Sep 17 2020
Declining discretionary incomes and negative consumer sentiment resulting from the COVID-19 pandemic have weakened consumers’ willingness to spend on discretionary items. In addition, the increasing shift towards living in multi-unit apartment buildings instead of detached, single-unit houses has weakened consumer demand for lawn care supplies and services.
Gardening Supplies Retailing
The trend of people staying home has the potential to boost demand for the Garden Supplies Retailing industry, as gardening presents an opportunity for entertainment that can take place without social interaction. However, consumers have increasingly been shifting to living in multi-storey apartments over the past five years, limiting their opportunities for gardening as these buildings usually lack lawn space. Furthermore, detached house construction activity has declined significantly over the past five years, negatively affecting demand for supplies and services to landscape new homes. This trend is expected to cause industry revenue to fall at an annualised 0.6% over the five years through 2020-21, to $3.1 billion. This trend includes an anticipated fall of 0.1% in the current year.
The rising trend of living in apartments without lawn space has also negatively affected demand for the detached housing clients market of the Gardening Services industry over the past five years. However, gardening services firms have benefited from a rise in the number of businesses, and increasing trends of business process outsourcing, over the period. Consequently, detached housing clients are expected to account for only 24.2% of industry revenue in 2020-21, while multi-unit housing clients are expected to account for 10.4%. The industry’s other markets include:
- Real estate services businesses
- Health and education sectors
- Hospitality sector
- Facility management businesses
- Sport and recreation clients
- Government sector
Consumers who live in homes without lawn space are more likely to purchase houseplants rather than establish an indoor garden. Consequently, the shift towards living in multi-unit apartments has supported the Flower Retailing industry over the past five years, while plants have increased as a proportion of industry revenue to represent an estimated 12.0% in the current year.
Flower retailers have faced increased competition from online-only firms over the past five years, as floral delivery was one of the earliest sectors to shift to the online space. However, revenue for the Flower Retailing industry is expected to increase by 1.0% in the current year as more bricks-and-mortar operators establish ecommerce operations. The shift towards working from home due to the COVID-19 pandemic is also anticipated to support demand for houseplants, as consumers seek to decorate their living spaces.
Forecast rising discretionary incomes and a projected return to positive consumer sentiment are anticipated to support revenue growth for these industries over the next five years. In addition, a projected rise in detached housing construction activity is forecast to boost the size of potential markets for garden supplies retailers and gardening services firms. However, multi-unit construction activity is forecast to grow at a faster pace over the period, meaning that more consumers are likely to shift to living in apartments. Gardening supplies and service providers are therefore likely to face increased competition from flower retailers for residential clients. Nevertheless, projected improvements in business confidence are forecast to cause the Garden Supplies Retailing and Gardening Services industries to grow at a faster rate compared with the Flower Retailing industry over the next five years.
IBISWorld reports used to develop this release: