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Garden Suppliers Talk Overstock Concerns

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After two years of record sales prompted by the COVID enforced return to home, the mood has changed among garden suppliers. 

Gardenforum has talked to several major suppliers. Most report that the season has tailed off early. Some are saying demand has fallen off a Cliff. The result is that many importers are left with too much stock especially decorative garden products and garden furniture.

A rush to get enough stock

Last autumn, suppliers of dry goods were trying to juggle record orders with delayed deliveries from manufacturers especially from the Far East.

There was a scramble to get stock. Suppliers faced record orders from garden centres. On top of record consumer demand, retailers were increasing inventories to cushion themselves against predicted shortages this spring. ‘Just in time is dead’ was a common expression. 

At that time, no one expected Russia to invade Ukraine. The economic uncertainty this has caused has amplified the predicted fall back in demand post-Covid.

Demand has fallen off a cliff

After promising early season sales, customer demand has gone back to pre-Covid levels more quickly than expected. The GCA reported garden sundry sales, compared to 2021, were down -29% in March and -21% in April. Furniture and barbecue sales were down -33% in March and -23% in April.

Several garden centres are reported to have introduced buying bans to reduce stock levels. One major group is said to have banned reps from visiting. We are told a major discount chain has reduced some Christmas orders by 30%.

Guy Jenkins of DLF said, “We knew last autumn that garden centres were sitting on a lot of stock. Even though they have sold out of their best selling lines, they have switched off buying in order to clear other stock. They are not replenishing.”

The agents of another supplier have said, “It is hardly worth going out because no one is ordering.”

According to LOFA, barbecues and furniture are not selling through and garden centres are sitting on a lot of stock.

For suppliers this means that demand appears to have fallen off a cliff even though underlying consumer demand seems to be continuing but at lower levels. 

Warehouses are full

By the early season, outstanding containers were arriving sooner and in greater quantities than anticipated into UK ports. Suppliers began to realise that without another record breaking season they would have a problem of too much stock. And, it was too late to do anything to reduce the quantities for this season because delivery lead times from the Far East are so long.

One supplier estimates they have 20% – 30% too much stock. Another was holding almost 3 times what it had last autumn and 25% more than budgeted.

What are the implications of too much stock?

Too much stock and falling sales means cash flow becomes the top focus for suppliers. 

Full warehouses prevent introducing new stock and the cash and management burden hampers new product development.

Some companies say they will introduce few new products at Glee. Smart Garden, however, says NPD is its lifeblood and will be launching over 300 new lines.

A supplier of quality garden sundries explained, “It's a problem of getting the right stock for 2023 and working within the constraints of working capital. There are no quick solutions, and he was likely to use all methods to get inventories down.”

What to do about the stock? 

  • Several say they are trying to find smart solutions to make it easier for retailers to sell the stock through with novel display solutions. Expect to see several offers along these lines at Glee.

  • Storing it for next year ties up cash and warehouse space, but the products will be good for the next season especially as prices are rising. It becomes a greater problem when the stock is made up of slower moving lines which are not what’s needed for the next season. 

  • Finding alternative channels for the stock is likely to be at a significant loss but it will free up warehouse space. Some companies such as Burgon & Ball say they are using their active export market.

  • Having a discounted sale risks damaging future business from the core customer base. Most companies said they would not be clearing stock but imagined others would.

One supplier, typical of many, put it succinctly, “We are all trying to maximise sales, drive down stock and get cash back in, without damaging our core market. Slashing prices would generate new pressures.”

Westland’s Edward Conroy said, “Companies have got to deal with the stock overhang in the best way they can but not let it affect their long-term focus.”

“It could be worse,” said Woodlodge. “There is no delay in people [garden retailers] paying their bills. The industry is amazing and people are paying on time and we couldn't be more grateful.”

We must not get too negative

Wiser heads are calling on the industry to keep the current short-term issues in perspective. Although consumer demand is behind the exceptional years of 2020 and 2021 it is still ahead of 2019 and the long-term trend line.

Burgon & Ball MD, Rainer Schubert said, “We must not get too negative but consider 2020 and 2021 as exceptional years. We are still ahead of 2019 and on our long-term growth trajectory… Gardening is still a good place to be.”

Edward Conroy is not taking anything for granted but is quietly ambitious for 2023. He believes that with the right investment Grow-Your-Own will show growth over both 2022 and 2019. 

Adam Taylor of Taylor’s bulbs said buyers are taking a more cautious approach but generally orders are ahead of 2019 because there has been a general increase in the market. The people who are gardeners have been less impacted by economic concerns generally.   

Guy Jenkins said that generally orders are ahead of 2019 because there has been a general increase in the market.

Smart Garden’s Jonathan Stobart predicted underlying demand will go back to 2019 levels. Anything using plastic and resin will be going up in price. With inflation it is not clear whether volumes will decline even though revenues could continue to grow.            

What is clear is that no one knows what’s in store for the next 12 months. Garden retailing is better placed than most when the economy hits recessionary times. However, industry leaders are calling on companies not to let their reaction to the current short term cashflow squeeze, caused by overstocking, damage the long-term growth of the industry which still looks positive. 

Source : Reproduced with permission from George Bullivant, GardenForum

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16 June 2022

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