Primrose Southport Corridor: “Small Businesses Make People Happy”

Husband-and-wife team Erik and Leah Thallemer operate Primrose, a locally owned shop that opened in 2019.

Husband-and-wife team Erik and Leah Thallemer operate Primrose, a locally owned shop that opened in 2019

On the window of recently opened plant shop The Sill on Roscoe Street, the words “Plants Make People Happy” greet customers in a bold, white font.

Around the corner and down the street, in the window of a locally owned plant shop is this retort, spelled out in similar font: “Small Businesses Make People Happy.”

The Sill is part of a six-store, New York-based chain backed by venture-capital firms and operated by founder Eliza Blank. The locally owned shop, Primrose, is run by husband-and-wife team Erik and Leah Thallemer.

Roscoe Street is a front in the emerging faceoff between independent retailers and Wall Street-funded firms looking to build national chains in what has traditionally been a local business. The new competition comes amid booming demand for houseplants from homebound customers in need of greenery. Still, the Thallemers worry about competing with a company backed by venture-capital dollars.

“Why did they have to come park right here?” Leah Thallemer grouses.

Houseplant purchases exploded during the pandemic, driving nationwide sales up 31 percent to $1.7 billion last year from $1.3 billion in 2019, according to a survey estimate from the National Gardening Association. More than 29 percent of American households—or 37.6 million—participated in indoor houseplant gardening last year, up from 26 percent in 2019.

“It’s a completely unprecedented year,” says Dave Whitinger, executive director of the National Gardening Association. “There’s never been any kind of jump like that.”

Venture-capital investors noticed. According to deal tracker PitchBook, venture firms have plowed a record $293 million into plant companies so far this year, up 325 percent from the roughly $69 million invested throughout 2020. Of that total, $212 million went to brick-and-mortar stores and just $81 million to e-commerce plant startups.

Online plant sales have been slow to take off, representing only about 4 percent of the market, according to NPD Group. That has given traditional plant shops like Primrose a measure of protection from e-commerce giants that have steamrolled brick-and-mortar retailers in other sectors. Customers often prefer to pick out fiddle leaf figs in stores, where they can eyeball a plant’s color, size and health and get advice on plant care from knowledgeable shopkeepers.

Venture-backed chains pose a more immediate threat to mom-and-pop plant shops. Erik Thallemer says venture-funded competitors have more money to spend on marketing than Primrose and better know-how in the social media realm. Primrose has social media accounts and has noticed a recent uptick in engagement as more consumers seek to support local businesses post-pandemic. But he still feels it’s a stacked competition.

“We really can’t grow beyond our revenue,” he says. “They’ll lose money until they have complete dominance.”

The Thallemers opened their store in 2019. The Sill opened its Chicago location last month. The Thallemers say it’s too early to tell what impact the Sill will have on their revenue, but they have seen customers who come into their store carrying items purchased from the Sill. They have also posted their concerns about competing with the Sill on Instagram and are working to organize other local plant shop owners.

Social media helped fuel the recent houseplant boom, particularly among millennials and members of Generation Z, says Alex Frederick, a senior emerging tech analyst at PitchBook.

“Knowing how to market to those audiences is definitely key,” he says. That often means having the right funding and media savvy.

Andy Robledo, owner and founder of Plants Delivered Chicago, sells plants online and delivers them. He credits a lot of his sales to Google and online ads. “It’s hard to stay competitive,” he says. “As a small-business owner, I may not be able to outspend them, but what can I do to get a little more creative?”

The Sill launched online in 2012 and opened its first store in New York City’s Chinatown in 2014. Blank bootstrapped the business for five years before raising its first round of venture capital in 2017, she says. Investors include San Francisco-based Raine Ventures, Portland, Ore.-based Color Capital and Austin, Texas-based Brand Foundry Ventures, according to venture-deal tracker Crunchbase.

Blank won’t disclose financial information, but PitchBook says the company has raised a total of $13 million in venture funding. That’s less than some competitors, such as Bloomscape, which has raised $24.2 million.

The Sill plans to open more stores, but Blank says there is no target number or time frame. The company is actively looking at two spaces outside of Chicago.

Blank says she proposed a few ideas for immediate collaboration with Primrose, such as co-hosting a floral workshop and featuring Primrose on its Instagram story for Small Business Saturday. The Thallemers say they declined.

“We’ve sort of done what we can to extend an olive branch, and I think we just have to prove over time that we are here to be respectful neighbors and part of the community,” Blank says.

To be sure, the number of local plant shops in Chicago grew during the pandemic, and some industry operators say there is plenty of demand to go around. Mike Langhammer, general manager at plant supplier Chicago Foliage, says he sells to 41 florists and mom-and-pop plant shops in the city, a number that has increased about five times since pre-pandemic. He expects demand will shift a bit as the world continues reopening and even out over time—he already has noticed a decline in sales recently.

But local shops are right to fear venture-capital-backed competitors, says Andee Harris, adjunct lecturer of innovation and entrepreneurship at Northwestern University’s Kellogg School of Management. Venture-capital firms typically are more concerned with top-line growth in their portfolio companies than profitability. That approach sometimes allows the companies to spend more freely on marketing or cut prices to win customers. Smaller local shops can compete by playing up their origin stories and local roots, she says.

“They’re right to be concerned,” Harris says. “What they can do is try to get ahead of it.”

Article originally posted in Crain’s Chicago Business.

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