January 2011: 2010 is considered to have been another year of generally good trading for the garden centre sector against the backdrop of a continuing challenging economic environment. The sector continues to be an attractive proposition for institutions and private investors as demonstrated by property company Garden Park Investments opening one of the largest garden centres in the south of England, Peterborough Garden Park. Banks continue to lend to the sector, mainly because most centres are freehold and therefore asset-backed.
The majority of centres have maintained their value and have not suffered the spectacular falls that other commercial property portfolios have experienced over the past couple of years. There have been a couple of instances this year where garden centres have sold for significantly less than they would have achieved. Gilbert Evans advised the purchasers of both Wincanton and Townley centres and both were acquired at significant discounts. Both these centres were in administrators’ hands and in such cases cash is king and significant discounts can be negotiated. This year two important centres have changed hands, Redfield at Fleet leased to Blue Diamond and Byrkley Park sold to Klondyke. Gilbert Evans has a further five garden centre businesses currently under offer. There is as strong a demand for garden centres as there has even been and providing businesses remain sound, cash flow allows a controlled sale and realistic prices are offered, the sector will remain an attractive proposition.
Larger centres in particular appear to have traded strongly with some smaller centres struggling. To a certain degree, the impact of the recession has played into the hands of the garden centre industry. With rising unemployment and many consumers having less disposable income forcing more discerning purchasing behaviour and more frugal lifestyles, the recession is proving to be a fillip for garden centres. Trends including the ageing population, the flourishing ‘grow your own’ lifestyle, enforced leisure time for many and ‘stay at home’ holidays should continue to contribute to gardening products expenditure continuing its upward trajectory. Earlier this year, Verdict reported that the growth in consumer spend on DIY and Gardening Products in 2009 was entirely driven by gardening with expenditure on gardening products growing by 10% to £4 billion.
Investment in developing family oriented destinations combining garden centres, restaurants and a retail experience continues to enjoy healthy returns through improved footfall, increased dwell time and the generation of significant non gardening revenues. Whilst gardening will continue to be exposed to the vagaries of the British climate, the extended offer at garden centres will help to offset the impact of such traditional events.
As long as garden centre owners and operators continue to be canny and adapt their proposition to suit today’s changing attitudes and lifestyles, then the sector looks set to be more resilient than other retail sectors. Mike Gilbert, Head of Garden Centre Division