Chain, Chain, Chain.
After receiving a press release from Mayesh Wholesale regarding a recent acquisition of a new location I started to wonder how and what the other wholesaler chains were doing. So I started contacting all of them and asking a few simple questions.
My definition of a Wholesale Florist chain is a company with four or more physical locations.
Let start by identifying who they are, the number of stores they operate, and who owns them:
|Baisch and Skinner||8||Family|
|Bill Doran Company||17||Family|
|Carlstedts||15||Alice L. Givens & John T. Cross|
|Cleveland Plant and Flower Co.||10||Family|
|Delaware Valley Floral Group||7||Family|
|Mellano & Co.||4||Family|
|Pennock Floral Company||10||Employee|
|Roy Houff Co.||8||Family|
|Tennessee Floral Supply||4||Family|
My next question was: Are you planning growth?
Without exception every company said they have their eyes and ears open if the right opportunity comes along. Opportunities do come along and, of course, each situation is different but basically there are two distinct types. Profitable companies that are looking to cash out and unprofitable companies that need to cash out. Bill LaFever of The Bill Doran Company put it this way, “We can’t pay a multiple of profits to a healthy company and expect to make any money so nearly all acquisitions are made from struggling companies where there is potential to apply our business practices and economies of scale. However, only if we have the right manager to run it.”
This sentiment was echoed by nearly every owner I spoke with. Having the right manager in the job makes the difference between a profitable store and a loser. However, finding that right person is perhaps the most daunting problem facing wholesale chains where the average age of a store manager is above 55.
Scott Kitayama, President of Greenleaf stated that; “Before deciding on any new market they look closely at what a wholesale florist in 2014 and beyond needs to look like. Clearly there are more flowers than ever being sold and we want to use our distribution network to touch as many of those flowers as possible. Hiring younger employees is the key to acquiring younger customers.”
It is no secret that filling the manager position at a wholesale house is no simple task. Long early hours, floral knowledge a must and modest compensation are not that sexy to potential applicants.
I think Bill LaFever put it best by stating: “I would enter any market if I had the right manager to run it but I would not enter the perfect market without the right manager.”
Jim Haley of Pikes Peak’s stated that: “Bill LaFever’s comment echos our expansion policy perfectly.”
Most stated that they did not have any or modest planned growth but would not shy away from a good opportunity. However, several stated that they were planning strong growth in existing markets and beyond. Most of these asked me not to name them specifically but it does not take much investigation to see who is buying, based on recent activity. I single out Mayesh and Delaware Valley Floral Group here simply because they have been very aggressive and public about their acquisition ambitions. My guess is that many readers will be surprised at the number of locations they have amassed over the last years.
My next question was: How do you find the floral industry in general?
The short answers were;
Very Ill * Short term pain * Stagnant * Hard * Challenging * Flat * Fragmented * Broken.
Others responded this way.
“Overall the industry sales are about flat. There is a slow ongoing consolidation at the florists and wholesale segments. Those who are growing are taking market share from those who are shrinking. These market conditions are likely to remain for the next few years. If the economy and disposable income pick up, the industry could experience modest growth. We are not expecting this in 2014.”(Anonymous)
Jim Haley of Pikes Peak of Texas, Inc. sees the industry as: “Healthy, strong, and vibrant, but changing rapidly. We see continued consolidation with wholesalers not adapting to new technology and changing needs of the retailers falling out of the picture”.
Alice L. Givens the new co-owner of Carlstedt’s in Jacksonville Fl. had this to say: “I believe the industry is very strong and ever changing, and will continue to change every day! There’s not a truer statement than….CHANGE is the name of the game!! Miami is under construction as far as reaching out to retailers, retailers are looking into new media outlets to be noticed by the ultimate consumer, and AH….the ultimate consumer is looking for the deals, freebies or coupons!! #whopaysfullpriceforanythinganymore :)”
Tom Logue of The Pennock Company said “they are were willing to grow if they can acquire existing operations but not to start a new one”.
Tom Figueroa, current WFFSA President and Vice President at Nordile Inc. said, “They are not planning any growth but would consider a move in their market area”.
Dave Gaul, VP Sales & Marketing at DWF Wholesale Florist Co. Said: “They are looking to grow”.
My final question was: Where would you like to see your company be in 7-10 years?
The short answers were:
“Still standing” *”Holding on to what we have” *” More stores” * “Up 30% in sales” *” We are developing an ordering platform that we will offer to our customers” * “We expect to have grown the company significantly” *(And my personal favorite) “From the back of my sailboat”.
Based on my conversations with these many companies I can summarize their comments this way.
Everyone I was able to speak with pointed out that their once total reliance on the traditional retail florist had changed. Several of them mentioned a “one third” approach where one third of the total business is from traditional retail, one third from Event planners and one third from non-traditional outlets (mass markets). As well most were pleased to have survived the last two years and were optimistic about the future.
Jim Haley said: “Transitioning to the next generation is our biggest challenge. How can we attract the next generation of leadership into our industry as they enter today’s workforce? Expanding into new markets is on our priority list. And, yes – I’m ready for a ride in that new sailboat!”
There was a clear consensus for the need to reduce the age of the workforce in order to keep pace with the age of the consumers.
And finally, way back in 2008 Peter Moran of SAF in his “State of the Floral Industry Report,” delivered at the Society of American Florists (SAF) convention in September:
“Mr. Moran also suggested that there are between 700 and 900 wholesalers currently serving the traditional florist market, a net decrease of about 300 in the past six years. He foresees that within a few years, there will be significant consolidation, resulting in 15 mega-wholesalers, each generating $100-million-plus in sales”.
Based on my research and my definition there are only fourteen wholesale chains and I would suggest that only eleven might be considered Mega wholesalers. I did not ask or expect to learn of gross revenues so I can only guess that there are just a few that are $100 million + in sales.
I would like to thank all of the companies that took the time to respond.
Written by: William “Williee” Armellini 4-22-2014