It wasn’t really so long ago that we had a milkman deliver fresh farm goods to our home. I’m not sure what happened to him, but I know he doesn’t deliver milk any more. That niche simply vanished from the marketplace. This is also happening today with independent retail Christmas tree lot operators.

Will they recede into a memory of things past? The short answer is yes, for the most part, they will. Many have already and more will disappear in the future. While this trend is especially important to small growers, it has implications for the industry as a whole.

Independent retailers are facing an onslaught of challenges. If their declining numbers have not been noticed at the farm level, it may be masked in growing regions where tree demand is matching or exceeded supply.

Some areas such as the Pacific Northwest have seen significant increases in planting trends. As a result, these growers will need to substantially expand their markets in the near future. However, recent national surveys suggest that this need may occur in the face of declining tree demand.

Who will the small growers sell to when this supply increases? The independent retailers will not likely provide a sufficient, nor even perhaps a significant contribution to future markets.

Challenges Facing Retailers

Look at the challenges facing independent retailers today. There is a one-two punch of escalating costs and a smaller share of the market.

Head to head competition with the chain stores is not profitable. So the stand alone tree lot must appeal to the more upscale customers and those who enjoy the tradition of taking the family to a tree lot. Increasing costs for trees, rent and labor have left the independents in a state of teetering viability.

In the major cities, vacant land is at a real premium. The modern style of development just doesn’t leave room for temporary Christmas tree lots. Competition for the best sites has resulted in rents that are often five or ten times of what they were in 1990.

To service upscale markets, independent retailers also have higher outlays for lot setup, decor and more complete customer service. Significant additional outlays for better product handling are also required because freshness is a top priority. So, even at current price levels, the cost of trees still represents less than half of most retailers’ overall expenses.

Pacific Northwest growers and their customers are aware of the rapid escalation in prices for Noble fir over the last few years. This is also showing up on retailers’ bottom lines. Most independent retailers have been increasing prices relentlessly over the last four or five years to meet these and other escalating costs.

However, the price hikes may be one reason surveys have shown a declining market share for Real trees during the past few years. Shrinking revenues and declining margins will continue to be a death knell to many small tree lots in the future.

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