Economy

How will your garden grow?

SmartCompany /

Australians love to watch their garden grow — especially when someone else is doing the work. By IBISWorld’s JASON BAKER.

By Jason Baker, IBISWorld

Opportunity: Gardening services are expected to benefit from Australia’s ageing, as well as the current drought conditions in much of the country. The short to medium-term outlook looks bright.

Over the five years to 2006-07, industry employment is expected by IBISWorld to increase at an average annual rate of 2.6% as revenue grows (see chart on revenue growth).

The gardening services industry is sensitive to changes in household disposable income, which is expected to grow moderately over the next five years due to sound economic fundamentals, and a fall in the unemployment rate.

This industry derives a significant portion of its income from low-income individuals, such as aged, retired and pensioners. There are currently 1.86 million people in Australia aged over 65, and of these about 40% are aged over 75. The average age is expected to increase from the 35-years, which is from 1999, to 41 in 2021, and to about 45 in 2051.

Weather conditions, both very wet and very dry, can affect the demand for this industry’s services. Drought conditions and water restrictions are currently affecting many cities and towns in Australia; August 2006 was the driest August since rainfall records were started in 1900. A substantial lack of rainfall has led to a continuation of multi-year droughts in parts of Australia, especially the south-east.

Franchised gardeners grow

A growing trend is the consolidation of franchised gardening chains with other household services, such as car cleaning, house cleaning, exterior house and window cleaning and carpet care. With all the service operators under the same name, these businesses can take advantage of the established brands.

One of the main barriers to growth in this industry is its dependence on discretionary household expenditure for garden maintenance and services. It is reliant on trends in household disposable income, which are affected by factors such as changes in employment as well as tax and interest rates.

However almost half of industry’s revenue comes from government and business contracts. They represent a key growth area for the future.

IBISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au

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