Published on 25/11/2015 by Punchmedia

Gardening Services: Why the Grass Looks Greener

An IBISWorld Report has forecast that gardening industry revenue will increase at an annualised 1.8% over the five years through 2014-15 which includes growth in 2014-15 of 2.7% to $2.9 billion.

Current Overview

The Gardening Services industry has performed relatively well over the five years through 2014-15, as strong demand fundamentals have underlined steady growth despite some economic uncertainty. The industry's main customer base consists of high-income households and elderly people that require assistance in garden maintenance. Demographic shifts have worked in the industry's favour as higher income levels across the board and a steadily ageing population have boosted demand for this discretionary service.

Employment and Establishment Growth

Over the five years through 2014-15, industry employment is expected to increase at an annualised 0.4%, as garden service demand has increased in most years. Establishment numbers are estimated to increase at an annualised rate of 0.4%. While there are some garden service businesses that employ large number of employees, the vast majority of industry operators are sole proprietors. This means that the number of people employed within the industry largely depends on those that seek to open their own business, either as a part-time or full-time enterprise.

Profit Trends

IBISWorld expects industry profit to account for 13.9% of industry revenue in 2014-15, down from 15.7% in 2009-10. Strong price-based competition, due to an increasing number of operators and the inability of most operators to pass on all cost increases to clients, has been the major reason why industry profit has not grown along with revenue. Some plant, fertiliser and equipment maintenance costs have risen at faster rates than inflation, heaping pressure on margins. Some operators do have the ability to pass on costs in many areas, which has limited the decline in profit margins.

Industry Demand

The use of gardening services is a discretionary expenditure by households, and is therefore sensitive to changes in economic conditions. Trends in gardens have evolved considerably over the past three decades, between native, rustic, formal and cottage garden styles. Cottage gardens require greater planning and maintenance, and continue to benefit the Gardening Services industry. With drought conditions across most of Australia at times during the past five years, native gardens have tended to be in favour for new gardens and plantings.

High Income Households

Much of the industry's demand comes from time-poor, high-income households that can afford to pay a high price for services they do not have the time, or inclination, to undertake themselves. The industry earns revenue from a number of value-added services such as garden plant trimming, hedging and pruning from these customers. The industry also derives a significant proportion of its revenue from low-income (aged, retired and people on pensions) and disabled households. Many of these clients only require basic services, such as lawn mowing, that offer lower profit margins for operators.

punchmedia

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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