Current State of the Floral Industry

[hopeful]

                                                            Wholesalers, like retailers, are increasingly optimistic

Business is looking up for an increasing number of wholesalers, suppliers and importers, according the second Economic Outlook Survey conducted in late May 2009. Twenty-four percent of wholesalers* rated business as “good,” which is 60 percent more than when wholesalers were asked about business in late January. Likewise, wholesalers rating business as negative fell considerably since the January survey, from 46 percent to 18 percent, a 61 percent drop.

Wholesalers are also less pessimistic about the economy in general than they were in January: 19 percent predict the economy will worsen, compared to 62 percent, and twice as many wholesale florists (26 percent) expect the economy to improve than did in January. More than half of wholesalers expect little change in the economy over the next six months, compared to 40 percent in January.

What’s the six-month outlook for wholesalers’ sales? Better compared to their forecast in January: 39 percent expect sales to increase, compared to just 13 percent who felt that way in January. The percentage expecting a decrease dropped from 38 percent to 18 percent. Wholesalers remain cautious about staffing, with just 6 percent expecting to add employees before November. About half expect to maintain current levels, up from a third last time. Although 45 percent of wholesale businesses expect to decrease staff, that’s still fewer than the 62 percent who saw reductions coming last time.

Similar results were found for floral retailers including a sizeable increase in the number of businesses more positive about the future. The proportion of florists describing the state of business was positive rose in the second quarter, according to the Economic Outlook Survey conducted in late May 2009. In fact, the number of florists rating their businesses as “excellent” was five times as high as during the first quarter survey conducted in January, rising from 1 to 5 percent, while ratings of “good” almost doubled. Retailers rating business as negative fell considerably, with those rating business as “terrible” falling from 13 percent to 4 percent.

The largest shift in economic outlook comes from those who predicted the economy will worsen, down to 20 percent from 46 percent last quarter.
More than half of retail florists expect little change in the economy over the next six months, 18 percent more than said so when surveyed at the beginning of 2009. This time 22 percent of florists, an additional 12 percent compared to last time, say they expect the economy to improve.

The findings parallel the optimistic Consumer Confidence Index results reported May 26 by The Conference Board showing the public’s confidence “soaring” to its highest level since last September. And how do florists see their sales changing in the next six months? While forecasts were a bit tempered compared to ratings of the overall economy, 9 percent more florists than last time saw their sales improving and 7 percent more saw them remaining the same, as the number saying their sales would worsen fell from 39 to 26 percent. More shops said they would be adding staff positions in the next six months, compared to those that said so in January. The number of businesses saying they would be laying off personnel fell to less than half, 7 percent fewer than last time. There was a equal uptick in those hoping to maintain current staffing levels.

Source: Zoomerang Survey

[hopeful]

From Flower Web

               

                                                 Manhattan: Flower District Wilting From Decreased Sales
06-16-2009

While the economic recession continues to take some of the financial bloom out of Manhattan's Flower District, merchants and customers alike are finding new ways to substitute simplicity for extravagance. NY1's Rebecca Spitz filed the following report.

At first glance, it seems there's decent foot traffic in the Flower District. But peek in the stores and you'll find plenty of foliage with hardly any buyers.

"It's a very, very hard time now. Very tough time," said Paradise Plant owner Sees Kumar.

Kumar's store has been open for 25 years. But while his inventory is blooming, Kumar says his business is not. He says the recession is keeping his customers away and that's affecting his bottom line, no matter what he does.

"We're open from six to six, that's 12 hours, like 7 days a week, we're open Sunday too," said Kumar.

Hard work and little profit seems to be the norm for the wholesale merchants on 28th Street between 6th and 7th Avenues.

"We're still doing a lot of charity work, but as far as the corporate events side has gone, it has completely disappeared as of last year and that has affected 50 percent of our business," said Absolutely Wild owner Peter Cunningham.

With rent, employees and taxes to pay and customers loathing to spend money on a luxury item like flowers, some merchants say they're thinking carefully about how they pick and price their inventory.

"If people choose less expensive and you buy flowers for like 15, 20 dollars a bunch where you can sell? People ask for three dollar, two dollar flowers," said Rasid Mohamed, a flower merchant.

It seems merchants aren't the only ones who are hurting. Many people buying flowers say they're struggling too.

Event planner Dena Rogoff says she's cultivating a new set of money-saving skills.

"I find I'm trying to work with more economical flowers and just use filler-ins on the higher-end ones so I can achieve a nice look but not spend that much," said Rogoff.

Some floral designers who are used to pulling out all the stops say they're seeing clients tailor their expectations to meet the economic climate.

"They don't want to hear about lilies and orchids and beautiful centerpieces. People are retreating, they've got to do good at their daughter's wedding but not as luxuriously as it would have been," said John Grafenecker, a floral designer.

As desperate as things may seem now, flower merchants are hoping it won't be this way forever. While not optimistic about recouping their losses, many say they're committed to weathering the economic storm.

[hopeful]

                                          U.S. Retail Florist Population Drops 14 Percent, Hits ’77 Levels. Canadian Figures coming next month.

In the five years between 2002 and 2007, the number of retail florist shops fell about 14 percent, as sales per shop rose 10 percent, according to the most recent figures from the U.S. Economic Census. In 2007, there were 19,609 retail florist shops, compared to 22,750 in 2002. The loss of 3,141 establishments puts the number of florist businesses at about the same level as in 1977.

The average sales per shop rose 10 percent to $320,000, compared to $291,000 in 2002.

Total retail florist sales declined by more than 5 percent (unadjusted for inflation) to $6.275 billion, down from $6.625 billion five years previously. Employee counts reflect these numbers, falling by 18 percent to 93,683 employees compared to 114,186 in 2002. Payroll figures were down accordingly, declining by 6.7 percent. In 2007, the number of employees per shop averaged 4.78, the same as 10 years ago, but down from 5.02 at the time of the 2002 census.

“These are clearly challenging times,” said SAF President Rod Saline, AAF, of Engwall Florist & Greenhouses, Inc., in Duluth, Minn. “But, these are energizing times that need our laser concentration and a very clear direction to communicate to our fellow staff.”

The focus, Saline said, must be on the following:

                   1. providing products and services that exceed customer expectations;
                   2. exploring new models to sell flowers;
                   3. partnering with other companies and organizations to market our services; and
                   4. developing and/or finding new product lines to serve our customer base.

The contraction will likely continue “well into 2010 before we see stabilization,” said SAF CEO Peter Moran, noting that the retail contraction is not unique to the floral industry.

[thinkflowers]

So how much growth has there been in the grocery/WalMart/Costco side of the business. Also the online guys like 1800 and Proflowers etc... I am guessing they have way more than made up for the decline in sales.

[hopeful]

From SAF:

                                                                      Mother's Day Sales Results

Mother’s Day sales fell at 41 percent of shops, rose at 32 percent and were about the same at 25 percent of businesses, a reversal compared to 2008, according to a post-holiday SAF survey of members. The results basically flipped those of 2008 when sales rose at 42 percent of shops and fell at 31 percent.

The average decrease in sales was 15 percent, compared to 18 percent a year ago. Small-town florists suffered the least, with 34 percent reporting declines. More than half of shops (54 percent) with annual sales more than $1 million reported sales off from a year ago, compared to just over a third (35 percent) of the shops with sales under $300,000.

Business appeared to anticipate the declines, with 45 percent of shops cutting back on the amount of product ordered this year versus last year. The results from florists reinforce the national polling data of consumers conducted for in 2009, which found 5 percent fewer adults buying flowers or plants as gifts for Mother’s Day compared to 2008.

For the shops reporting declining sales, the reasons most cited were the national and regional economies, followed by competition from supermarkets and mass merchandisers and from order gatherers. Shops with a spike in sales attributed their gains to increased shop reputation, followed by more walk-in traffic, online business, wire-in business, word of mouth and not surprisingly contraction in the industry with fewer competitors.

Sales were most likely to come from local phone orders, followed by wire-service orders, walk-in traffic and long-distance calls. Two-thirds (66 percent) of retailers promoted the holiday with as much gusto as last year, and 20 percent upped their promotions. Ten percent cut back. These results mirrored 2008. About half the businesses reported wire-in orders off from a year ago, and a third reported a decline in wire-outs. Only 22 percent of shops raised their delivery charges this year, compared to 66 percent in 2008, when energy costs skyrocketed. Seven in 10 florists left their delivery fees unchanged from a year ago. The average charge was $8.43.

About 80 percent of retail florists hired additional staff for the holiday, the most common source being friends followed by former employees and family.

[Zorro]

To All
I thought this would be the best heading to list this posting under. With all the great minds that are out in the industry lets talk about what these minds are going to do to move the industry in a positive direction. The one sure thing that comes out of corperate meetings is after all the discussion is over and a direction is agreed upon the people that are in charge of implementing the changes usually let the ball roll under the tabel because they are affraid of being unpopular or making a mistake and loosing their jobs. What we find the most in the industry especially on the wholesale and import level is the cover thyne ass syndrome. I have seen many times in my many years in the flower industry. We need to come up with a new plan and involve all levels on the business. Starting with requiring all levels of the industry to pay there bills immediately, as in COD! CASH ON THE BARRELHEAD! NO TRADE CREDIT! NO TERMS! Simply said " YOU PAY I SEND FLOWERS". Next, charge all the 10 percenters a premium on their purchases for all the unjustified credits they will try to take and have taken in the past so they can increase their bottom lines. Well, that is all I have time for today.

[blackmagic_82]

We need to come up with a new plan and involve all levels on the business. Starting with requiring all levels of the industry to pay there bills immediately, as in COD! CASH ON THE BARRELHEAD! NO TRADE CREDIT! NO TERMS! Simply said " YOU PAY I SEND FLOWERS". Next, charge all the 10 percenters a premium on their purchases for all the unjustified credits they will try to take and have taken in the past so they can increase their bottom lines. Well, that is all I have time for today.

The problem with this idea and some other industry-wide ideas proposed on this Board is that our industry is a pretty good example of free enterpise.  Each company can decide for itself how it should run its business.  If extending credit as part of a bsuiness plan works for a particular company, they should be able to do that.  If another company wants to require cash only, it can do that.  It's annoying when a business cannot manage its accounts receivable, takes a bath, and wants to impose a cash only requirement ON ITS COMPETITORS.  Do you want to dictate what price your competition can charge?

[Zorro]

Do you have any ideas?? I am sure the growers, importers, wholesalers, would love to hear them. One dollar over 30 days is to much for me. While you at it ask the importers for a list of 10 percenters. I know most of them. Oh and by the way ask the importers which of the so called pillars of the industry that are behind on payments are trying to impose a 5% rebate on all purchases in order to be on the approved vendor list. How much are you willing to bet most of them are out their 90-120 days or more. I spend my time smiling and dialing looking for the customers that pay credit or debit card. Because come Friday I can enjoy my weekend instead of worrying about who is not going to pay me.

[sfox]

We need to come up with a new plan and involve all levels on the business. Starting with requiring all levels of the industry to pay there bills immediately, as in COD! CASH ON THE BARRELHEAD! NO TRADE CREDIT! NO TERMS! Simply said " YOU PAY I SEND FLOWERS". Next, charge all the 10 percenters a premium on their purchases for all the unjustified credits they will try to take and have taken in the past so they can increase their bottom lines. Well, that is all I have time for today.

The problem with this idea and some other industry-wide ideas proposed on this Board is that our industry is a pretty good example of free enterpise.  Each company can decide for itself how it should run its business.  If extending credit as part of a bsuiness plan works for a particular company, they should be able to do that.  If another company wants to require cash only, it can do that.  It's annoying when a business cannot manage its accounts receivable, takes a bath, and wants to impose a cash only requirement ON ITS COMPETITORS.  Do you want to dictate what price your competition can charge?

            What a great idea! But what do I get? You want to get paid right up front. That means no collection issues for you. Do I get a discount or do I still have to pay the inflated "wholesale" prices?

As far as credit is concerned. In 30 years at this business, I have never recieved a box of flowers that I have been able to get to sell every stem.
But in those same 30 years, the bills have always charged me for every stem. You know... billed for 300 carnations, but only able to get 290 saleable  stems. Now I never call to get credit becuase it's not worth the time and effort, but if I have to pay upfront and assume all liability, I want to be compensated.               

[Zorro]

Absolutly our cusotmers provide pic's and charge the credit amount back to the card. Our credits are processed within 24 hours after we receive the pic's. Very neat and clean. However we do not sell any wholesalers. The reason being if a wholesaler receives a box of roses the whole box is bad and in my 40 years of wholesaling usually you can sell some of the roses But, when a retailer receives a box of roses only the bunches that are bad are claimed. We don't have give discounts for paying up front. Our prices blows every local wholesaler out of the water. So, the savings is right in fromt of them. Plus, the product is 3-8 days fresher.

[sfox]

Absolutly our cusotmers provide pic's and charge the credit amount back to the card. Our credits are processed within 24 hours after we receive the pic's. Very neat and clean. However we do not sell any wholesalers. The reason being if a wholesaler receives a box of roses the whole box is bad and in my 40 years of wholesaling usually you can sell some of the roses But, when a retailer receives a box of roses only the bunches that are bad are claimed. We don't have give discounts for paying up front. Our prices blows every local wholesaler out of the water. So, the savings is right in fromt of them. Plus, the product is 3-8 days fresher.

            Forgot to mention, ZORRO, in those same 30 years, I have never had a fresh flower supplier, call me and say that the product they sell is slightly older and that their prices are usually higher than everyone else's. It seems every single caller says...."  Our prices blows every local wholesaler out of the water. So, the savings is right in fromt of them. Plus, the product is 3-8 days fresher."
         

[Rumpelstilskin64]

However we do not sell any wholesalers. The reason being if a wholesaler receives a box of roses the whole box is bad and in my 40 years of wholesaling usually you can sell some of the roses But, when a retailer receives a box of roses only the bunches that are bad are claimed. We don't have give discounts for paying up front. Our prices blows every local wholesaler out of the water. So, the savings is right in from of them. Plus, the product is 3-8 days fresher.

Zorro,  Be careful when pricing and "jumping" the distribution chain.  If you say that "your prices blow every local wholesaler out of the water" by having the customer save an eventual intermediary commission, you might also be shooting yourself on the foot.  You are pushing prices down.  Remember, when prices are up, everyone wins. When they are down, EVERYONE loses.

[blackmagic_82]

Zorro,

Part of doing business is deciding who to sell to and on what terms.  If you want to sell only on a cash basis, that's fine.  If you don't want to do business with the "10%ers", that's fine.  Just don't me who I can or can't sell to and on what terms.  If I think extending credit is good for me - my increased business more than offsets my costs of extending credit - I should be able to extend credit.  We don't need an industry mandate telling me what to do.

[Zorro]

I don't agree. When the prices are up and keeps going up not so much flowers but everything else the retailer does not win. The consumer finds something more reasonable to buy and the retailer looses the business and eventually closes up. So the main focus shoudl be to keep the retailers in businsess because good help us all if we have to deal with chain stores and grocery stores and their pay by scan method.

[blackmagic_82]

Sooooo.....we should pass a law to prevent floral companies from selling on credit?