How the metrics of US garden centers compare with those from other countries

Garden center wages and prices of core products differ dramatically around the world.

How the metrics of US garden centers compare with those from other countries

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.

Table 1. The average national minimum wage and the average minimum wage for garden center staff in different countries.

            Average national minimum wage

Average minimum wage for garden center staff

Country

Wage per hour ($)

Country

Wage per hour ($)

Australia

13.93

Australia

24.51

Denmark

16.49

Denmark

21.06

Spain

11.14

Spain

13.37

Canada

8.45

Canada

11.68

United Kingdom

9.64

United Kingdom

11.04

France

10.71

France

10.93

Ireland

10.19

Ireland

10.19

Netherlands

9.75

Netherlands

9.80

United States

7.25

United States

9.681

Italy

9.47

Italy

9.47

Germany

9.47

Germany

9.47

Japan

6.35

Japan

8.02

Mexico

3.74

Mexico

4.38

South Africa

2.67

South Africa

4.12

Czech Republic

2.23

Czech Republic

3.40

China

2.79

China

3.23

International Average:

8.39

International Average:

11.29

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.

Table 2. The retail prices of a 4-inch annual and a 1-gallon shrub in different countries.

Price of 4-inch annual to consumer

Price of 1-gallon shrub to consumer

Country

Price ($)

Country

Price ($)

France

5.52

France

8.91

Denmark

3.90

Denmark

12.26

Ireland

3.90

Ireland

16.70

Canada

3.08

Canada

11.57

United Kingdom

3.06

United Kingdom

17.77

United States

2.992

United States

11.802

Switzerland

2.56

Switzerland

23.40

South Africa

2.19

South Africa

5.01

Australia

2.12

Australia

16.27

Germany

1.66

Germany

7.74

Belgium

1.23

Belgium

9.73

Japan

1.10

Japan

9.16

Spain

1.10

Spain

18.93

China

0.76

China

4.35

Czech Republic

0.70

Czech Republic

15.04

Mexico

0.68

Mexico

57.60

Italy

0.67

Italy

13.37

Netherlands

0.66

Netherlands

11.13

International Average:

2.10

International Average:

15.04

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).

Table 3. Plant sales as a percentage of total sales for garden centers around the world.

Country

Plant sales percentage (%)

Germany

61

Japan

55

Mexico

55

South Africa

55

Belgium

53

Australia

50

Canada

50

United States

51-603

Czech Republic

50

Denmark

48

Netherlands

46

Italy

40

France

35

Ireland

30

Spain

30

United Kingdom

22

China

15

International Average:

45

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).

Table 4. Percentage of the four-inch container compared with the average hourly wage paid to the garden center employee in different countries.

4-inch hours/price

Country

8%

Spain

9%

Australia

14%

Japan

18%

Germany

19%

Denmark

21%

Czech Republic

24%

China

26%

Canada

28%

United Kingdom

31%

United States

38%

Ireland

51%

France

53%

South Africa

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.

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