Ornamental producers maintain post-pandemic gains, but profitability pressures and market uncertainty drive focus on efficiency

The green industry continues to maintain sales gains achieved during the pandemic era, but growth has slowed as producers navigate rising input costs, trade uncertainty and a challenging housing market, according to an article on hortidaily.com.

During his annual Economic Update keynote at Cultivate 2026, Dr. Charlie Hall, chief economist for AmericanHort, said the industry has entered a period of stabilization following several years of rapid expansion.

“We’re definitely moving sideways. We’ve plateaued and we’re maintaining that plateau,” Hall said.

While sales continue to increase for many greenhouse growers and ornamental producers, the pace of growth has moderated compared with previous years. Hall said the industry is now focused less on expansion and more on managing costs, improving efficiencies and protecting margins.

Sales remain above pre-pandemic levels

Data from Hall’s Green Industry MarketMetrics benchmarking program show that 81% of growers reported higher gross sales during the first half of 2026 compared with the same period in 2025. About 20% reported declining sales.

Most of the gains were modest, with the largest group of respondents reporting sales increases between 0% and 5%.

Despite slower growth, the industry remains significantly ahead of pre-pandemic levels. Hall noted that 98% of growers are reporting sales above 2019 levels, reflecting the lasting impact of increased gardening activity during the pandemic.

“We had anywhere from 18 to 20 million new gardeners during that time period,” Hall said. “Apparently, we’ve captured them and they’re still engaged.”

A five-year comparison shows a gradual return to more typical growth patterns. In 2023, approximately 20% of growers reported annual sales increases exceeding 10%. By 2026, that figure had declined to about 12%, indicating a market that continues to expand but at a slower pace.

Unit sales continue to support demand

The industry’s growth is not solely the result of higher prices. Survey results show 68% of growers reported increased unit sales during the first half of 2026, while 32% reported lower volumes.

Nearly 80% of growers are selling more units than they were in 2019, demonstrating continued consumer engagement with gardening and landscaping products.

Hall emphasized that tracking unit sales separately from revenue is important because price increases implemented in recent years can make sales growth appear stronger than underlying demand.

Consumer spending trends also support continued interest in ornamental products. Purchases of flowers, seeds and potted plants surged during the pandemic, then stabilized at higher levels rather than returning to pre-pandemic patterns. After declining during the second half of 2025, spending increased again during the first five months of 2026.

Profitability remains a challenge

While sales remain positive, profitability trends are more mixed.

Approximately 61% of growers reported higher net profits compared with the previous year, while 41% reported lower profits. Compared with 2019, about 79% of growers remain more profitable.

Hall suggested some businesses may be experiencing margin pressure because pricing strategies have not fully kept pace with higher production costs.

“I might theorize that those are growers that maybe didn’t keep up with their pricing strategy with the added input cost,” he said.

Retail channels continue to show strength

Garden centers also reported continued sales growth during the first half of 2026. Data from The Garden Center Group showed revenue increasing 5.3% year over year, with transaction counts up 1.7% and average transaction values rising 3.6%.

Large home improvement retailers also posted gains in lawn and garden categories. While overall comparable sales at major retailers increased only slightly, Hall noted that lawn and garden sales were approximately 7.5% higher than the previous year.

Retail promotions funded by large chains rather than suppliers have helped support demand, while direct-to-consumer online sales continue to grow, although they remain a smaller portion of the overall market.

Consumers continue purchasing despite economic concerns

Consumer confidence remains weak, but Hall said spending behavior is a more important indicator for the green industry.

“I don’t care how we feel, I care how we spend our money,” he said.

Consumer spending on ornamental products increased 2.4% year over year despite declining sentiment. However, household financial conditions are becoming more uneven. Higher-income consumers continue to spend, while lower-income households face greater financial pressure.

At retail, one emerging trend is consumers shifting toward lower-priced products rather than eliminating purchases altogether.

Housing market limits landscape growth

The housing market remains a key factor affecting future growth opportunities for landscape-related businesses.

New home construction continues below demand levels, limiting potential installation activity tied to new housing. Hall said mortgage rates remain the primary barrier to stronger housing activity.

“As housing goes, we go,” he said.

Hall expects housing-related demand to improve once mortgage rates decline below approximately 5.5%. In the meantime, remodeling activity continues to provide support for landscape projects.

Rising costs continue to pressure producers

Input costs remain one of the industry’s largest challenges. Fuel, fertilizer and freight expenses continue to increase, adding pressure throughout the production and distribution chain.

Hall forecasts freight costs increasing approximately 6% for the year, although spot-market rates remain significantly higher in some areas.

Since 2019, overall input costs have increased approximately 23%.

“If you have not adjusted pricing, just know that the input cost structure is not going down,” Hall said. “Our cost structure is going to continue to go up.”

For producers of soil amendments, mulch, compost and related products, continued cost increases in transportation, raw materials, labor and equipment are likely to require ongoing pricing adjustments and operational improvements.

Hall pointed to automation, mechanization and artificial intelligence as tools businesses can use to improve productivity and offset rising expenses.

Trade uncertainty remains a concern

Changing trade policies continue to create uncertainty for businesses throughout the green industry supply chain.

Hall cited ongoing discussions surrounding Section 301 tariffs and global transportation risks as factors that could influence future costs. Depending on how trade issues develop, input costs in 2027 could increase between 2.5% and more than 5%.

Despite economic uncertainty, Hall’s recession model currently places the probability of a U.S. recession at approximately 16%, similar to estimates from the Federal Reserve Bank of New York.

Efficiency becomes the priority

With market growth moderating and costs continuing to rise, Hall said businesses should focus on improving operational efficiency, managing working capital and evaluating product mix.

“We’ve got to sharpen the pencil,” Hall said. “We have to find those operational efficiencies and manage our cost structure.”

For soil, mulch and compost producers, the outlook points toward a continued focus on controlling production expenses, optimizing logistics, strengthening pricing strategies and finding new ways to improve efficiency while serving a market that remains larger than it was before the pandemic.