Sit n' Caddy
Market Analysis Summary
Sit N’ Caddy has no direct competition due its unique design and wood construction. For market analysis purposes, research was done on the lawn and garden industry, particularly in the small garden tool sector. Trade publication articles quoting national surveys pointed out the upswing of consumer interest in all sectors.
Garden Craft has decided to sell wholesale only, targeting select retailers. Initially, five segments of the retail industry have been identified: Chain-retailers, single retailers, fundraising organizations, mail order catalogs, and ‘other.’ Based on the ability of chain-retailers to buy in bulk, this segment was analyzed for market strength. Three target categories were identified as most likely to be interested in the Sit N’ Caddy. These categories are home-improvement, garden specialty, and gifts & crafts.
Of these three categories, home-improvement was selected based on the strength of their purchasing power, as well as the rate of growth shown in the industry (See Industry Analysis). Research has noted that Home Depot showed the highest sales volume in lawn and garden supplies among the home-improvement sector, thus providing Garden Craft with it’s initial sales prospect.
Supporting research shows that the definitive market research tool for the lawn and garden industry is the 1998-99 National Gardening Survey published by the National Gardening Association (NGA). This survey provides tables of customers divided by sex, age, education, occupation, race, income, region/section of the country, stage in life, size and type of community, home ownership, and size of household. Portions of the National Gardening Survey that have been published in various lawn and garden trade publications, gardening periodicals, and newspaper articles are used for consumer segmentation, trend analysis, and target market tasks.
4.1 Market Segmentation
The market segmentation focus is directed towards retail stores, rather than individual customer sales.
Major segments identified are:
- Chain retail
- Single store
- Mail order/Internet
- Fundraising organizations
- Other (cross-boundary stores, miscellaneous micro-segments)
Based on research and speculation, the decision was made to target chain retail stores that would offer the largest opportunity for volume sales.
Three categories of chain stores that would fit the product are:
- Garden specialty
- Gifts & crafts
In the industry analysis, it was noted that the majority of the 1998 top ten retailers of lawn and garden products were home-improvement stores. Concentrating research efforts in this area, the top three home-improvement retailers were found to be Home Depot, Lowe’s, and Ace Hardware.
Home Depot was selected as the best target due to their dominance in lawn and garden sales. This selection process is noted in the following chart and table.
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4.2 Target Market Segment Strategy
The following sections describe the various aspects of the market that will affect the success of the Sit N’ Caddy.
4.2.1 Market Trends
Quoted in the trade publication DSN Retailing Today (August 2000), a buyer for one of the mass merchants said he expected tabletop fountains and water garden accessories to increase in popularity.
Discount Store News mentioned in a 1998 article that small garden tool manufacturers were scaling down the size of their tools to make them easier for women and senior citizens to use.
An horticultural industry expert in 1998 noted that the increase in gardening activity is also tied to housing starts, which are high due to a strong economy. There is also an increase in rework of landscape materials in older neighborhoods.
In 1998, the NGA survey noted that American gardeners were shopping selectively at garden centers for merchandise they couldn’t find at home centers and discount stores. But the principal competitor is the well-run nursery.
4.2.2 Market Needs
Mark Smith, a spokesman for small tool manufacturer Ames-True Temper, noted that people are likely to shop for tools according to a specific task facing them. He said ergonomic features in tools continue to be important, and agreed that fashion has made its way into the garden. As an example, Ames-True Temper is launching two types of pruning tools with translucent handles.
The NGA survey points out that products which make gardening easier hold a particular draw for this group, such as ergonomic hand tools and riding lawn mowers. And people in their 50s spend significantly more money than others on container gardening, water gardens, and tree care.
The 1997 Consumer Expenditure Survey noted that the population of people over 50 have made health issues extremely important. There have been large jumps in spending on vitamins, medications, nutritional supplements, and health foods. Spending on fresh fruits and vegetables by consumers age 45 to 64 is the highest of any age group, gardening has now become an attractive alternative to the supermarket.
4.2.3 Market Growth
The National Gardening Survey points out that consumer interest in gardening remains as strong as ever, with two-thirds of homeowners spending an average of $532 annually on products to spruce up their yards. Purchases grew 11% last year to $33.5 billion. It marked the third straight year of double-digit sales gains.
According to Discount Store News (DSN), 13.8 million families bought cutting tools in 1996, which represents an annual growth rate of 12% over the previous five years. The price range for small tools is between $10-50.
The Scotts Company reports lawn and garden market growth to record levels. Sales in lawn and garden fertilizers plus potting soils have reached near 20%. Baby boomers are spending more on lawn and garden care.
Discount Store News made a recent Internet search, which revealed almost 1,700 gardening catalogs, and numerous online retailers, including Garden Escape, which reported nearly 1,000% growth from December 1996 to December 1997.
An horticultural industry consultant stated in 1998 that industry watchers agree, the biggest driving force in lawn and garden growth has been the emphasis of the big box retailers.
Mass merchants are treating lawn and garden as a real category. He said, “It’s going to continue to grow because of the expertise of the mass marketers.”
4.3 Industry Analysis
With such a robust lawn and garden market, the research director of the NGA expects Spring 2001 sales to surge once again. Products that are sure to be a sales hit next spring include even more decorative accessories and any type of product related to container gardening. Items that make a gardener’s job easier should also be a success, according to the NGA research director.
In 1998, the Santa Fe Springs, California chain store, Fedco, has gone after the casual gardener, rather than compete with Home Depot. During three store remodelings, Fedco doubled the size of the combined patio, lawn, and garden departments.
In 1998, horticulture industry experts noted:
- Wal-Mart has been steadily expanding its lawn and garden department, testing permanent greenhouses and increasing its commitment to the category as it rolls out new stores.
- Target operates a year-round live plant department inside some stores, and Kmart stands to profit from the impending introduction of Martha Stewart lawn and garden products at retail.
- The Martha Stewart line was introduced in 1999, and included annuals, perennials, seeds, pots, tools, and patio furniture.
- Home centers, such as Lowe’s and Home Depot, have come to dominate the market at the expense of traditional nurseries.
4.3.1 Distribution Patterns
Distribution among the chain-retail sector heavily involves the corporate buyer. This company representative determines the need for a product, as well as the quantity needed. Often, deals can be made or broken based on the perceived ability of a company to meet a set quota. Delivery is usually made to a centralized location, then distributed to the retail centers via the company’s own distribution system.
Single-store retail requires distribution to the Point of Sale (POS). The responsibility for this distribution usually falls on the supplier. Consideration must also be given to the quantity shipped, due to the warehousing constraints of a smaller outlet.
Most of the larger fundraiser operations have a centralized inventory system, much like the chain-retail sector. Shipment must be made to a warehouse location in large batches of product.
4.3.2 Industry Participants
Although home centers garner a good share of consumer lawn and garden dollars, retail chain estimates reported by DSN Retailing Today the affiliate publication of National Home Center News showed mass merchants becoming a destination for many shoppers. The top retailers of lawn and garden products last year, based on estimated local sales, in descending order were:
- Home Depot
- Frank’s Nursery
As for purchase frequency, Wal-Mart grabs the top spot. A survey by the Home Improvement Research Institute, a subsidiary of DSN Retailing Today’s parent company Lebhar-Friedman, showed 20.8% of the respondents had purchased one or more of 15 lawn and garden products at that retailer last year. Home Depot placed second, with 17.6%, Kmart came in fifth, behind Lowe’s and Sears.
4.3.3 Competition and Buying Patterns
Among the retail businesses, competition tends to be less about products of similar nature and more about shelf space. Typical stores have limited display space and devote most of that space to brand name products. Many larger manufacturers offer the merchant some form of incentive, either as a discount, or through the use of promotional materials. In larger stores, with a multitude of offerings, visibility places a big part of customer selection.
One concern among most retail stores is that of supply. The manufacturer must have a system in place to ensure timely deliveries of the expected quota. Failure to fulfill these contracts can result in loss of exposure and loss of customers, and has been listed by the Small Business Administration (SBA) as one of the leading causes of failure among start-up manufacturers.
4.3.4 Main Competitors
Since Garden Crafts has no direct competitors for the Sit N’ Caddy, indirect competition will have to be addressed. Because of the dual nature of the product, both as a tool carrier and as a garden stool, two different types of products must be examined.
First, the garden stool. In a survey of local garden centers, the closest product to the Sit N’ Caddy was a kneepad for gardeners called the AirKnee. This air-filled cushion was found in Lowe’s, sharing shelf space with gardening gloves and other comfort items. This product sells for less than the Sit N’ Caddy, and takes less shelf space. However, it appears to be less sturdy in a garden environment, does not come with any patching materials, and most importantly, is not capable of being customized by the manufacturer or the customer.
Tool carriers come in many different styles and functions, giving us many indirect competitors. By narrowing the search down to those most commonly found in the gardening centers and sections, it was determined that the only types of carriers currently being sold in this area are canvas bags and straw baskets. Typically, these are not brand name items, but products that the retail outlet has either manufactured or bought in bulk with their own logo. These items tend to be less expensive and easier to store. They are not as durable as the Sit N’ Caddy, nor will they typically hold as many tools or supplies. They can be personalized by the customer, or ordered in bulk by the distributor.