Exploring market choices in the US ornamental horticulture industry

Abstract

AbstractIn 2019, the US ornamental horticulture industry had a farm gate crop value of roughly $17 billion, contributed $348 billion in total output to the nation's economy, and created 2.32 million employment opportunities. However, as the industry matures and reaches a slow‐growing stage, interfirm rivalry may appear among grower firms for marketing channels and sales opportunities. Independent garden centers and retailers report facing increased competition from mass merchandisers. Market channel choices, as part of the competitive strategy, are alternative ways for ornamental production to reach consumers. However, marketing practices of this industry have not received adequate attention from researchers despite the economic significance of the industry. Combining four waves of the National Green Industry Survey from 2004 to 2019, this study provides a comprehensive analysis of factors influencing firms' market participation and market channel choices. Over the survey period, traditional wholesale market channels such as landscape services companies, rewholesalers, and single‐location garden centers have remained mainstream channels. The direct‐to‐consumer (DTC) channel showed the potential to gain significant market share. Thirty percent of the firms participated in DTC channel in 2018, and their sales represent about 22% of total sales by all survey firms. Our empirical results show firms' wholesale market participation and choices of market channels are largely influenced by plant types and firm perceptions (variables potentially affecting firms' assessment of the “size” of their market) and variables approximating the market size such as regional dummies and housing price index, confirming the impact of market size on entry decision. [EconLit Citations: C50, M31, L14].