Fall 2011 State of the Landscape Contractor Report

For the third year in a row, landscape contractors had more success with their maintenance-related services than they did with installation. Furthermore, the continuation of relatively flat demand coupled with intense competition among contractors has created a market of clear “winners and losers” as contractors fight to steal market share in order to drive sales.

According to an October survey of Green Industry PRO readers, 45% said new landscape installation business was down this year, compared to only 18% who said maintenance business was down. On the other hand, 31% said new installations were up, while 46% said maintenance was up.

The overall outlook among landscape contractors is rather favorable for 2012. Few expect a reduction in sales volume (regardless of service sector), and roughly half expect to grow sales.

Haves and have nots

Although the majority of landscape contractors have held their own, 2011 has proved to be somewhat of a disappointment for some. Four times as many contractors (ranging from 20-45%) reported a sales decrease as those who forecasted one. Additionally, the number of contractors who forecasted a sales increase outweighs by 10-15% the number who actually reported a sales increase.

Intense competition continues to play a big role. Most contractors reported that acquiring and retaining customers became much more challenging in 2009-2010. For at least one out of five, this challenge became even more daunting in 2011. For example, 35% say retaining “small commercial accounts” has become harder than usual, while only 7% say it has become easier. The numbers are similar when asked about acquiring new customers.

Growth with specialty services

Contractors continue to diversify. According to the survey:

  • 71% perform aerating services – 33% of them reported a sales increase, 18% a decrease
  • 65% perform hardscaping services – 35% of them reported a sales increase, 34% a decrease
  • 51% perform tree care services – 40% of them reported a sales increase, 15% a decrease
  • 50% install water features – 22% of them reported a sales increase, 41% a decrease
  • 46% install outdoor lighting – 22% of them reported a sales increase, 32% a decrease
  • 43% perform pest control services – 35% of them reported a sales increase, 17% a decrease
  • 28% perform hydroseeding – 31% of them reported a sales increase, 31% a decrease
  • 23% perform holiday decorating – 36% of them reported a sales increase, 21% a decrease
  • 13% install/maintain green roofs – 48% of them reported a sales increase, 12% a decrease

Contractors “getting a handle” on things

Despite the challenging and oftentimes unpredictable business conditions, most landscape contractors are gaining a pretty good handle on what they need to do to remain competitive, yet profitable. Just 10% said they will lose money this year. On the other hand, 35% said they’ll earn a profit of at least 10%.

Looking ahead to 2012, 55% of landscape contractors expect to become more profitable, while only 7% plan on making less money. The number of contractors planning to make more money is up 7% from one year ago, while the number planning to make less money is down 7%.