Are you in the flower business? If so, you are no doubt aware that the number of independent flower shops operating in the United States has been dropping over the past 5 years. The United States Department of Labor projects a 7 percent overall employment growth rate for all occupations, between the years of 2014 to 2024. At the same time, Bureau of Labor Statistics also projects that employment in the floral business will drop by 3 percent, over the same period of time.
If you are in the floral industry these numbers probably don’t give you much confidence about your future. Let me share some thoughts with you. At least some of what I have to say may ease your concerns. The numbers say there will be less florists ten years from now than there are today. The data also says there will be fewer jobs in the floral industry. What those stats don’t speak to is demand and supply. If you look at the supply data, you will quickly see that growers are planning to increase supply over the next ten years. Why would they do that you ask? Well, the answer is demand. People love fresh cut flowers and beautiful green and flowering plants. As population in the U.S. continues to increase, the need for fresh cut flowers, wedding flowers and event flowers grows as well.
What Is Causing So Many Flower Shops To Close
If you ask the question around the industry, “What is causing so many flower shops to close?” you will get a bunch of different answers. We have our own opinions on what is causing the decline. Here is what we would describe as the problems.
- Flower Shop Reliance On Wire Networks
- Order Gatherers Keeping Larger Percentage of Sale
- Rapidly Changing Shopping Patterns
- More Competition for Fresh Cut Flower Sales
Lets take these bullet points and review them in more detail. Why would we list flower shop reliance on wire networks as a problem. Many small and medium sized flower shops have historically relied on the wire networks for orders. At the height of the wire network effectiveness, a florist could set up shop, hire employees, purchase product, then turn on the order wire and wait for a steady stream of profitable orders to flow across the wire networks. In today’s world, that strategy just does not produce the same result. Take a look at the shops who are closing their doors. Many relied heavily on the wire networks for order volume.
What has changed that makes wire network reliance such a huge problem in todays world? We believe that the order gatherers are keeping a larger percentage of each wire order and passing through a smaller amount of revenue to the flower shop who actually fills the order. What is most likely driving that is the fact that the cost of order acquisition has increased for the order aggregators. In addition to the cost of acquisition, many of the order aggregators are also facing increased pressures by their owners and share holders to increase profitability. Well, how to you increase profitability? The most obvious ways are to increase the number of orders you gather, or increase the percentage of each order that you keep.
What Do We Mean By “Rapidly Changing Shopping Patterns”
The Internet is changing many aspects of our lives. One very clear change is how people are choosing to shop. In the past, if you wanted to purchase something, you generally went down to the store that carried the item you wanted and made a purchase. In today’s world, you can simply order right from the Internet, in the safety and comfort of your own home. The data is clear, online sales are growing at an incredible rate. Check out this data. comScore reported last year that retail spending in the U.S., conducted on desktop computers for the first 30 days of the November-December 2015 holiday season, had reached $27.9 billion. That was a 6% increase versus the same time period the previous year.
Folks, that was just online shopping, done by people using desktop computers. When you look at online sales from all devices, you really begin to see just how dramatically the Internet is changing shopping patterns. 2015 statistics reflected that more than 191 million Americans owned smartphones. That number has continued to increase. People using smartphones are searching the Internet at staggering rates. In fact, searches from smartphone and tablet devices have now exceeded the total number of searches being conducted on desktop and laptop computers. These smartphone shoppers aren’t just researching, they are buying!
Lastly, competition in the fresh cut flower business has increased, even though the number of independent flower shops in the U.S. has declined. The competition for florists is coming from grocery stores, Costco, Sam’s Club and other wholesale and natural foods stores. Seems like everyone who sells groceries wants to offer fresh cut flowers, vases, balloons and plants. That clearly wasn’t something that traditional florists had to worry about in the past.
Florists We Support Are Flourishing
Seven years ago, we met a man named Charles Carithers. He was the owner of Carithers Flowers in Atlanta, Georgia. We had just opened our doors for business a few months prior to meeting him. In January of 2009, we sat down with Charles and developed a PPC program that was designed to create a steady order stream for Carithers. The idea was to move away from the reliance on wire orders and to replace those orders with sales that we had generated on our own. That program delivered in a big way! From there, we studied the other issues facing Carithers. We went on to develop a comprehensive marketing strategy for Carithers that allowed us to build brand recognition, customer loyalty, wedding and event sales and more. In essence, we focused on a global strategy that would allow Carithers to grow, while the rest of the floral industry scrambled to find solutions to declining order volume, increased competition, lower value wire orders and overall declines in gross revenues.
Over the past seven years, we have added even more florists as clients. In fact, we have taken on a number of very notable flower shops, including; Veldkamp’s Flowers in Denver, Allen’s Flowers in San Diego and the Ozment Family, who own and operate four Flowerama shops in and around Columbus Ohio. As we took on each new client, we extensively studied the demographic differences of their market, versue markets we already compete in. We also identified the unique elements of the competitive environment each florist was operating in. Armed with this new competitive knowledge, we tactically adjusted elements of our strategy, then deployed the comprehensive program for each shop owner. The end result of all these learnings and tactical adjustments is a program that produces eye popping results.
Shops we serve are achieving historical highs in both sales and revenues. Florists we support are no longer just making a living, they are thriving. The best part of the whole process for us has been the development of long term, strategic relationships with the florists and families we support. For us, the relationship we enjoy with our clients and watching their families grow and flourish is worth all the hours we put in on our end.