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State of the Industry

Written by Brandi Cowen

The beginning of a new year is the perfect time to take stock of your business in floral industry, looking back on how your shop has performed and looking ahead to chart a course for the future. To help you evaluate your business and plan for what lies ahead, we’ve prepared our third biannual State of the Industry report, looking at how things have been in the industry and what we can expect in the months and years to come.

Canadian Florist conducted its first SOI report in January 2010 and followed up in January 2012, examining how florists were faring and reporting on the challenges and opportunities facing the industry.

The current state of the floral industry
“We in Canada are faring better than our neighbours to the south,” says Pam Goold of Goold’s Flowers in Sussex, N.B. “The industry as a whole did well through the ups and downs of a roller coaster style economy.”

Goold, who is also the Atlantic representative on the Flowers Canada Retail board of directors, says that although consumers have been cutting back the number of floral purchases they make, sales averages have been creeping up. Everyday purchases are down and so are purchases for occasions that once meant big business for florists. Today’s consumer needs a reason to buy flowers and the occasions that will push them to purchase are fewer now than in the past.

There is one segment of the market showing some fair growth potential. Jim Turley, of Turley’s Florist in Nanaimo, B.C., has noticed that businesses looking to send small thank-you gifts to clients have been stepping up their floral purchases lately. Realtors in his area have started sending flowers to clients, and some local car dealers have been following suit. These flower buyers offer lots of opportunities for repeat purchases.

Goold believes that our still tight economy has made flower shops more cautious buyers. “There’s only so much money coming in so we have to be a little bit more careful with what we’re buying from suppliers… I don’t keep 30 boxes of vases because you can get anything you need within a few days. I just get one case of something and once we’re almost finished with it, I can get another case.”

On a positive note, the cost of hard goods has held relatively steady over the last four or five years, according to Jeff Waters, vice-president and general manager of Waterdale Inc. and president of Flowers Canada Retail.

Waters puts the plateau in prices down to the relative strength of the Canadian dollar in recent years. However, a number of shops have seen some of the benefits of this stability eroded by increases in other areas, from cellphone bills to lease rates.

The combination of rising costs of doing business and falling floral purchases has taken a toll on the industry. Right across the country, Waters is seeing just one or two shops open for every five that close.

The competition is keeping the pressure on
Competition in the industry remains fierce. Chain stores continue to compete for market share – a reality that Marianne Suess, a professor and co-ordinator for the floral design program at Seneca College, thinks is unlikely to change anytime soon. “We can get fairly nice roses and flowers and plants at the grocery stores; however, the design aspect is not there,” says Suess. “And that is where I think we come in. We can pick up and say, ‘No, we can’t really compete with the product itself so much anymore, but there is creativity in our design.’ We do innovative designs.”

Waters agrees retail florists can differentiate themselves on design. He notes that many chain stores have been cutting back on design services, opting for self-serve and grab-and-go items rather than custom work. To win back market share from chain and box stores, marketing messages should be focused on the skill and creativity of a shop’s designers, highlighting the customized pieces they are able – and eager – to create.

Online flower sellers and call centres are also challenging the market like never before, continuing to offer rock bottom prices that brick-and-mortar florists simply can’t compete with. The Internet abounds with complaints from consumers who have been burned by these companies, from drop shipped boxes of roses ruining sweet gestures of love on Valentine’s Day to orders that simply never arrived. It seems, though, that consumers are finally cottoning on to the drawbacks of buying on price alone.

Turley, who is also the B.C. representative on the Flowers Canada Retail board of directors, says that his shop now routinely fields calls from consumers who want to make sure that the shop is a “real” flower shop located in the community it serves. “They’ll give us the order because they’ve been burned by the call centres.”

On the East Coast, Goold is seeing a similar pattern emerging. “I think it’s probably a case of once bitten, twice shy,” she explains. Many out of town customers calling in orders to the shop want to know that they’re sending flowers through a florist with a physical storefront in town. As far as these consumers are concerned, order gatherers’ practices are hurting the order gatherers themselves. Brick-and-mortar shops are painted with a different brush.

To stand out in today’s crowded market, everyone we spoke with agreed that the key is to not just be different, but to make sure those differences are apparent to consumers. That, according to Waters, means owners need to shift how they think about their businesses and how they present their shops to consumers. “Florists have to separate themselves and they can’t do it on flowers. They can’t say that the flowers are better quality or better cared for or this or that. They have to do it through atmosphere, they’ve got to do it through service and they’ve got to do it through design.”

Suess is an advocate for ongoing design education that emphasizes skill development. She also stresses the importance of staying abreast of new trends and techniques emerging both locally and globally.

Although it’s important to be aware of who the competition is and what they’re doing in the market, the best thing you can do for your business is remain focused on your business. Don’t let what other people are selling or how much they’re selling it for distract you from doing what you need to do to protect and grow your own bottom line.

“Worry about doing the best job you can yourself and don’t worry about your competition,” says Turley, “In the end, if you’re doing what your consumer appreciates, then what [the competition’s] doing doesn’t matter.”

The web has never been more powerful
If you’re among the one in 10 florists who reported not yet having a store website in our 2013 reader survey, it’s time to rethink your shop’s need for an online presence. These days a website is an absolute must. The Business Development Bank of Canada reports that 47 per cent of Canadian consumers conduct a broad online search prior to purchasing a product or service, and 42 per cent search online to find the best business to buy a product or service from. If you don’t have a website, these customers can’t choose your shop.

Although many consumers lament that e-commerce in Canada lags behind the offerings in the United States, retailers are increasingly creating opportunities for Canadians to spend online. In 2012, the last year Statistics Canada reported data for, 11 per cent of Canadian businesses sold goods or services online. With major e-tailers like Amazon.ca also capturing a share of the $18.9 billion that Canadians spent online in 2012, flowers are now competing against a whole slew of product categories that simply weren’t viable gift-giving options 10 or 15 years ago.

Turley thinks this rise in online shopping is a major factor driving consumers to turn elsewhere for gift-giving options. “We were once in a situation where the flower business was the only business where you could get overnight or same day delivery,” he says. Now many people, especially in smaller communities, have made a habit of shopping online. These days, deliverable gift options are virtually infinite.

In many cases, e-commerce is also training consumers to expect that their purchases will be delivered free of charge – a recent survey by The NPD Group found that 85 per cent of Canadians report that free shipping encouraged them to buy online.

From talking with industry experts for this story, it’s clear that simply having a website isn’t enough anymore. The days of a standard template-based website being sufficient to promote a business are over. “We’ve got to get away from the same thing that 20,000 other shops in North America have,” says Goold. “I think the shops need to start being a little bit more independent, showing their own creations, coming up with their own holiday specials and doing their own advertising.”

“You do not want to be a cookie cutter,” agrees Waters. “You have to spend the money to do it yourself. It’s no different than spending the money on the sign on your store. Spend the money – you need to separate yourself.”

In many ways, online marketing has taken over from traditional marketing. That’s a mixed blessing for florists. The upside? Many popular online marketing tools are free. Sites like Facebook, Twitter, Pinterest, YouTube and other social media channels allow small businesses to connect with consumers around the world, promoting new products to loyal locals and first-time out-of-town buyers. The flip side is that your marketing messages can easily get lost in the noisy social sphere unless you know who you’re trying to reach with your messaging and target your efforts where they spend their time.

Opportunities for 2014 and beyond
When we asked for ideas florists can put into practice to strengthen their businesses going forward, we heard lots of suggestions that all touched on the same theme: the need to build relationships.

“If an athlete wins a big prize, send a congratulations arrangement,” says Goold. This has worked well for her shop. It’s a small gesture that makes a big impression on the recipient. The same principle applies when a loyal customer passes away. Sending an arrangement either to the funeral home or to the deceased’s family is a thoughtful act that will be remembered for a long time.

Building relationships with other businesses in the community is another opportunity that more florists are starting to run with. This can be as simple as delivering a “welcome to the community” arrangement when a new business opens its doors in the neighbourhood – something Goold says her shop often does. Some florists are even teaming up with complementary local businesses to offer expanded services to clients. Suess has seen florists collaborating closely with display, rental and catering companies in order to grow their bottom lines.

Another way to build relationships with local businesses is to work together to cross-promote one another’s products and services. Turley is a fan of a bud vase program in which a small vase is delivered to a local business with a note stating where the arrangement is from and providing the shop’s complete contact information. “Those who have tried it think it has worked pretty well,” he says.

To control costs on these cross-promotional pieces, Waters suggests dressing up the arrangements with hard goods that can be rotated through a number of arrangements and sent to different businesses over time. The key is to make sure the arrangements sent out for a cross-promotion program make a flower shop stand out. “You’ve got to show separation,” he stresses.

All of this boils down to a basic need to be open-minded and adaptable. Suess says it best: “I think florists need to be innovative and not stay with what worked years ago. I see some businesses who have evolved into a different business from what they started off being and I think that is really key.” The shops that succeed over the long run will be the ones that dare to be different, be it through design or service, business model or marketing.

Last but by no means least, we need to concentrate on building relationships within the industry. Now is the time to reconnect with one another, strengthening our existing relationships and forming new ones. “We’ve gotten away from it, but we’ve got to start finding ways again of getting to know each other and networking,” says Goold. “We have common problems and somebody else has already got the answer out there, but we’re not sharing.”

Goold believes now is the time to harness the varied knowledge and skill sets of peers from across the country, channelling our collective know-how for the benefit of the entire industry.

Tips for 2014
Here are some final thoughts from our experts. In their own words, these are the things a shop must do to succeed in 2014:

“In order for us to be successful, we need to focus on and look after our existing customers. If we focus on them and keep them happy, then they will pass that on to other people and we will get new customers.”
– Pam Goold, Goold’s Flowers

“Be aware of colour trends, be aware of fashion, be aware of interior design. I think if we can do that, we can be successful. Creativity in this industry never ends and professionalism will carry you through.”
 – Marianne Suess, Seneca College

“Make sure that your product quality and your care and handling of the product is second to none, and that your service level is something that you can be proud of.”
– Jim Turley, Turley’s Florist

“Know your market. Know who you’re selling to. If your market is changing, if your market now has a lot of Chinese, then you have to start to stock a lot of red during Chinese New Year and go after that business.”
– Jeff Waters, Waterdale Inc.

 

Source:canadianfloristmag

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