MSU Extension

It may not be surprising that garden center retailers do not operate in isolation from political, regulatory, cultural and social factors in their respective countries. The profitability of garden centers is impacted by many factors including costs (product inputs, labor, energy, etc.) and revenue (prices that garden centers charge for their products). So how do some of the common metrics of American garden centers compare with those in other countries and how do some countries compare to others? At the members meeting at the International Garden Center Congress in Denmark held in August 2015, the International Garden Center Association shared compiled metrics that were reported by the national garden center associations from each country.

As with most of agriculture, labor is often the greatest input cost for garden center businesses. The international average government-mandated minimum wage was $8.39, while the average minimum wage garden centers paid their employees was $11.29 (Table 1). The average national minimum wage ranged from $16.49 in Denmark to only $2.79 in China. The international average minimum wage was $8.76. The federal minimum wage in the United States was below average at $7.25. The average minimum wage for garden center employees was the greatest in Australia ($24.51 per hour), while China had the least at $3.23 per hour.

According to the 2015 State of the Industry Report by Today’s Garden Center Magazine, garden retailers in the United States paid their employees a minimum of $9.68 per hour. Therefore, garden centers pay their employees an average of $2.43 more than the national minimum wage, which is $1.61 less than the international average for a garden center employee. Businesses hire employees to help the company generate sales. What would be interesting would be to determine how effective these employees are at different minimum wages relative to the sales they help generate. Would higher wages contribute to higher sales or higher profits? That would be interesting to determine.

¹The average minimum wage for garden centers in the United States was provided by Today’s Garden Center Magazine’s 2015 State of the Industry Survey (n=375).

With the wide range of labor costs in different countries, how do the prices of common product categories compare between countries? The international average price of a 4-inch annual was $2.10 while the average price of a 1-gallon shrub was $15.04 (Table 2). The price of a 4-inch annual was the highest in France at $5.52 and was the lowest in the Netherlands ($0.66). The price of a 1-gallon shrub was the most expensive in Mexico ($57.60) and the least expensive in China ($4.35). According to the 2009 USDA Census of Horticultural Specialties, the average retail price of a 4inch annual was $2.99 in the United States and a 1-gallon deciduous shrub was $11.80. Therefore, the average price of a 4-inch annual was $0.89 more than the international average, while the price of the 1-gallon shrub was an average of $3.24 less.

²Retail prices according to USDA Census of Horticultural Specialties (2009).

So now with perspective of some examples of costs and prices of products, how do their business metrics compare? Plant sales are only 45 percent of total sales at garden centers around the world. Germany had the highest percentage of sales from plants (61 percent), while China had the least (15 percent) (Table 3). The metric for the United States was in the top half between 51 and 60 percent. The international average of how much garden centers spend on advertising as a percent of sales was 4.48 percent. Retailers in Mexico spent the most on advertising in relation to sales (25 percent) and retailers in Belgium spent the least (1.85 percent). American retailers projected they would spend 4.4 percent in 2015 on marketing (2015 State of the Industry Survey, Today’s Garden Center Magazine; n=168).

³The range in plant sales as a percent of total sales for the United States was calculated from data provided by Today’s Garden Center Magazine’s 2015 State of the Industry Survey (n=375).

Interestingly, if the price of the four-inch container is compared to the average garden center hourly wage, we see (in Table 4) that the small container accounts for only 8 percent of the hourly wage in Spain, but accounts for half of the hourly wage in France and South Africa. This does not mean that only 8 percent of the cost of a 4-inch plant in Spain is labor, but it does give the garden center manager some ideal of output (retail price of a 4-inch container) relative to an input (average wage per hour).

So what can we conclude from these examples? The economic and political climates vary greatly from country to country and it has strong implications for garden center owners. Most often, the wages garden centers are paying their employees mirror the cost of living and prices of products in that country. For example, it may not come as a surprise that the costs of common plant products are relatively high in northern Europe. However, their relatively high wages compared with other countries are also consistent with that trend. There are also some outliers. For example, retailers in Mexico only pay their employees $4.38 per hour but the cost of a 1-gallon shrub is the highest ($57.60) for the countries compared. These benchmarks can provide prospective for garden center managers interested in comparing their businesses with others.

Note: The international data was provided by the International Garden Center Association unless otherwise noted. All averages were recalculated to include the best available data on U.S. garden centers. All international data was converted from Euros to U.S. dollars based on the exchange rate as of Sept. 9, 2015.