Retailers prime engines for outdoor sales

As Americans begin gearing up for the spring lawn and garden season, home channel retailers are jockeying for position in the $8.9 billion outdoor power equipment segment.

This category, which includes lawnmowers, chainsaws and trimmers, is a major driver in the late first-quarter/early second-quarter sales period for home improvement stores, and many throw a good portion of their spring budgets into extensive advertising and marketing campaigns.

For instance, Sears announced in January that it has added a new line of Snapper lawn mowers to its brand portfolio for spring, including three self-propelled push-style mowers, two lawn tractors and a zero-turn riding mower. Sears, the only major retailer carrying this line, is using Snapper spokesman and NFL quarterback Brett Favre to propel a national print and radio ad campaign.

The Hoffman Estates, Ill.-based company hopes this exclusive deal with Snapper will create for Sears another important point of differentiation in the category, in addition to its Craftsman brand. Company executives have conceded experiencing a “notable” decline in the mower category in recent seasons, and research shows they’ recertainly not alone.

According to Mintel, a Chicago-based market research firm, the lawn and garden power tools market has been flatlining, along with the real estate market. And with experts saying that the housing slump will continue in 2008 and possibly into 2009, the scramble for market share among home improvement retailers becomes even fiercer.

Mintel reports that the U.S. lawn and garden power tools market declined 1.3 percent in 2006 and 2.7 percent in 2007. According to Chris Haack, a consumer market analyst for Mintel, the market size for outdoor power equipment is driven by home sales, although there may be as much as a six-month lag.

“When you see house sales dropping, you will soon see sales of outdoor power equipment drop. It’s a pretty linear relationship,” Haack said. “Prior to the recent drop, the market was growing pretty consistently. Interest rates were lower, so people were refinancing and buying big ticket items, including lawn mowers.”

Bill Harley, president and CEO of the Outdoor Power Equipment Institute (OPEI), agrees that the housing market is a major indicator of mower sales, but not the only one. “Obviously, housing starts and resales are important factors, but weather trumps everything,” he said. “If this spring is warm and wet—but not too wet—that will impact spring sales to a great extent.”

Sears isn’t the only retailer to bank on brand power as a means of with standing market fluctuations. Home Depot has benefited from an agreement it signed in 2002 with Deere & Co. to sell a line of John Deere 100-series lawn and garden tractors. Lowe’s later added John Deere to its lineup. According to Mintel, John Deere continues to lead the market, while other key players include Husqvarna, Toro (which also includes the Lawn Genie and Lawn-Boy brands) and MTD Products (which owns Cub Cadet, Troy-Bilt, Yard-Man, White Outdoor, Yard Machines and Bolens).

The Snapper line, which was acquired by Briggs & Stratton in 2004, stands to benefit from its zero-turn riding mower, as the category continues to gain in popularity among American consumers. “If a lawn mower can be sexy, the zero turn is a sexy lawn mower,” Haacks aid. “They’re high technology; it’s like putting a professional tool in an everyday consumer’s hands.”

In fact, according to the latest information released by OPEI, zero-turn riding mowers was the only mower category to experience increased shipments (up 20.8 percent) in 2007. Compare this to riding garden tractors (down 44.9 percent), riding mowers (down 10.6 percent), front-engine lawn tractors (down 12.9 percent) and walk-behind power mowers (down 5.7 percent).

OPEI’s research further explains that 2007 was the first year since 2002 that shipments of walk-behind mowers fell below 6 million units.

Not everyone is reporting negative numbers, however. Do it Best’s sales of outdoor power equipment were up 4.5 percent in fiscal years 2007 (ended in June) and were up more than 12 percent from July 2007 to January 2008. According to Jeff Ridgeway, merchandise manager for outdoor power equipment and garden tools, his Company has been somewhat insulated from the downward trend because of its diversity of members—including non-U.S. locations. He says Do it Best has also reworked its product mix according to current economic trends.

“With some of the market conditions, consumers are choosing to do it themselves with walking mowers, manual reel mowers and lower-end riding mowers,” Ridgeway said. “While the market is struggling, our guys are hanging in there pretty well.”

Most experts agree that a turnaround in outdoor power equipment sales will have to wait until late 2008 or, more likely, sometime in 2009. “The recent lowering of interest rates will affect the ability for many people to refinance, but I don’t expect to see this until the end of this year,” Haack said.

OPEI’s Harley is also reticent about predicting a market recovery. “The projection we have is to be cautious, and that’s based on the weather factor coupled with the housing market,” he said. “Most product lines are projected to be slightly down—not an awful year, but not a robust one, either. We see it as a soft market, with things rebounding in 2009.”