a sharper-than-expected 27% after the declining housing market hurt demand for its building and home goods supplies and the outlook for 2008 remains “challenging.”
Declining housing and credit markets have hurt consumers’ appetite for home supplies provided by Home Depot and rival Lowe’s, which said Monday that profit dropped 33%, with sales at stores open at least a year declining 7.6%.
To reduce costs, Home Depot said in January it would cut 10% of its headquarters staff, following moves to slow the pace of its stock buybacks and advertising-spending growth. The company, however, said it remains committed to $2.3 billion in capital spending this year. Home Depot has spent money on projects to make stores cleaner and brighter and improve customers’ experience after it lost market share to Lowe’s and other competitors.
What to make of this?
- DIY retail sales will most likely continue to crawl. Of course, this is no surprise since lawn & landscape services have increased in recent years to offset declining DIY sales due to more DIFM (do-it-for-me) purchases.
- Growers who sell to Home Depot and Lowe’s will still need to offer differentiated programs as usual — and pay particular attention to shrinkage and gross margin on a store-by-store basis.
- Landscape service firms need to ratchet up the marketing efforts — especially emphasizing the return on investment from lawn & landscape improvements (see earlier posts).
One step closer to recession???
Recession worries surged, slamming financial markets, amid signs that service businesses may be stumbling. A key barometer of the strength of the service sector dropped to its lowest level since October 2001 and suggested those businesses are now contracting. ISM’s Non-Manufacturing Business Activity Index registered 41.9% in January, indicating a significant contraction in business activity in January from the seasonally adjusted 54.4% registered in December. This is the first contraction in the non-manufacturing sector since March 2003, when the index registered 46.3%, and the lowest Business Activity Index since registering 40% in October 2001 (one month after 9/11). The next piece of major economic data comes in a week with the retail sales report for January. Reports from retailers already offer cause for concern. Capital Economics today offers another sign of caution, and it goes back to the surprise drop in the ISM’s nonmanufacturing index that shook markets yesterday. The firm tracks the ISM’s service-sector index against real consumer spending and finds they are correlated, meaning that next weeks retail sales report should prove interesting! Even so, most pundits still only put the chance of the U.S. entering recession at 42%. All for now…time to polish the crystal ball.