Mowed Down: Lawn and Outdoor Equipment Stores

February 4 -- According to IBISWorld’s updated industry research report the Lawn and Outdoor Equipment Stores industry has been wilting over the five years to 2011, with a multitude of factors adversely affecting its landscape. Poor economic conditions, such as falling consumer confidence and disposable income, have reduced discretionary spending, driving down demand for new lawn and garden equipment. IBISWorld projects that the Lawn and Outdoor Equipment Stores industry will remain relatively unchanged in the five years to 2016, with revenue virtually stagnant.

The Lawn and Outdoor Equipment Stores industry has fought through declining demand in the five years to 2011, with revenue falling at an average annual rate of 3.8%. According to IBISWorld industry analyst and report author Mary Nanfelt, “as consumers' confidence in the economy and disposable income dwindled following the housing market's collapse, households cut back on discretionary spending, including on lawn and garden tools. In particular, sales for big-ticket items have suffered since the recession because consumers have kept their wallet closed. However, sales of less-expensive products have offset some of the industry's demise. Many households that traditionally hired gardening services have increasingly invested in smaller equipment to take care of their lawns.” From 2010 to 2011, revenue is expected to increase by 0.6%, to total $5.2 billion.

In addition to falling demand, Nanfelt says “competition from home improvement stores like The Home Depot and Lowe's has held back the industry's growth. By leveraging their size, these national retailers can achieve significant cost savings on comparable products and pass them down to consumers in the form of lower prices. Therefore, these stores have increasingly attracted customers away from lawn equipment specialty stores and outdoor power equipment dealers. As companies reduced their price markups to remain competitive, the industry's average profitability declined.” IBISWorld estimates that profit margins have decreased to less than 2% of revenue. Such poor industry performance has caused many retailers to merge with other players or exit the industry. The number of enterprises declined at an average annual rate of 3.6% during the period, from 3,994 in 2006 to an estimated 3,328 in 2011.

The Lawn and Outdoor Equipment Stores industry is characterized by a low level of concentration and a high number of companies. This is because a large number of small and independent players dominate the industry; most businesses only cater to their local or regional demand. In fact, of 3,300 businesses that are expected to participate in this industry this year, the majority will be of small stores with fewer than 10 employees. As such, there are no major players that account for a considerable share of the industry.

Generators Sell Briskly, Then They Often Come Right Back

August 31 -- Retailers are reporting brisk sales of portable generators as millions of Americans remain without electricity after Hurricane Irene, but the stores are likely to face a rush of returns once the lights come back on.

Generators powered by gasoline, propane or natural gas have become a niche industry in recent years as more U.S. homeowners seek to ensure they can keep lights, refrigerators and air-conditioning systems running during extended blackouts.

That is proving to be the case this month as consumers flocked to chain stores such as Wal-Mart Stores Inc., Home Depot Inc. and Lowe's Cos. to buy generating units costing hundreds, or in some cases, thousands, of dollars, before and after Irene struck the eastern seaboard.

"Demand has been extremely heavy," said Todd J. Teske, chief executive of Briggs and Stratton Corp., one of the top portable-generator manufacturers. "It's not unusual to see 100,000 generators go out—we saw that certainly during Katrina—and I fully expect this storm to be similar."

But consumers who come to regret the pricey purchases often try to return portable generators after their personal emergency passes, a phenomenon one manufacturer executive sardonically called a "weekend rental."

Retailers typically say they allow returns of generators if they haven't been used, while some take back used items—for a fee. Home Depot accepts returns of gasoline-powered items like generators within 30 days of purchase, but it reserves the right to charge a maintenance fee if a used item has to be cleaned or restored to resell.

Either way, the stores usually bear the financial brunt of returns, especially in areas such as the Northeast, where residents are less likely to need them again soon than in more hurricane-prone areas.

A spokeswoman for Lowe's said Tuesday that the retailer had yet to see an unusually high rate of returns.

Nick Mohabir, 38 years old, a supervisor at Bruno's Home Center in Brooklyn, N.Y., said his store sold out of generators before the storm. One man from Long Island indicated he wanted to return his, Mr. Mohabir said.

"I said, 'Are you for real, buddy?' " Mr. Mohabir said. "I said, 'Listen, it ain't going to happen. If you use it, you can't bring it back.' "

Retailers all refuse to disclose exact sales, but they say generators are among the emergency items most in demand at stores in heavily affected states such as North Carolina and Virginia.

"It's definitely one of the key items people want," said Dianna Gee, a Wal-Mart spokeswoman.

Managers at a Lowe's store in eastern North Carolina and a Home Depot near the southern New Jersey coast reported that generators were among the items selling almost immediately upon arrival.

"We've seen a fivefold increase in orders this month," said Duane Nelson, vice president of marketing for Generac Holdings Inc., a leading generator maker whose units are sold at Home Depot and Lowe's. "The problem most people in the country are unaware of is that when you have an event of this magnitude, there are just not enough generators in the marketplace to meet the demand."

A rush to buy generators has become such a predictable rite during hurricane season that retailers and manufacturers stockpile units heading into the summer months. Many residents in the Southern U.S. avoid the rush by spending thousands of dollars to have standby generators installed in their homes beforehand. In Florida, Generac says about 2% of single family homes now have backup systems, one of the highest rates in the U.S.

Mr. Teske of Briggs and Stratton said storm events typically lead mentally scarred consumers to purchase generators for months after the fact.

www.wsjonline.com

Kohler Recalls Engines Used on Husqvarna, Cub Cadet and Troy-Bilt Riders

WASHINGTON, D.C. – May 5 -- The U.S. Consumer Product Safety Commission, in cooperation with the firm named below, today announced a voluntary recall of the following consumer product. Consumers should stop using recalled products immediately unless otherwise instructed. It is illegal to resell or attempt to resell a recalled consumer product.

Name of Product: Kohler Courage Engines

Units: About 10,000

Manufacturer: Kohler Co., of Kohler, Wis.

Hazard: A wire connector on the engine can become disconnected causing the operator’s seat switch to fail. When this happens, the blades will not shut down, posing a laceration hazard to consumers.

Incidents/Injuries: None reported.

Description: This recall involves Kohler Courage twin-cylinder engines sold with three brands of lawn tractors: Husqvarna, Cub Cadet, and Troy-Bilt. The vertical-shaft gasoline engines range in horsepower from 20 to 25. Engines included in this recall have serial numbers with the first five digits beginning with 41028 through 41056. Serial numbers can be found on the black engine cover.

Sold at: Lowe’s, Tractor Supply Company stores, and by authorized Cub Cadet dealers nationwide from February 2011 through April 2011 for between $1,500 and $5,700.

Manufactured in: USA

Remedy: Consumers should immediately stop using the lawn tractors and contact an authorized Kohler dealer or the retail location where the tractor was purchased for a free inspection and repair.

Consumer Contact: For additional information, contact Kohler Co. at (800) 451-2294 between 8 a.m. and 5 p.m. CT Monday through Friday, or visit the firm’s website at www.kohlerengines.com

In a Battle for Turf, Sears Revs Up the Riding Mower

March 17 -- A retailer struggling to fend off increasing competition is borrowing a page from the marketing playbook of products like soft drinks and soup by naming its rivals in aggressive advertising.

Sears, in a campaign scheduled to begin on Sunday, will urge consumers to shop for lawn and garden products at Sears rather than Home Depot or Lowe’s. A description of the campaign on a section of the Sears Web site (sears.com/turfwars) underlines its tough-talking nature: “Sears Turf Wars, fighting the Home Depot and Lowe’s for the right to be on your lawn.”

The campaign, being created by the Chicago office of Y&R, has an extensive presence in new media, including Web video clips, social media and a mobile application that enables comparisons of products sold by those three retailers.

“ ‘Turf Wars’ isn’t just an ad campaign,” said Martin Lee, vice president and chief marketing officer for lawn and garden products at Sears Holdings in Hoffman Estates, Ill. “It’s a marketing platform, an attitude, a statement of what we will do for our lawn and garden customers.”

Sears, part of the Sears Holdings Corporation, is joining a lengthy list of marketers challenging competitors rather than using coy terms like “Brand X” or “another leading brand.” Such direct campaigns are known in the industry as comparative advertising, but they amount to the Madison Avenue equivalent of the negative advertising that is prevalent in politics.

Comparative ads typically become more commonplace when the economy is weak, on the theory that when times are tough it may pay to hit your rival harder.

“We wanted to create disruptive advertising,” Mr. Lee said. “The brief to the agency was ‘shock and shatter.’ ”

Among brands that have been naming names in pointed ads are Pepsi Max and Sierra Mist Natural sodas, citing, respectively, Coke Zero and Sprite; Campbell’s Select Harvest soups, tackling Progresso, which soon counterattacked; Dunkin’ Donuts, taking on the coffee sold by Starbucks; and the Chevrolet Cruze, proclaiming its superiority to the Honda Civic and the Toyota Corolla.

Comparative advertising is not without its risks. One is that the intended audience may be turned off by the tactic, flagging the sponsor for unnecessary roughness. Another risk is that the novelty of hearing or seeing names of other products in ads may prevent consumers from recalling who the sponsor actually was.

And comparative advertising requires “a high degree of believability about the message,” said Robert Passikoff, president of Brand Keys in New York, a brand and customer-loyalty consulting company.

For instance, “if I tell you Kia is a match for Mercedes,” he added, “you’d be laughing your head off.”

In the Brand Keys rankings of sellers of merchandise in the categories of garden care and home repair, Sears is fifth among five retailers, Mr. Passikoff said, trailing, in order, Ace, True Value, Home Depot and Lowe’s.

However, the Craftsman brand, which is a focus of the new Sears campaign, does resonate with consumers on attributes like quality and value, he added.

The initial television commercial in the campaign features an assertive, gravelly voiced actor named John Lacy, who has appeared in films like “Live Free or Die Hard” and “Zodiac.” He comes across more like a pitchman in a truck ad than a retail spot.

Indeed, Mr. Lacy is first glimpsed inside the cab of a truck, part of a caravan delivering Sears lawn and garden products. The trucks drive past a Lowe’s store before setting up the merchandise in a parking lot near a Home Depot.

“There’s a lot of home improvement centers out there,” he says, “but does paying more for less mower really improve anything? You deserve better.”

Sears will “put our money where our mouth is,” Mr. Lacy says, by offering a lowest-price guarantee,” adding, “You won’t find a better deal there or there,” pointing to the Lowe’s and Home Depot stores.

“It’s a turf war, ’cause your lawn is worth fighting for,” he concludes.

The campaign is “purposely aggressive and provocative,” said Bob Winter, chief creative officer at Y&R Chicago, part of the Y&R unit of Young & Rubicam Brands, owned by WPP.

“It’s definitely got a little bit of bravado,” Mr. Winter said, because Sears executives “feel it’s time to show bravado.”

But it does not go too far, he added: “It’s a war. But it’s a war waged with riding mowers that max out at seven miles an hour.”

The tone should appeal to potential customers, Mr. Winter said, describing them as “middle-aged suburban dudes” for whom “their lawn is their ultimate form of self-expression.”

The campaign is arriving as Y&R Chicago takes part in a review for the Sears creative account, with spending last year, according to Kantar Media, of $459.4 million, of which $12.3 million was devoted to lawn and garden products.

Asked what it was like to produce the campaign at such a precarious time, Mr. Winter replied: “We’re focused on the future, and doing the right thing for our client, no matter what. The review aside, our challenge is to provide them with innovative creative solutions to their problems, and we’re going to continue to do that.”

Mr. Lee declined to discuss the review but said, “Y&R really did a great job for us on this.”

The Turf Wars do not seem to be prompting Sears’s rivals to wave white flags. For example, Home Depot and a company called Scanbuy are introducing a print campaign using mobile bar codes, or QR codes, to provide information about Martha Stewart Living merchandise.

Riding Mower Sales Predicted Up For 2010

We plant it, water it, fertilize it, cut it, stuff it into bags and then throw it away.

It's called grass. It is one of the least productive crops we grow. And we are increasingly doing it the easy way, on riding mowers.

Janet Shim, an analyst with Santa Monica, Calif.-based industry research publisher IBISWorld Inc., forecasts sales of riding mowers will be up 9.8 percent to $896.6 million in 2010.

She recently tripped across this little noticed trend while researching home improvement stores, such as The Home Depot and Lowe's.

She expects this retail group, overall, to post a 2.3 percent decline in sales for 2010. But one bright spot has been riding lawn mowers.

"People have been viewing riding mowers as an investment," Shim explained. "It adds curb appeal to their homes. It's an easy way to increase home values."

Indeed. Nothing says "I'm not making my mortgage payments anymore" like an overgrown lawn. The bank-owned home down the street can get away with it, but not you.

Shim speculates many Americans have gotten rid of their gardeners, landscapers and lawn servicers amid the sluggish economic recovery.

But they soon find out that mowing themselves is hard work. So they run to a home improvement store and plop down anywhere from $700 to $5,500 or more for a new riding mower.

Sales of push mowers, or walk-behind mowers, meanwhile, remain on the decline, Shim said.

"Baby boomers are driving this trend," Shim said. "They are seeking comfort while they mow the lawn."

Aging Baby Boomers are caught between distinct generations: Their parents, who once had to cut lawns with motor-less push mowers; and their children, who do not even know what a lawn mower is because operating one has yet to be effectively simulated by a popular video game.

Meantime, the grass keeps growing and someone has to cut it.

Marketers learned long ago that Baby Boomers will do anything if it somehow can be considered cool or artsy.

Riding mower maker John Deere leveraged this strategy perfectly in an advertising campaign during the March Madness college basketball season this year. It was dubbed "What will you create?"

The campaign featured South Carolinian Pearl Fryar who turned his lawn into a world renowned topiary garden by logging 1,200 hours on his John Deere lawn tractor.

Then there was former executive Larry Carlson of Bridgehampton, N.Y., who turned a five-acre potato field into "a work of art, complete with beautiful rustic gardens and a labyrinth."

Carlson looked like a guy who could afford to hire a landscaper, but he was doing it himself for his love of the art, you see.

The message: Time to get back in touch with the earth. Get yourself a cushy riding mower and cruise the rolling greens of your gated suburban spreads — if you haven't lost them to foreclosure, that is.

"Lawns are a status symbol," Shim said. "People judge your wealth or status by your lawn."

And where else can a man be free — to text and drive, to rage and drive, to drink and drive — than on his own lawn?

Where else can a woman — barefoot, pregnant and mowing the lawn — find more glamour and sophistication than on a Husqvarna?

There's nothing more invigorating than revving a Briggs and Stratton engine, buzzing the open space of your own backyard, smelling the fresh-cut grass, wind in your hair, sun on your back, whirling blades beneath your feet. The nation's unemployment rate be damned.

In a sluggish economic recovery like this, this could be the closest many of us will come to owning a yacht.

Al Lewis   www.denverpost.com