Ellison Chair in International Floriculture
Ellison Chair in International FloricultureTeaching, Research, Extension and Service

We enhance the quality of life…period.

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The plethora of benefits provided by flowers, shrubs, and trees is not common knowledge, let alone ingrained in modern day American culture. Humans often have difficulty in even seeing flowers or plants in their own environment, much less connecting plants to tangible benefits – a phenomenon called plant blindness. For most people, flowers and other plants are a part of the subconscious sector of mental life, perceived as the backdrop, not the main actors in the playing out of our everyday lives.

All industry firms need to emphasize these types of “benefits” messages in the marketing efforts of their individual companies. A new publication that summarizes these benefits is entitled Economic, Environmental, and Health/Well-Being Benefits Associated with Green Industry Products and Services: A Review and was published in the Journal of Environmental Horticulture (Issue 29(2):96-103) thanks to the Horticultural Research Institute. Since previous efforts on the part of the industry to provide a united voice through a generic advertising campaign (e.g. Got Milk) have been met with a less-than-enthusiastic response, firm-level marketing of these benefits may be the best alternative (in the short run) to propagate the quality of life value proposition.

Of course, one industry-wide effort that is already in place that has shown to be quite effective in conveying this message is America in Bloom (AIB). Now in its tenth anniversary, the program has countered early naysayers by effectively not only conveying the industry’s message of beautification, but one of economic development, provision of environmental amenities, and enhancement of health and well-being as well. Almost 200 cities and several million citizens have been exposed to AIB’s message; undoubtedly benefiting the countless local businesses in those trade areas. One such business owner stated publicly at this year’s OFA Short Course that they had experienced an 8 percent increase in business during the period their city had participated in America in Bloom. While this alone is impressive, it is exciting to consider that as AIB continues to expand, even more synergistic benefits will likely result.

There is an old adage that says: “If you always do what you’ve always done, you’ll always get what you’ve always gotten.” This latest economic downturn has certainly caused us all to do some things differently than we had been doing them previously. We’re doing more with fewer people and in some cases, fewer resources. But as we move into the future, even more aggressive marketing will be needed to ensure that we are considered as necessities in our consumers’ lives and not mere luxuries. Now is exactly the time to make those strategic marketing investments both as individual firms and through industry-wide efforts.

America in Bloom receives award

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America in Bloom has been named to the 2010 Associations Advance America Honor Roll, a national awards program sponsored by the American Society of Association Executives & The Center for Association Leadership in Washington, D.C.

The prestigious awards program recognizes associations that propel America forward – with innovative projects in education, skills training, standards setting, business and social innovation, knowledge creation, citizenship, and community service. Although association activities have a powerful impact on everyday life, they often go unnoticed by the general public.

“America in Bloom’s program truly embodies the spirit of the Associations Advance America campaign. It is an honor and an inspiration to showcase this activity as an example of the many contributions associations are making to advance American society,” remarked Associations Advance America Committee Chair Ping Wei.

If folks in the industry would like to support AIB financially, now is the time to do it. Between now and the OFA Shortcourse, AIB is conducting one of their main fundraising events of the year — the AIB Raffle. Proceeds from the raffle and other fundraising events help America in Bloom fund numerous projects for communities and their citizens such as—webinars on plant varieties that perform well in the landscape, an annual educational symposium, and community awards.

Wouldn’t it feel good to put $5,000; $1,000, or even $500 in your pocket? If you purchase an AIB raffle ticket you just might be one of the lucky cash prize winners! The 2009 raffle generated over $30,000 in funding for America in Bloom. Buy your raffle tickets online using their secure form today!

How not to save housing…

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I have pontificated previously regarding the value that landscaping provides in increasing perceived home values by enhancing curb appeal, etc. (see value of landscaping in the sidebar). In recent months, I have also reported on the record decline in home values. Intuitively, those who have landscaped their homes “properly” may have offset the devaluation of their home to some degree.

But several Congressional proposals seek to adjust home values artificially by authorizing the Federal Housing Administration (FHA) to guarantee $300 billion of new home loans to strapped homeowners, allowing them to refinance their existing mortgages at lower rates and lower outstanding amounts. Under it, homeowners who borrowed from Jan. 1, 2005 to July 1, 2007 would be eligible for new loans if their monthly payments of interest and principal exceeded 40 percent of their income, well above a more prudent level of 30 percent.

Everyone wins from this arrangement, say its supporters. Homeowners (some perhaps victims of deceptive lending practices) stay in their houses. Neighborhoods don’t suffer the potential blight of numerous foreclosures. Housing prices don’t go into a free fall, depressed by an avalanche of foreclosures. Although lenders take a loss, the losses are lower than they would be if homes went into foreclosure.

But Bob Samuelson provides a differing perspective, saying not only does not make good moral sense, but less economic sense:

About 50 million homeowners have mortgages. Who wouldn’t like the government to cut their monthly payments by 20 percent or 30 percent? But Frank’s plan reserves that privilege for an estimated 1 million to 2 million homeowners who are the weakest and most careless borrowers. With the FHA now authorized to lend up to $729,750 in high-cost areas, some beneficiaries could be fairly wealthy. By contrast, people who made larger down payments or kept their monthly payments at manageable levels would be made relatively worse off. Government punishes prudence and rewards irresponsibility. Inevitably, there would be resentment and pressures to extend relief to other “needy” homeowners.

The justification is to prevent an uncontrolled collapse of home prices that would inflict more losses on lenders — aggravating the “credit crunch” — and postpone a revival in home buying and building. This gets the economics backwards. From 2000 to 2006, home prices rose by 50 percent or more by various measures. Housing affordability deteriorated, with home buying sustained only by a parallel deterioration of lending standards. With credit standards now tightened, home prices should fall to bring buyers back into the market and to reassure lenders that they’re not lending on inflated properties.

If rescuing distressed homeowners delays this process, the aid and comfort that government gives some individuals will be offset by the adverse effects on would-be homebuyers and overall housing construction. Of course, there are other ways for the economy to come to terms with today’s high housing prices: a general inflation, which would lift nominal (but not “real”) incomes; or mass subsidies for home buying. Neither is desirable.

None of this means that lenders and borrowers shouldn’t voluntarily agree to loan modifications that serve the interests of both. Foreclosure is a bad place for most creditors or debtors. Although the process is messy, promising to lubricate it with massive federal assistance may retard it as both wait to see if they can get a better deal from Washington, which would then assume the risk for future losses.

The Home Depot "Index"

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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).

How to combat falling consumer confidence

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The University of Michigan’s consumer sentiment index tumbled to 69.6 in its preliminary February reading from 78.4 last month, marking its lowest point since February 1992 when the economy was emerging from a recession. The component of the index that gauges consumers’ expectations — a possible sign of their willingness to spend — dropped to to 59.4 from 68.1. Time will tell whether the infusion of stimulus rebate checks will counter this trend. Regardless, now is the time for the industry to promote the value that landscaping provides in increasing perceived real estate values. A recent study by the S-1021 Multi-state research committee provided key findings regarding the effects that landscape design sophistication, plant size, and diversity of plant material has on consumer perceptions of home value.

Design sophistication accounted for 42% of the value added to the home, so clearly doing more than foundation plantings yields a greater return.

Plant size accounted for 36% of the value added to the home, so larger plantings translate into greater value.

Diverse plant material accounted for 22% of value of the value added to the home, so it appears that having many large numbers of different plants was not as important.

Adding one or two island beds (increasing design sophistication) can alone add 2% to the perceived value of the home.

Although a small investment (less than $250), colorful annuals and perennials added nearly $1000 to home value; returning 400% on the investment.

Moving from the least valued landscape to the most valued landscape, perceived home value increased, on average, 8.6% across all states included in the study.

A landscape is a good investment, yielding a greater than $1 return in home value for every $1 invested in the landscape.

Landscapes are one of the only home improvements that increases in value (and size) over time. Other renovations (e.g. bathroom, kitchen) typically yield less of a return than the amount invested.

Clearly, installing more than foundation plantings yields a greater return for consumers. Curvilinear beds are effective design elements in adding value to the home.

Obviously, this is vital information for landscape firms and retail garden centers to include in their marketing and sales literature. To view more details of this study, click here.