Despite the unprecedented challenges we faced in 2009, the
floral industry has proved, overall, to be remarkably adaptable
by Stan Pohmer
Okay, sit back and take a deep breath. It’s been one heck
of a year, one that challenged all of us—and our consumers.
We’ve faced tough economic periods before but nothing like this.
Also for the first time, we were impacted by a crisis that was
global in scope.
Will 2010 bring us the relief we need and want, or are we
in for more of the same? Let’s take a look at what 2009 served
up, shine the crystal ball, and see what we’ve learned and what
we can look forward to.
Although we didn’t create the financial crisis or
contribute to the pickle many people got themselves into that
led to their personal crises, we had to deal with the outcomes.
And the changes in consumers’ mindset and values—what they
bought (or didn’t buy), why they bought and where they
bought—were almost overwhelming.
We’ve heard that our mission is to provide solutions to
consumers’ needs, wants and desires, but 2009 was the epitome of
us having to march to the beat of the very loud consumers’
drums. The changes consumers experienced were significant, and
the retailers and suppliers who anticipated those changes and
who have developed products, programs and services that adapted
to the changed consumer mindset were the ones who have felt the
It’s safe to say that almost all of us felt some pain,
whether it was in image/positioning, sales or profits; the speed
of our adaptation and the way we adapted determined the degree
of pain we suffered. Unlike past recessionary periods, this time
the effect was felt by all demographics, including the
upper-middle and higher-income consumers, our core buyers. We
used to think our industry was somewhat recession proof because
past recessions didn’t really impact our core customers. But the
recession of 2008/2009 was far broader and deeper than any
others, and we learned that we aren’t bulletproof.
Distribution and logistics will become major focuses for
the entire demand chain in order to generate cost-saving
efficiencies (e.g., GTIN, a new California distribution
model, standardized box sizes, etc.)
In the face of price-focused consumers, some retailers
will develop marketing positions that connect with
consumers by effectively communicating the true value of
plants and flowers to them. These marketing strategies
will act as catalysts for industry change and
As consumers learn to deal with the new economic
realities, sustainability will become a more prominent
factor in the purchasing decision process, and growers
and retailers will work together on promoting
Retailers will start to use social media (e.g., Twitter
and Facebook) to develop relationships with their
customers through reminders, education, and care and
handling guidance as well as to communicate/promote
sales and events.
causes of the crisis
Here are a few of the most impacting contributors to the
economic crisis. It was a “perfect storm”—the result of a
concurrent combination of factors:
The bursting of the housing bubble, where people were in
homes at inflated values, and, as the market rationally
adjusted, they ended up under water, with negative net worth
and mortgages that were higher than the homes’ values,
leading to foreclosures.
People funded their lives and lifestyles with credit-card
debt, and when their lines of credit were cut back and they
had to live within their means, they had problems paying
down the debt and had to cut back spending.
This curtailed spending affected retail sales and the
service economy, impacting producers, which led to layoffs
and a 10.2 percent unemployment rate (and some will say that
figure is understated and could be as high as 18 percent
when those who have used up their unemployment benefits and
have stopped looking for jobs are taken into consideration).
Underemployment, where those who were/are laid off had to
take/are taking positions at far lower salaries than they
were previously earning.
the impact on
Individually, any one of the factors above would have been
significant for consumers and the economy, but when they all hit
simultaneously, it brought consumers and the economy to their
collective knees. Not only did consumers have to adjust to their
changing financial situations but their faith in their financial
futures and the health of the economy, as reflected in the
Consumer Confidence Index®, plummeted. And because consumer
spending accounts for 72 percent of Gross Domestic Product
(GDP), a prime economic indicator, if consumers see their future
as bleak and uncertain, they cut back on unnecessary purchases
and, as a natural reaction in uncertain times, start putting
money in savings. Add to this the need to pay down credit-card
debt and start living within their means, and a significant
reduction in disposable income results, affecting retail
Consumers reacted to this turmoil and uncertainty by
changing their values and purchasing behaviors in ways that will
most likely transcend the economic recovery. They became more
price sensitive. They became more discreet in purchasing
luxuries and “want” items. They started buying more private
label and store brands, not only to save money but also because
the perceived image of being a brand snob became socially
unacceptable. They traded down in store and venue, and “good”
quality (versus “better” or “best”) became acceptable.
the impact on
Some retailers, especially those who sold on price value,
saw this runaway train coming and aggressively promoted their
price advantage. Others, especially those who had positioned
themselves with a value-added/upscale image, tried to buck
consumers’ changing behavior and fought to maintain their
nonprice value statement; however, unless their unique value
proposition was clearly demonstrated and resonated with
consumers above price, their positioning worked against them.
It’s difficult to maintain value-added and price-point image
strategies simultaneously, and in today’s marketplace, confused
consumers take their shopping where the message is clearly
Because the inventory for Christmas 2008 had already been
brought in before the full impact of the economic downfall
occurred, many retailers had to revert to fire-sale prices of 60
percent to 70 percent off, to move through the inventory, and
this set the stage for consumer expectations that we’re still
dealing with today. Consumers came to realize they have a
distinct advantage—they can wait out retailers who pull the
trigger on reduced prices. It is the classic game of “chicken,”
and consumers quickly learned that retailers usually blink
A good example was consumer behavior on Black Friday 2009.
There were 17 percent more people shopping, but sales increased
only 0.5 percent. Consumers cherry-picked the door-busters and
deferred buying anything that wasn’t a giveaway.
At press time in early December, some retail experts were
suggesting that sales between Black Friday and the week before
Christmas would be dismal, with consumers forcing retailers to
panic and offer the 60 percent to 70 percent discounts to clear
their inventories just before Christmas. Consumers know they
have the power over retailers, and they’re clearly using that
power to their advantage.
2009 in review
Most mass marketers will take small consolation in the fact
that they fared better than other floral channels, but it’s
true. They continued to pick up market share of the floral
industry, especially in the cut-flower and potted plant
For the cut-flower category, total stems sold was little
changed from 2008, but the dollars generated at both the
grower and retail levels were down due to lower costs and
retail price points. Overall, supermarket sales of cut
flowers ranged from -5 percent to +5 percent while sales in
the traditional retail florist channel were down 15 percent
to 30 percent.
Bedding plant sales in the mass-market channel were
generally higher in 2009 than in 2008 due to better weather;
however, they were still down significantly from 2007. If
the weather hadn’t cooperated, bedding plant sales would
have been dismal.
The economy has taken its attrition toll on growers,
importers and wholesalers, with quite a few of them shutting
down. And unlike past years, where financially challenged
companies were absorbed by other companies and production
was continued, in 2009, companies that went out of business
stayed dark, and their production was taken out of the
supply chain. While we hate to see companies go out of
business, it was a bit of a blessing in disguise because it
brought supply a little closer to the reduced demand and
slightly mitigated price pressures.
With minor exceptions, mass-market retailers were
hard-pressed to deliver positive corporate sales rates, with
very few showing comparative store sales increases. The
result of this is that new-store growth has been slashed, to
save on capital expenditures and maintain focus on organic
sales. Relatively few new stores are planned to open in
We did see some major remodeling and repositioning of
existing stores to more price-value formats in response to
consumers’ changed buying behaviors. And even in value-added
formats, there was a renewed focus on price-oriented
private-label and store brands, in order to appeal to
With the continued challenge to take costs out of the
process of doing business, the GTIN (Global Trade Item
Number) project is gaining traction, with a planned
implementation in mid-2010. This process is already being
used in many other supermarket categories and establishes a
protocol for growers to assign vendor-specific bar codes to
cut-flower boxes and UPC’s to bunches and bouquets, allowing
the electronic communication of purchase orders and invoice
reconciliation and payments. The protocol also provides for
systemic inventory management and a perpetual inventory.
This project is the result of an all-industry effort, with
the Association of Floral Importers of Florida (AFIF),
California Cut Flower Commission (CCFC), NORCAL/California
Association of Flower Growers & Shippers (CAFG&S), Produce
Marketing Association (PMA), Society of American Florists (SAF)
and Wholesale Florist & Florist Supplier Association (WF&FSA).
For more information, go to
A manual, Cut Flower Minimum Guidelines & Standards, was
created by the Association of Colombian Flower Exporters
(Asocolflores) and AFIF to develop a common
understanding of minimum standards for 41 flower types. Each
page of the manual shows the various harvest stages and
minimum specifications. The goal is to expand this list to
include all flower types from all growing areas. For more
information, and to obtain a copy of the manual, contact
Christine Boldt at AFIF at (305) 593-2383.
Although at press time in early December it had not yet been
addressed by the U.S. Congress, it appeared that the Andean
Trade Preference and Drug Eradication Act (ATPDEA), which
was due to expire on Dec. 31, would be extended for Colombia
and Ecuador, allowing their flowers to continue to enter the
U.S. duty free. Colombia is still challenged by the
Colombian peso and U.S. dollar exchange rate, putting added
pressure on grower profitability.
predictions for 2009
Although I would like to be able to state otherwise,
sales and profits will be challenged due to the outside
influences of the global economy.
Unfortunately, the global economic crisis/recession was
worse than I anticipated, and the impact on our industry
was severe. Virtually no sector or product category was
able to buck the negative trends.
2009 will be a shakeout year, with growers and
retailers, especially independent garden centers and
traditional florists, forced out of the market due to
lack of profitability and the inability to obtain
We lost quite a few retail florists and a few
wholesalers, a few independent garden centers, and some
farms in Colombia and Ecuador, but overall, our industry
once again showed its resiliency and ability to weather
the financial storm better than I anticipated.
Growers and manufacturers will further consolidate to
gain distribution and logistics efficiencies.
Due to the lack of capital and slow sales, there weren’t
too many consolidations of companies in 2009. Two areas,
however, showed some activity: 1) Multiple-facility
wholesale florists expanded into new markets, filling
the voids left by wholesalers that went out of business,
and 2) full-service pay-by-scan growers increased the
use of contract growers and/or purchased additional
production capability to service a broader geographic
Sustainability initiatives and certification programs
will gain traction with producers, and retailers will
start to use this as a marketable differentiation
With the slowed economy, even the ardent “green”
consumers weren’t willing to pay the higher costs for
sustainably produced product, so the pressure for
growers and retailers to implement sustainability
processes and get certified was low.
Because of the worldwide oversupply, products from
nontraditional markets, especially cut flowers, will
make inroads into the U.S. market, putting additional
cost pressures on existing trade partners.
Although there were cost pressures due to poor markets
throughout the world, there was relatively little
sourcing from new grower communities of cut flowers
(e.g., Africa and Mexico) into the U.S. market. Two
reasons for this were that the higher transportation
costs remained a barrier, and the traditional suppliers
maintained their competitiveness to keep the newcomers
out of their markets.
2010 and beyond
The economy will continue to be challenged for the next year
or two, and there’s no indication that consumers will go
back to their old buying habits anytime soon. The housing
market is still in turmoil, and prices will stay low for
years. Although the rate of people going onto the
unemployment rolls is slowing, unemployment will continue to
rise, and it’s said that serious job creation won’t occur
until late 2011, at the earliest. And unlike past
recessions, where the economy crashed and recovered quickly
(a “V”-shaped cycle), led by increased consumer spending,
the recovery from this recession is not being fueled by
consumer spending but rather by government stimuli, meaning
that the recovery will be slow and prolonged, especially
when consumer confidence remains low.
This means that the current consumer purchasing values
and behaviors will become more entrenched over time and more
permanent than temporary. This is the new world we’ll have
to adapt to.
Unlike specialty retailers such as traditional retail
florists, mass-market florists are lucky that they have
traffic coming through their stores on a regular basis. Your
opportunity is to convert that existing traffic to floral
sales. You have products with relatively low retail prices
that can bring great joy, convey emotions, and improve
consumers’ lives and lifestyles. Your challenge is to convey
this message to become more relevant to today’s and
tomorrow’s consumers. Yes, price will continue to be a major
consideration in purchasing decisions, but you have
tremendous opportunity to sell the benefits of your
products, to add to your value statement.
Will 2010 continue to be a challenge? Absolutely. But
with your grit, determination, resiliency, and willingness
to learn and adapt, you’ve proven that you can rise to the
occasion and beat the odds.
Pohmer writes his exclusive “State of the Industry” report every
year for Super Floral Retailing. He is CEO of Pohmer Consulting
Group, Minnetonka, Minn., and executive director of the Flower
www.flowerpossibilities.com. Reach him at (612) 605-8799 or