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  what has happened to our industry? A look back at the factors and events that helped shape today’s retail floral trade. by Kenneth R. Royer, AAF Editor’s note: After an eight-year hiatus, Ken Royer is returning as a contributor to Florists’ Review, at this critical time in our industry’s history, with an exclusive seven-article series, “Florists in Crisis.” This is the first installment of the series, which will run through May 2010. I am concerned about the rapid decline in the number of retail florists in the U.S. and the perilous financial condition of many of those who remain in business. After writing for this magazine for 14 years, authoring a book in 1998 and serving on the board of Gerald Stevens, Inc., I retired in the summer of 2001. Since that time, I have remained deeply interested in the retail flower business and active as a member of the board of directors of U.S. Retail Flowers, Inc., which operates Royer’s Flowers & Gifts and Stephenson’s Flowers & Gifts in southeastern Pennsylvania and Connells Maple Lee Flowers & Gifts in Columbus, Ohio. I have returned because I am concerned about the current state of retail florists in this country, and I believe I can be helpful. I would like to begin with a retrospective, which reveals why flower retailing is in its current circumstances, then follow up with subsequent articles that will present tactics that will improve the situation of the remaining retail florists. a retrospective: the 1950s and ’60s My experience in the retail flower business spans more than 60 years. In the 1950s and ’60s, little change took place, and growers, wholesalers and retailers had very much a seller’s market. A person wishing to purchase flowers went to a florist. Florists were, with few exceptions, the only flower vendors in town. In the early 1960s, change began to take place, beginning a period during which many profound changes occurred—and at an ever-increasing rate. During that time, industry segments were clearly defined, and flower distribution was orderly, if not efficient. Growers were mostly regional. Florists purchased flowers from growers and wholesalers within 25 miles of their stores, and, sometimes, growers that were both growers and retail florists provided a portion of their flowers from their own greenhouses. Growers were slow to adopt laborsaving devices such as automatic watering and air conditioning. Most were operating greenhouses that had been constructed years earlier and that were not adaptable to efficient handling procedures or energy-saving innovations. Wholesalers were very powerful and controlled the flow of flowers and floral supplies from the growers and manufacturers to the florists—except for the small percentage of sales that went directly from the growers to the retailers. The wire services also were very powerful, and they were growing increasingly more powerful as they utilized media advertising to market arrangements in their own containers, on which they made substantial profits. the retailers During this period, there were few multiple-store retailers. Most florists were single-store operations and purchased all of their fresh flowers and hard goods from wholesalers. Funeral flowers was the largest sales category, but holidays began to grow in importance. Changes began to take place in the early 1960s, and I believe there were six profound changes that altered the retail flower business and impacted segments of the industry. I will focus on the impact on retail florists specifically. Profound Change No. 1 During the 1950s and ’60s, Easter was the largest-volume holiday for many florists in the U.S. There has been an annual decline from that time; in most communities, Easter floral business is now minimal. For example, the total sale of Easter corsages in our 24 stores today does not equal the volume of the single store we operated in the 1950s. Profound Change No. 2 In the early 1960s, fundraisers—primarily affiliated with the environmental movement—discovered the value of using “In lieu of flowers … ” in funeral notices, followed with the suggestion of making a contribution to a charity or memorial. Attempts by the floral industry to discourage the practice met with little success. From that time to today, the volume of funeral work has declined. In my personal experience, funeral orders are now only 20 percent of what they were in the early ’60s. In addition, beginning in the mid- to late 1980s, the number of orders for hospital patients—another major business segment for many retail florists—began to decline, brought about largely by shortened hospital stays. This is another area of lost business about which most florists can do—or, perhaps more accurately, have done—little about. Profound Change No. 3 Offshore production of cut flowers began in the late 1970s. By 1979, after occasionally receiving flowers that were grown in Colombia, I decided to go see what was taking place. I traveled to Bogotá and Medellin in 1979, where I saw that the world of flower retailing was about to change drastically. Royer’s immediately initiated direct shipments of cut flowers from Colombia. By 1982, we had sold our greenhouses, which had been fulfilling 80 percent of our needs for cut flowers and plants. Flower growing was quickly becoming an international business and was gravitating to countries with ideal year-round conditions and low wages. As cargo planes grew larger, and as airport refrigeration and handling facilities improved, the advantages of buying from offshore producers grew proportionally. During the 1980s and ’90s, virtually all cut-flower greenhouses on the East Coast were idled, and growers across the country felt the impact. The volume of imported flowers rapidly grew from a trickle to a flood, which overwhelmed the demand for cut flowers in the U.S. Unfortunately, the existing retail flower industry in the U.S. showed little desire to accept the challenge to market those flowers. Profound Change No. 4 Grocery stores entered the floral marketplace. The large volume of offshore flowers entering the U.S. made it possible, for the first time, for supermarkets to obtain a consistent supply of low-cost flowers to stock floral departments. By the mid-1970s, many progressive supermarkets began to experiment with floral departments, and the vast majority of supermarkets quickly followed. Supermarkets soon owned a 10 percent share of the retail floral market. Profound Change No. 5 In the late 1980s, credit cards and overnight shipping of flowers provided by Federal Express (the name was changed to FedEx in 1994) came into wide usage. Consumers no longer were loyal to “their florists,” with whom they had established charge accounts. Credit cards gave them the freedom to change their selections of florists or Internet suppliers at will. Federal Express made it possible for anyone in the U.S. to provide next-day service. Credit cards also removed the payment obstacle for customers who wanted to place out-of-town orders directly with florists themselves. This change altered the relevance of wire services, which later led to rebates. In order to pay the rebates, wire services reallocated funds that had been used for national advertising. The wire services’ rebate programs created a fertile financial environment that spawned the “order gatherers,” and the wire services began to compete with the florists that helped build them. Profound Change No. 6 Internet marketers joined the fray in the mid- to late 1990s. Once again, the oversupply of flowers worldwide provided an opportunity for vendors who could sell them to consumers in the proper form at the right price. Also, Internet usage was growing exponentially, and more and more consumers were shopping from their computers. The Yellow Pages marketers (sometimes called “order gatherers” because they do not fulfill orders) were the predecessors to the pure Internet marketers. They offered 24-hour toll-free phone service and sent the orders they gathered to established florists for fulfillment. They were followed by pure Internet marketers, who opened their own distribution centers and imported their own flowers, which FedEx delivered overnight. florists were slow to react All these “profound changes” had an impact on retail florists; their market share shrank, and it continues to shrink. And while all these changes were taking place, the average florist changed little. I think florists were slow to react to these changes because they didn’t fully understand the business they are in, and they didn’t understand the real desires of the consumers they were attempting to serve. Those important issues will be addressed in my next article, and later in this series, I will provide actionable steps that retail florists can take now to reposition themselves for the current and future markets. To comment on this article, send an e-mail to ken.royer@royers.com or editors@floristsreview.com.
Kenneth R. Royer, AAF, is
a lifetime florist who expanded the business started by his mother in
1937 into what is now, arguably, the largest traditional florist
business in the United States—U.S. Retail Flowers, Inc.—which is
operated today by his three sons. |
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