Nate Baxter spent much of his career in technology. Now, just weeks into his tenure as CEO of ScottsMiracle-Gro, he’s betting that artificial intelligence, e-commerce and faster product innovation can help reshape one of America’s biggest lawn and garden companies.
“I’ve told this company that we need to behave more like a technology company and not think of ourselves as just a basic materials company supplying dirt and fertilizer,” Baxter told FOX Business.
Baxter, who joined Scotts more than three years ago, said his decades of experience in technology have shaped his approach to the lawn and garden business, even as he has had to learn the consumer products industry.
“Leadership is leadership,” Baxter said. “And I believe good leadership translates across all sorts of categories.”
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That technology mindset is already showing up in the company’s use of artificial intelligence.
Scotts has about 40 AI use cases spanning consumer-facing tools and back-office operations, according to Baxter. Rather than making large investments upfront, he said the company has taken a cautious approach, starting small and investing more when an application generates a return.
One of the first tests came in consumer services, where employees traditionally needed extensive lawn and garden expertise to answer customers’ questions. Scotts digitized that knowledge and built an AI-powered assistant.
“And now nearly 100% of our incoming calls are dealt with by an AI agent and not a human agent,” Baxter said.
Scotts is also deploying AI in demand planning and on its website, where consumers can use an AI assistant to ask more complicated lawn and garden questions.
Baxter said the technology is already generating revenue growth, cost savings and productivity improvements, but he pushed back on the idea that AI’s primary value will come from eliminating jobs.
“My view, there’s a lot of CEOs out there that think we’re going to be able to just eliminate a lot of jobs. I don’t see it that way,” Baxter said. “I think we are going to be able to make our people more productive and so that’ll allow us to maybe hire at a slower rate than we would as we grow.”
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Reaching new customers is another major piece of Baxter’s strategy.
Scotts estimates the lawn and garden category it competes in is worth roughly $12 billion, while its household penetration averages only about 10%, leaving significant room for growth.
Part of that opportunity lies with younger consumers who may have different expectations than the homeowners who traditionally bought Scotts products.
“We are pivoting hard into naturals and organics and biologicals not only is it just better for the Earth, but we know there’s a whole cohort of consumers out there that really want safe and effective organic solutions, but they also need to work,” Baxter said.
Scotts is also changing how it reaches those consumers.
Baxter said the company is moving away from large-scale advertising campaigns centered on traditional television and toward an “always on” model that produces thousands of pieces of creative tailored to different groups of consumers.
E-commerce is also becoming a testing ground for products before Scotts commits to nationwide distribution.
Baxter pointed to a product the company launched through TikTok Shop last year that sold out almost immediately. While the initial volume was relatively small, he said the launch demonstrated demand and gave Scotts an opportunity to learn how to operate through a new sales channel.
“That product is now Nationwide and Brick and Mortar, so that’s another lesson for us, which is test it in e-com first with a limited audience, learn from that, and then maybe the second season you bring it into Nationwide Distribution and Bricks and Mortars.”
Product innovation represents another pillar of Baxter’s growth strategy. He said Scotts introduced more than 80 new SKUs that accounted for more than $75 million in revenue, a figure he hopes the company can double over the next year.
“I do believe there’s a lot of organic growth,” Baxter said.
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The growth push comes as Scotts continues to strengthen its balance sheet following financial challenges after the COVID-19 pandemic and the collapse of the cannabis industry. The company has divested the remaining pieces of its cannabis-related business and refocused on consumer lawn and garden while paying down debt.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SMG | SCOTTS MIRACLE-GRO CO. | 62.61 | +1.92 | +3.16% |
Baxter said Scotts’ leverage is currently in the high threes, with a medium-term target of between three and 3.5 and a longer-term goal of getting below three. Reaching that level, he said, could free up cash for additional investment in the company and more shareholder-friendly uses.
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For Baxter, the next phase will come down to whether Scotts can turn its technology investments, new products and push for younger consumers into sustained growth.
“There’s a lot of excitement at the company,” Baxter said. “Change can always be good. We’re trying to improve on the culture that we have, which is already an amazing and fun culture. And at the end of the day, we’ve got a lot of excitement and enthusiasm here in the building about what’s next for Consumer Lawn& Garden.”
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