How hard is the nursery industry getting hit up? I have noticed slightly more interested trees at the Big Box fellows recently. Looked tagged the same as the rest so I just ASSUMED it was someone actually interested in trees doing their ordering.

Some of the big guys have declared bankruptcy, including Iseli, or are close to it. Monrovia is in major trouble and I think that's where some of the Home Depot stock came from. A number of smaller outfits have been completely wiped out...

I checked Menard's last night (big box lumber store) and they're starting to get some plants in. They had some 4ft Abies koreana 'Silberlocke' for $59.95. The shape wasn't the best and it was in a small pot. It was getting dark and I didn't look to see if it was grafted, could have been a 'Silberlocke' seedling? A 4ft one (Iseli) with good form and in a much bigger pot runs about $350 at my local nursery.

I doubt its a seedling.

Here's a few links on nursery bankruptcies:

http://www.greenhousegrower.com/news/?storyid=3805&style=1

http://economy.ocregister.com/2010/10/13/hines-nurseries-files-chapter-11-bk/42574/

http://www.lindenwoodassociates.com/articles/crisis-management/flowers-gone-nurseries-financial-distress/

http://www.csmonitor.com/The-Culture/Gardening/2010/0219/The-nursery-industry-is-facing-tough-times/(page)/2

The sell-off of suppliers to big box stores will certainly hurt local nurseries. They'll have a tough time until after that stock is gone. After that, selection may be pretty dismal except via mail order.

tj

On top of all that I see where prices are predicted to rise in the fall of 2011.

I received this from a friend yesterday.

Price increases are a sore topic. In our current economic climate, cost cutting has become a way of life as businesses fight to conserve cash and preserve margins. The unwelcome news of a price increase from a supplier is usually the last thing a buyer wants to hear. The ornamental tree business has been no different. Growers have suffered a crushing over-supply of trees which was, in fact, developing 6 -7 years ago, but was masked by the frenetic pace of construction through the middle part of the decade. When the bubble burst in 2007-2008 the demand for trees was reduced dramatically, beyond what few of us have ever witnessed. Since that time, growers, desperate to maintain a market share, have reacted by cutting prices for each of the last 3 years to the point where prices, on some items, have reached 30-year lows.

Unlike many businesses, tree growers cannot simply downsize their company to a scale that matches their sales. Existing inventory requires upkeep and that costs money. Like everyone else, growers have aggressively cut costs to try to staunch the negative flow of cash. That is a tall order in a world where the costs of raw materials such as burlap, diesel, and plastic have only increased. So, in many cases, fertilizer, pesticides, pruning, and staking have gone by the board. The results of excessive cost cutting are evident in the marketplace this year and many growers are simply not capable of supplying trees of adequate quality. For most growers, even the cost of culling bad trees is daunting when cash is tight and so the trees sit around, on display in the fields or, in the case of containers, growing increasingly pot-bound.

The other major area of cost cutting has been a sharp decrease in tree-planting in nurseries. Many cash conscious growers have realized that if they cannot afford to maintain what they have, then there is little point in putting more trees in the ground. As a result, tree planting has declined 70-80% over this period. This reduction occurred progressively: first by about 20% in 2008-2009 and then an additional 30-40% in each of the two following years. This trend has only just begun to become evident, with many smaller-sized trees and evergreens becoming scarce this spring. Over the next two years the breadth of shortages will increase dramatically and progressively, as more gaps appear while the old inventory outgrows the market, becomes ruined from neglect, is sawed down to increase spacing, or grubbed out entirely to prepare fields for re-planting.

Growers are watching carefully to see which items are selling out and they will raise prices whenever market conditions allow. This is not a matter of greed as much as survival. Most nurseries are just hanging on and absorbing losses, if they are even doing that. We are all watching while prominent nurseries fail, unable to continue in an economic meltdown that was nearly impossible to predict.

The shock waves from the sub-prime melt-down will continue to be felt, but will soon be felt in different ways. The crash of demand will be followed by a crash in supply caused by a reduction in the number of nurseries that have been willing and able to continue to risk investment in the planting and maintenance of quality inventory these last three years. And just as the construction boom masked the over-supply of trees 5-6 years ago, the construction bust is masking the currently developing shortage. When we experience even a modest resumption in new construction, the shortages will be difficult to manage.

It is important for businesses to educate their customers for what is coming. There is a special challenge for those who are bidding projects that are further out. There is a shocking gap between the desperate pricing of 2010-11, and the prices of, even, the over-supplied market of 2007. But when scarcities become prevalent, prices will return to their former levels, and eventually go higher still. That market of shortages may be much closer than you realize. Buyers should be prepared for price increases in fall 2011 and very large increases in 2012 and 2013.

Might also be a good time to travel the US and purchase as you go and either purchase your conifer collection/new landscape plants/ or purchase for stock plant material/ or even purchase to re-sell later if you can afford the maintenance... there's opportunity everywhere you look. 'The American Dream' --

Dax

The last few days I have noticed Lowes and Wal-Mart in this area offering thuja plicata Goldy for $20 and $16 respectively. Plants are nice and about 2ft tall

Marshall

Who DOESNT love a deal??????

Id love to find a decent sized pendula bruns at the big box...id probably buy it right away...any info appreciated...lets share that info...NOT that i dont support local nurseries and such....but boy can they sometimes be verrry pricy.....and i know im gonna get heat for this...but ill say it....the high prices may be the nurseries own demise....i know ive bought my fair share of expensive plants and even have thought...darn why was that soooo much....so im not sure if im sad to hear that the good stuff is coming to be more affordable...it should be??????????

I've visited about 30 nurseries in Washington state and have found widely varying prices, almost always based on their location. Near afluent neighborhoods, they seem to have no problem listing 10 gallon choice conifers at $350-500. Nurseries more rural and near less 'money' seem to offer similar plants at about 30-50% less. It's still boggling that people are paying $500 for a 6' tall specimen of Picea omorika 'Pendula Bruns'. I'm a huge conifer fan but I'd never go that ballistic for a plant that grows as fast and is readily propogated.

I guess ultimately supply and demand. Someone must be paying these prices because they are still priced as such every year...

-Will

Passed by a few Home Depots the last day or two for yard project supplies and they have definately improved their selections this year. Last year or two their exotic conifers pretty much consisted of Atlas cedars and Picea abies Pendulas of all weird shapes and sizes.

But this year their selections are much better and appear better quality and shape. As mentioned earlier almost all of their stores have P o Pendula Bruns, P o Bergmans, big full 5' P t Thunderheads for $79, P p Mongomery's mixed in with the Globosa's they always have, and I grabbed a nice little Picea stitchensis 'Papoose'. They also had lots of Picea likiangensis Purpurea, lots of the normal Jumipers and Thuja's.

mark

I am sorry that many nurseries are struggling or failing, but must admit I have been appalled by some of the tree prices I have seen in the past.... I look forward to the possibility of finding some nice cultivars for cheap at Home Depot or Lowes.

I haven't seen much of interest at either of these places in my area thus far this spring but I will need to go back and take a closer look. (I do hope, anyway, that some of the good stuff makes its way to big box stores in Colorado.)

Holly

Be careful what you wish for. Holly may have been appalled at the inflated price that some plants were sold at, but try to figure out the actual cost of producing a grafted conifer on a commercial scale.

Even if the nursery has a gifted grafter like Dax, you need to have a commercial facility that can propagate, grow and handle the logistics of shipping nationwide.

Those facilities have many costs. Many employees. Many years invested in each plant. The cost of fertilizer has gone up each of the last three years. All of the products that are derived from petroleum have gone up as well. (There is alot of plastic used in a nursery) And heaven help you if you have to spray with a chemical like Safari that can cost $500 for a pint. So while as a consumer you may feel like that plant is way overpriced remember there is nothing stopping you from grafting it, growing it and nurturing it yourself. You have a great resource of knowledgeable people who offer their help on this forum. I believe that you will find that some of those overpriced plants are not as far out of line as you might think at first glance.

"Be careful what you wish for. Holly may have been appalled at the inflated price that some plants were sold at, but try to figure out the actual cost of producing a grafted conifer on a commercial scale."

With few exceptions, the commercial growers are not the ones jacking up the price of the conifers - the retailers are. Typically they triple the wholesale cost of the plant, or even more. Just Google "nursery wholesale prices" and you'll get a feel for what the growers are charging the retail shops. So those ridiculous prices you see are coming from the retailers.

""With few exceptions, the commercial growers are not the ones jacking up the price of the conifers - the retailers are. Typically they triple the wholesale cost of the plant, or even more. Just Google "nursery wholesale prices" and you'll get a feel for what the growers are charging the retail shops. So those ridiculous prices you see are coming from the retailers.""

----------------------------------------------------

Having some experience in this now as both a customer and business partner in the nursery business, I know pretty well how this goes. I placed four orders at wholesale nurseries for about 300 plants varying between 1 gallon and 20 gallon pots. The wholesale up front cost was $6,720, and that was with no tax(Oregon). Transportation fees was about $450 and this was strictly fuel for a truck(21 footer) on four trips - keep in mind the truck was loaned to me, you're probably looking at $200-400 more for a truck in these instances if you financed it yourself. Next, watering, fertilizing and repotting the material ran another $250 for the first year, again on the cheap since it was in part of a system very few changes had to be made. Total costs at this point was around $7,500. Again, in a normal situation, you'd have rent(or a mortgage), insurance, liscensing, overhead for advertising and overhead for business staff(explained below).

Of the $6,720 in plants, $1,700 were deemed too ugly or too rare to sell. The rare stuff either ended up in my garden or our botanical garden, obviously a nice 'benefit' of the job - choice/rare plants at wholesale prices.

This left roughly $5,000 in stock which placed at an overall 'list price' of $11,800. (Slightly more then 100% mark-up).

In the first year 112 plants totaling $4,100 sold, with a whole sale cost of $2,400. To me, as both a mathematician and lover of problem solving, this indicated that since the average profit margin of these plants was about 70% (considerably below the 109% avg. mark-up), this showed customers being savy themselves and shopping for plants they felt were of best value. Of this $1,700 in profit, I agreed to pay 50% to the nursery owner since they had provided the real-estate, the staff(and subsequent costs), and the means to sell the plants.

A lot to take in no doubt, but as of 'today', my $7,500 investment has yielded $3,250, with about $2,500 in wholesale stock(valued at roughly $7,700) still for sale.

Some scenarios:

#1. **NONE of the stock sells in the next 2-3 years, it gets shuffled to whereever at wholesale cost or less minus costs and taxes and I'm looking at about $5,800 from my investment(a net loss of almost two thousand dollars and dozens of hours of time wasted). This is an unlikely scenario.

#2. HALF of the stock sells in the next 2-3 years. Again, the leftovers would probably be sold to landscapers/wholesalers if that was possible at cost, running a total here, after taxes to about $7,000, $500 in net losses and the time lost again. This is a very real possibility in this soggy market!

#3. ALL of my remaining stock sells for a total gross margin of $8,800, leaving me with $1,300 in profit for a few dozen hours of work. This is a pretty damn nice scenario, one which leaves me with both access to some rare plants for my own garden at wholesale prices, and also a decent profit out of it as well. In an ideal world, you take that $8,800 back to the nurseries in a couple of years and do it again, make another %15-20 and keep doing it until you're something akin to Walmart.....

.....Unfortunately, this is rarely the case and reality shows me that my little foray into the nursery business was more like a 'PUSH' at a casino. I didn't lose but I didn't get rich either, and there is certainly still some risk that I could lose some money in the end.

*********************************************************

Conclusion(still reading? you're my hero...):

To make any *real* money in the nursery industry, most retail nurseries are going to have to price plants at a *minimum* 125% markup and more like closer to 200%-300%. This means a 4' specimen of Pinus parviflora 'Goldylocks' bought at $45 wholesale ends up with a price tag of $135-170! In some extreme cases, I think nurseries around here are pushing 400-500% profit margins on some specific cultivars, simply because they're still selling at this price.

The reality here is that while the prices might seem high to the lay-person, there really is a lot going on behind the scenes and especially once you start thinking about stuff like taxes and lost product, it's pretty easy to see why these prices are commonplace.

-Will

OK, I stand corrected and will return to my lay person cave in shame... :-o

I did not mean my comments to disparage or belittle the hard work and struggle of conifer (etc.) growers or to dismiss the expense of growing a cultivar and bringing it to market. I just can't justify spending a day's wages on one tree, let alone a week's worth of wages. I guess I am not wealthy enough to indulge in this hobby/life style/addiction but I don't intend to give up on collecting and growing conifers or other plants that others bring to market.

I would love to learn how to graft trees and grow my own cultivars but can't afford to build a greenhouse and don't even have a garage or a basement in which to work, so I have to buy from others and accept whatever mark up they believe their hard work is worth.

I'm still going to look for some of the more interesting cultivars that big box stores may have even though this is taking advantage of the collapse of some more deserving nurseries.

Holly

Holly, you certainly don't have to be wealthy to use conifers in the garden. My explanation was meant to describe how and why nurseries often come to the prices that they do. A choice, dwarf conifer is often grown for 6-10 years before it reaches a 'sellable' size, and the price skyrockets accordingly. That said, it's much easier to garden with smaller plants and in time, a one gallon plant will be as large as the expensive nursery plants but also healthier because it's room system will have expanded more naturally. The vast majority of my conifers are from one gallon or 4-5" pots. Like Dave(dcsteg), I have purchased a handful of larger specimens to give the garden more immediate structure and impact, but I'd still buy 5 one-gallon plants before I'd buy a 10-gallon plant. If you're looking for sources, I will hopefully have something that helps later this Spring. I'll update my project I titled 'Online nursery reviews' which has picture, prices and my own experiences with various on-line growers. This may be helpful to someone starting out and trying to keep from breaking the bank as well.

-Will

Will,

You're missing some basic marketing principles in your analysis. The most important is "what is the value of this product to the consumer"? It doesn't matter what the wholesale cost was, or what the markup is; the bottom line is - what the consumer is willing to pay for it? High margin items always fare poorly in a weak economy, and nursery stock is frequently over-priced. Would the average consumer want to spend $450 on a pine tree, or perhaps buy a slick new iPad instead? I think you'll find the iPad winning out 99 out of 100 times. The trick in any business is inventory turns and cash flow. You will have neither if you have plants priced higher than consumer electronics or home appliances. That's why the big box stores are mopping up with these inexpensive offerings. They understand the relative value most people place on plants and are offering material in that price range ($125 or less).

Doug, I understand and agree completely. It's supply and demand, and the demand is not there right now. 7-8 years ago people were doing everything and anything with their homes because money had a different value then. Landscapers to higher end homes wouldn't hesitate to buy more expensive plants because they knew it would give them a larger return on their investment.

The current tree prices(the reasonable ones) do make sense, they're just not necessary items in the current economy. Many people are downsizing and there are simply fewer buyers who are lining up for 'luxury' items like landscaping plants.

When people have discretionary income, they buy things they don't need like iPads, fancy cell phones, jet ski's, etc.

Somewhere on that list for everyone who owns a home is garden supplies. Most people don't care all that much about fancy outdoor plantings in the first place, and even less so when money is tight. Last year a local nursery here had 10-gallon sized 'chocolate mimosa' trees for $45. They had dozens and still couldn't sell them. These same trees were listed by retail mail-order nurseries for $150 for a smaller plant 4-5 years before, and these nurseries were *sold out* at this price.

The nurseries surviving are probably doing so because instead of reinvesting everything five years ago during the boom times, they were stashing some away for an inevitable downturn. Naturally this conservative business approach wasn't commonplace, so like other businesses, many nurseries are simply crying uncle.

I feel for the nurseries(particularly the smaller ones) that are suffering but it's a natural cycle in this thing we call capitalism. The companies that do survive should be set to prosper in the rebound years to come and eventually everything will come full circle.

Interesting debate/topic!

-Will

Though it is no secret that IGP, Iseli's parent company has filed chapter 11, I want to let you know that Iseli is alive and quite well - doing business as normal, shipping to our excellent customer base of independent garden centers. I will not discuss pricing from the wholesale or retail perspective, but I do think that it is a terrible shame that so many good people have been adversely affected by our current economy. Personally, I understand everyone wanting to find the great deals out there, but remember that your local garden centers are independently owned by local folks - plant enthusiasts - just like you.

I've been in marketing and sales all my life. There's one fact that has hardly ever changed, at least in the last 50 years, retail markup on almost all items with only a few exceptions is always about the same...double the cost - or keystone as we say in the trade. And when I say costs I'm typically meaning wholesale cost of the item and shipping. Shipping in nursery stock in this part of the country typically runs about $100 a running foot of a truck's length. That markup has been a pretty stable trend for many many years and covers overhead in most cases and gives the person a decent percentage of profit. So almost all industries even today use it as a rule of thumb. If I have to explain much more detail than that of why that much markup is needed your probably not understanding all the pieces of the cost-of-business pie.

Now, that being said you must also remember the nursery business, like most types of business, have retailers whose customer care costs significantly are higher than others. And typically the ones with the highest markup are the same ones who have things like guarantees on their plants, which in a case like our largest retailer in this area is a surprisingly higher percentage of their sales than I would have imagined. Plus they are very seasonal on their sales cash flow, but they must keep virtually all their staff year around, etc.

Anyway, while I have the ability to buy wholesale or retail because I keep an active landscaper's license, I do understand there is a real significant cost that is attributable to all that good customer service many provide. Now there are some people who are just price gougers and that's a different story al ltogether.

So when I see most guys selling a nice full 6' deodora in some unusual varietal I'm really wanting for $250 that I know had a beginning actual cost of $75 B&B, I know I've got the option to just buy it from him and know no matter what I'm taken care of, or I can take all the risks and hassles of trying to get it brought in here to Oklahoma myself by some other method and know that there will be some associated potential costs on top of that $75.....up to and including eating the complete loss of that tree if it dies.

Business... you gotta love it.

mark

Good reading of very thoughtful points from all. Let's hope that in the near future we can all focus on the merits of plants rather than the business of plants.

"Personally, I understand everyone wanting to find the great deals out there, but remember that your local garden centers are independently owned by local folks - plant enthusiasts - just like you."

So I should pay jacked up prices just to keep my local store in business? Right...

If you're looking for sources, I will hopefully have something that helps later this Spring. I'll update my project I titled 'Online nursery reviews' which has picture, prices and my own experiences with various on-line growers. This may be helpful to someone starting out and trying to keep from breaking the bank as well.
Very cool, Will. I look forward to seeing your list and reviews.

I would much prefer buying from locally owned businesses and want to support the smaller nurseries around here. I do my share of both but I no longer have the income I once had and find myself also looking for bargains at the big box stores.

When I want to indulge my need for the unusual, (!!) I have been unable to find any place in Colorado that matches the quality and variety of plants offered by, just as examples, Porterhowse Farms or Coenosium Gardens. No instant gratification from either of these nurseries, in terms of large sizes offered via mail order, but well worth the cost when you consider that many of the 1 gallon specimens offered locally could be a $150. (A five or 10 gallon plant is out of the question for me. To be honest,even if I could afford it, I wouldn't have the physical strength to deal with hauling around a 10 gallon tree, let alone planting it, but that is a different story!)

There is one local nursery that I used to love to go to, starting out probably 30 years ago when all I was interested in was houseplants, but now I can't even afford to walk through their doors! They are one of the finer local nurseries, IMHO, with quite a few knowledgeable employees. They sell some of the rarer varieties of plants - perennials included - and actually offer a two year warranty on their shrubs and trees, which is virtually unheard of around here. Great selections of plants and tools, great customer service, with accordingly high end prices. I would love to support them but I just can't afford them anymore.

Holly