feature story


Sticking to your core specialties will help you ride out the current market shifts.

by AMY BAUER


Mom-and-pop flower shops face more challenges than ever, with increased competition from mass-market and Internet retailers and ever-rising costs of doing business. But listen to some of the nation’s top retail florists and a picture of hope and opportunity emerges. Though some shops won’t survive this period of consolidation, these owners agree there will always be a place for the traditional retail florist. They say they too are struggling for the answers in a changing marketplace, but they offer their perspectives on what will distinguish the survivors.
“The ma-and-pa and small family flower business will survive and thrive, but probably only those that excel at the service end of our business, and particularly those who focus on a few niches that they are particularly good at,” says Baxter Phillip, executive vice president of Phillip’s Flowers & Gifts in Chicago, Ill. He is among five members of the family’s third generation who are actively involved in its 10 shops.

CHANGING MARKET
A firm number for the remaining retail florists in the United States is difficult to pinpoint, but no matter what the source, the decline is clear. The number of larger shops, those with payroll, peaked between 26,000 and 28,000 in the mid-1970s, says Edd Buckley, vice president of service for The Floral Index, Inc., a Chicago, Ill., marketing and consulting service. The latest figures, estimated for last year, put the number of the larger shops at between 20,000 and 22,000, he says.
As florist numbers have fallen, competing floral outlets have multiplied exponentially and are fighting for the same customers. The most recent Ipsos/American Floral Endowment Consumer Tracking Study showed that while consumers spent 2.3 percent more on flowers and plants in 2004 compared with 2003, the number of purchases decreased 1.4 percent.
Despite the challenging atmosphere, many florists report their sales are stable or increasing. According to the 2005 U.S. Florist Tracking Survey by Columbus, Ohio-based floral research firm Prince & Prince, Inc.:
• 42 percent of florists characterized their sales as stable, which is defined as shrinking or growing five percentage points or fewer
• 27 percent said their business was declining
• 31 percent said their business was growing
The pace of growth appears to have slowed from 1998, however, when 48 percent of respondents said their business was increasing.
Mr. Phillip confirms those findings. “Our company had double-digit sales increases throughout the ’70s and most or all of the ’80s. That’s not here anymore,” he says. “If we have a year with a 2 or 3 percent increase, we feel pretty good.”

FINDING A NICHE
Cactus Flower, a florist with seven shops in Arizona, has boosted its event business to gain a steadier source of revenue. Two additional Accent with Flowers event-planning stores operate separately but are able to draw on some of Cactus Flower’s talent because peak event season falls during the slower times for the flower shops, and vice versa. “It has tended to smooth out the peaks and valleys, and we have a much more stable business model,” says owner Eric Luoma. Cactus Flower was founded in 1972 by Mr. Luoma’s parents and today also includes his sister, Kristina Dyrr.
The company provided hundreds of arrangements for the 2005 Super Bowl activities in Jacksonville, Fla., and has serviced events in Hawaii and the Bahamas. Gaining a reputation with corporate event planners has been the key to landing such contracts.
Ramsey Kraft, who owns the 156-year-old Nanz & Kraft Florists in Louisville, Ky., along with his three sons, says occasion-based arrangements are still the heart of their four stores. He was heartened by a study one of his sons commissioned with an advertising agency to gauge Nanz & Kraft’s standing versus the big-box retailers. The study showed customers were making impulse buys of $8 or $10 grab-and-go flowers at those retailers, but “they did not feel that that hurt our business,” Mr. Kraft explains, “and, if anything, they felt it helped because it made people more conscious of flowers for occasions.”
Mark Knox, AAF, TMF, the first-generation owner of Mark Knox Flowers in Odessa, Texas, spent some time going head-to-head with mass-market floral outlets, running flower shops for a local discount department store. “You’re never going to be able to compete with grocery stores on price, so you have to be unique in whatever it is you do,” he says. Today, his focus is on more traditional sympathy, wedding and party arranging at his three locations in Odessa and Midland, Texas.
Still other florists have supplemented arrangement sales with individual stems. Ken Royer, AAF, chairman of Royer’s Flowers & Gifts in Lebanon, Pa., says many florists missed an opportunity when they shunned the sale of loose flowers. Royer’s shops—there are 15 in Pennsylvania and four in Columbus, Ohio—started selling loose flowers in the 1960s. Today the shops offer rose specials on a continuing basis for $8.95 a dozen and limited specials such as 25 tulips for $8.95. “I think we kept a lot of that market and still do,” he says. “Our strategy has always been to try to convince people that there is no reason to go anywhere else for flowers.”

COMMUNICATING VALUE
Charles Kremp, AAF, owner of Kremp Florist in Willow Grove, Pa., which has a second location in Philadelphia and is in its third generation with Mr. Kremp’s children, says convincing customers of the value florists provide is key. “There’s a really good opportunity for the mom-and-pop shops when they concentrate on what it is that is the backbone of our business, and that is creatively combining things that pass along people’s feelings,” he says.
Mr. Royer says florists have erred over the years in implying to consumers that the flowers constituted the most expensive part of any transaction while the labor was essentially free. Royer’s Flowers & Gifts uses a formula for pricing in which each design function has a time value, which is then multiplied by an hourly rate. “People are comfortable with that realization in just about every other avenue of the world,” he says, comparing it to an auto shop’s charges for its services.

GETTING THE WORD OUT
Mick Gainan, manager of Gainan’s Flowers and Garden Center’s Heights Garden Center, one of three locations in Billings, Mont., says marketing efforts can be simple and hands-on. “Go out there on the street and hand out a fresh flower with your business card on it and just say, ‘Have a great day.’” Mr. Gainan and his brother, Chuck, have been joined by their children, the third generation, at their stores.
Gainan’s partners with various local gardening societies and opens its greenhouse each September for a fair, helping the clubs’ recruitment and Gainan’s sales; an online contribution request form helps the family weigh charity tie-ins at their weekly meetings; and the stores have found ways to contribute in less costly ways, such as providing centerpieces for a local nonprofit theater for half price in exchange for publicity in programs and announcements.
Similarly, Mr. Kremp gives bouquets to those who visit him at his shop, such as his banker or lawyer or the local chamber of commerce president. He measures his success by the response—from a sparkle of the eye to a thank-you note from a spouse. “Then you know you’ve touched that magic button that got them to be a flower buyer,” he says. Extending that experience to nonfloral buyers is the industry’s challenge, he says.

NEW GENERATION
Connecticut Florists Association Executive Director Bob Heffernan, who owned a flower shop for 19 years, says marketing to youths has been largely ignored over the past generation but is an area in which local florists can quickly make up ground. He suggests helping high schools with flower sales, participating in prom fashion shows or considering yearly direct-mail fliers highlighting kid-friendly arrangements. The association partnered with the Flower Promotion Organization to teach Girl Scouts flower arranging. Florists can set up similar events with local troops. “Even a 10-year-old today is a flower consumer in six years,” Mr. Heffernan says.

ONLINE OPPORTUNITIES
Mr. Phillip likens the Internet today to 800 numbers. A few retailers made a significant national presence for themselves when the new technology was in its infancy, but it eventually grew to be just a standard cost of doing business for the average retailer.
“If you opened a flower shop today and bought an 800 number, your goal would not be to spend $10 million advertising it nationally and compete with the top 800-number florists. It’s just too late, and the same is true of the Internet now,” he says.
While several of the retailers have a share of nationwide business because of their longevity and the mobility of their customers, most characterized their Web sites as a way to better serve their core local customers. Penny Coley, owner of Flowers by Coley in San Diego, Calif., compared it to Yellow Pages advertising, of which she is doing less these days. As more time-pressed consumers turn online, the Internet is, for some retailers, a way to recapture that lost foot traffic.
Mr. Royer says his Internet sales continue to increase. He attributes part of that to an increased marketing focus and promotion of online specials, but he acknowledges some of those sales are tradeoffs from his walk-in or phone customers. “But you can’t worry about that,” he says. “You’ve just got to get them accustomed to doing business with you in that channel.”
One exception to the local focus is Cactus Flower, whose online arm includes Flowershop.com. For Valentine’s Day, a nationwide advertising blitz on 14 XM satellite radio stations generated a good response, Mr. Luoma says. He expects sales from Flowershop.com, which was purchased in late 2002, to surpass Cactus Flower sales this year.

POSITIVE OUTLOOK
Like so many in the industry, these retailers say they are just trying to stay ahead of the changes. And a spirit of optimism was common among their comments.
“We definitely do not have it figured out,” says Mr. Phillip. “We just see the trends, and we’re mindful that these changes aren’t right or wrong, they’re just happening. Our job is to find the best way to respond to them and find opportunities in them rather than looking at them as hopeless disasters.”
Mr. Luoma observes, “There certainly will always be a need for flower shops. You’ll see the numbers change, and you’ll see concentration change, but it’s an industry that no other can duplicate.”



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