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Outlook is bright,

survey finds

Super Floral Retailing/Super Floral Show Buyer Survey reveals an industry that is poised to meet the challenges ahead.

by Cynthia L. McGowan

Despite the slowing economy, floral directors and buyers are optimistic about the future of supermarket floral sales, an exclusive survey sponsored by Super Floral Retailing and The Super Floral Show reveals. The survey also discusses challenges facing the industry and points to the importance of retailer-vendor partnerships in successfully meeting those challenges.
The Super Floral Retailing/Super Floral Show Buyer Survey, conducted earlier this year by Communications Center, Inc., of Spokane, Wash., Lakeland, Fla., and Washington, D.C., drew responses from floral decision-makers representing more than 23,000 individual stores. Personnel who make floral purchases for single-unit grocery stores, multi-unit grocery companies, discount chains, supercenters, wholesale clubs, distributors/wholesalers and military exchanges, representing full-, limited- and self-service floral departments, were invited to participate.
On these pages, you’ll discover key findings from the survey as well as analysis from four members of Super Floral Retailing’s Editorial Advisory Board, all with extensive background in the floral industry.

optimistic about the future

A whopping 87.5 percent of respondents say they are optimistic about the future of supermarket floral sales, with only 12.5 percent pessimistic. Broken down by service category, 92.6 percent of full-service operators, 100.0 percent of limited-service providers and 63.6 percent of self-service respondents report feeling optimistic.
Charlotte Russeth, business development manager at Dos Gringos and former floral category manager at The Kroger Co., was pleased to see such overwhelming optimism. “At some points in time, they’ve been really struggling to get sales, and so I thought that showed a really good trend,” she comments, adding that the results indicate positive sales. And, indeed, the survey shows that 56.3 percent of respondents had higher sales in 2007 than 2006, 12.5 percent had steady sales and 22.9 percent reported a decrease.

the challenges
Asked to identify the three biggest challenges facing retailers, respondents selected “maintaining profitability” (45.8 percent), “transportation costs” (39.6 percent) and, tied for third at 33.3 percent, “training employees” and “shrink/shelf-life of perishables.” For full-service respondents only, funds allocated for labor was one of the top three concerns, ranking higher than transportation costs.
The key to maintaining and growing profits, especially in the next year, is innovation, asserts Ben Pauley, vice president, mass markets, for FTD Group, Inc., and former floral director with Kroger. “As the economy slows, I think we have to look more toward innovation in products and merchandising programs and services to get us that extra 10 percent” of sales, he says. “It might not be 30 or 40 percent of our sales, but 10 percent here and 10 percent there is really what fuels growth, more than trying to hit a home run.”
The concerns about profitability and shrink tie together with the labor issues, points out Cindy Rapshus, vice president of business development for Temkin International, Inc./Element Imports, and former vice president of floral merchandising and procurement for Albertsons, Inc. In a tight economy, companies are tempted to cut labor costs. But, she says, “Floral is just one of those categories that requires service to sell the product—not that it can’t sell cash and carry—but it certainly enhances profitability if you have someone there to help upsell, upgrade, add a bow, put it in a vase, all the different things that people require if they’re giving a gift or if they want it to be a special floral piece.” And having employees in the stores to care for products reduces shrink, she reminds.
Ms. Rapshus challenges suppliers to “come up with ways to make product easier for the stores to maintain and easier for the stores to merchandise. Make it a solution for the store and not just an item in the store.”
Retailers also can look for help from their vendors with training. “Our vendor community has a lot of knowledge and a lot of experience,” she says, and retailers should tap into that knowledge on product care and merchandising.
Transportation costs, although difficult, can be managed with “forward thinking and planning,” including working with suppliers, Ms. Rapshus offers. She suggests retailers and producers open a dialogue about solutions to high fuel costs, such as consolidating loads and perhaps reducing the number of deliveries a week. “You might have to make some adjustments in your plan, but there are ways to reduce your costs on freight,” she says.

vendor relationships

Retailer-vendor partnerships were the focus of a set of questions on product sourcing. When asked the biggest challenges they face after identifying new products they would like to carry, 56.3 percent of buyers chose “consistency of product quality.” Other responses included “lack of merchandising/marketing support” at 41.7 percent, “availability of shelf/floor space” at 37.5 percent and “consistency of delivering on time” at 29.2 percent (participants could choose more than one answer).
They also were asked to list the top three things vendors need to do to be successful with their companies. The answers were “quality,” “building a good relationship—that of honesty, trust, good communication and reliability” and “price.”
Mr. Pauley says the responses reflect busy buyers’ need for helpful vendor relationships. “The pressure is really on the industry and the vendors to make new products that work,” he observes. “The buyers are stretched as thin as they can be stretched. The vendors have to really step up and create a merchandising program. They have to create a category plan; they really need to hand ‘plug-and-play’ programs to the retailers. Some do and some don’t, but certainly that’s what’s going to make a relationship work in the future.”
The survey provides insights for vendors who want to do business with these buyers, says Stan Pohmer, CEO of Pohmer Consulting Group and executive director of the Flower Promotion Organization. The old way of thinking, he says, is “I’ve got a superior product that your customer will respond to.” In fact, he offers, vendors should ask themselves, “How can I help address the concerns that the buyers have”?

importance of quality

A large majority, 93.8 percent, of buyers ranked “high-quality products” as the most important criteria for vendors to deliver, followed by “consistency of product quality” at 83.3 percent (they could choose more than one answer). Just 14.6 percent of the buyers chose “low prices.” Similarly, buyers say customers value quality over price, with 87.5 percent saying customers buy for quality and 12.5 percent saying price is most important.
Ms. Russeth says the answers on quality bode well for the industry. “What is important to buyers is exactly what is important to customers. Buyers are saying quality and service, and that’s what’s important to customers: quality and consistency, and price isn’t as much of a factor if you’ve got those,” she comments.
However, Mr. Pohmer says the responses on customers’ preferences raise a question: “If, in fact, quality is what you think your customers view as most important, why do we continue to focus on price point? Everything we do in the store, it’s all based about price,” he remarks. “We’re not focusing on the quality. Are we focused on the right thing?”

going green?
Environmentally friendly products are the rage these days, but they haven’t had a big impact yet on floral customers, according to the survey. Buyers report few requests for organic or sustainable floral products—68.8 percent say they’ve had no requests from customers in the past year for those products. Consequently, more than half the buyers say that less than 10 percent of their product mix falls into either category.
Mr. Pohmer says if retailers hope to be part of the eco-friendly trend, they must do a better job of communicating the benefits of sustainable flowers. Right now, he remarks, “the consumer is confused.”

customer trust
More than half the buyers—56.3 percent—say 90 percent to 100 percent of their sales comes from walk-in business. Ms. Russeth sees that number as an indication of a robust industry. More customers are visiting floral departments for flowers for personal use, not just special events like birthdays and anniversaries. “I think the reason we’re doing a good job of the walk-in business now is because they trust us more,” she observes.

Reach Editor in Chief Cynthia L. McGowan at or (800) 355-8086.

  survey at a glance

Here are key facts and figures from the Super Floral Retailing/Super Floral Show Buyer Survey:
• Buyers representing 13.1 percent of the 23,118 stores in the survey report they have full-service floral operations, buyers representing 8.7 percent have limited service and buyers representing 78.2 percent have self-service operations.
• Nearly half (11,600) of the stores represented in the survey belong to three supercenter banners, all of which offer self-service florals.
• Floral’s contribution to total company sales averages 2.72 percent in the stores surveyed.
• Overall, 39.6 percent of respondents report that net gross margin (after gross margin-shrink) for floral averages 31 percent to 40 percent.
• Annual floral sales per store average $200,000 to $299,000, the survey shows. The largest percentage of full-service stores, 22.2 percent, were in that range although 14.8 percent report sales greater than $1 million. Sales for limited-service stores were in a three-way tie at 20 percent each for $100,000 to $199,000 a year, $200,000 to $299,000 and $500,000 to $599,000. The highest response for self-service buyers was less than $50,000 a year, at 27.3 percent although 9.1 percent say their sales are greater than $1 million.
• Customers spend, on average, $10 or less per transaction on florals, according to 45.8 percent of the overall respondents. That range held true for the individual service categories. • A majority of stores that offer custom fresh designs; delivery; Internet orders; and funeral, prom and wedding services reported sales had increased or stayed steady during the past year. Stores that offer flowers-by-wire service had more varied responses, with 10.4 percent saying sales increased, 16.7 reporting a decrease and 12.5 percent saying sales were steady.
• The square footage dedicated to floral in the stores varied greatly by service category, with 33.3 percent of full-service stores occupying 1,000 square feet or more and 22.2 percent occupying 500 to 599 square feet; 30.0 percent of limited-service stores ranging from 500 square feet to 599 square feet; and 54.5 percent of self-service departments ranging from zero to 99 square feet.
• Overall, 33.3 percent of respondents report having one employee dedicated to each floral department. The number of employees increased with service capabilities: 59.2 percent of full-service respondents say they have two to four employees per location, as do 50.0 percent of limited-service respondents. No self-service buyers had departments with more than three employees, and 18.2 percent had departments with two to three employees.
• Labor costs as a percentage of total floral sales average 11 percent to 20 percent, with 50.0 percent of respondents overall in that range. As expected, labor costs were lower for self-service, with 63.6 percent of those respondents in the zero to 10 percent range.
• Many respondents (41.7 percent) have been in the floral industry 20 to 29 years. Their titles include floral director, floral buyer, floral category manager and floral merchandiser.



  be part of the discussion

You can get more insights into the Super Floral Retailing/Super Floral Show Buyer Survey and what it means for our industry by attending what promises to be a dynamic Education Session at this year’s Super Floral Show in Orlando. At 1 p.m. Tuesday, June 17, Talmage McLaurin, AIFD, publisher of Super Floral Retailing, will moderate a panel discussion with industry luminaries. In the interactive session, members of the audience will share their thoughts with the panel on the successes and challenges identified in the survey and offer ideas for the future. Panel members will be Ben Pauley, vice president, mass markets, for FTD Group, Inc.; Stan Pohmer, CEO of Pohmer Consulting Group and executive director of the Flower Promotion Organization; Cindy Rapshus, vice president of business development for Temkin International, Inc./Element Imports.; and Charlotte Russeth, business development manager at Dos Gringos.



Super Floral Retailing • Copyright 2008
Florists' Review Enterprises, Inc.