FROM THE BOARD 



Retail Florists: Endangered Species? 



Paul Godbout 



■^ our retail flower shops have 

 closed in Manchester during the 

 last two months. The hopes, 

 dreams and talents of their owners 

 are dashed by what? The recession? 

 Their own incompetence? The wire 

 services they belong to? Each flow- 

 er shop closing has its own story to 

 tell; my purpose today is to wonder 

 out loud about the independent, or 

 "mom and pop" flower shop's fu- 

 ture. There will be no questions 

 answered, no brilliant solutions of- 

 fered, only more food for thought. 



Retailing, as an industry, is domi- 

 nated by giants: Sears, K-Mart, 

 Wal-Mart, McDonalds, and Exxon, 

 to name but a few. The retail flow- 

 er industry has Conroy's in Califor- 

 nia, Burnings in Florida, Royer in 

 Pennsylvania, and — the biggest in 

 terms of sales — Bachman in Minne- 

 sota. Locally, we have Barber 

 Brothers in Massachusetts as an 

 example of "big". However, "big" 

 in the retail florist industry means 

 dominating a very small geographic 

 area. Did you know that largest 

 single shop in the U.S. is Mc- 

 Shanes's of Dallas, Texas, at ap- 

 proximately 12 million in sales? 

 Bachman's, with a chain of 15, 

 is only doing about 60 million in 

 sales. How many of you reading 

 this have ever heard of any of 

 these shops or chains? The point is 

 that the retail florist industry is 

 fragmented, localized, and very, 

 very small m retail dollars. 



Did you know that Hallmark 

 Cards has been test marketing 

 flowers in Indianapolis, Indiana, 

 and Baltimore, Maryland, in over 

 100 stores for a year? Hallmark is 

 the 52nd largest advertiser in the 

 U.S. They have marketing clout. 

 Will they become the "McDonalds" 

 of the retail florist industry? How 

 can Jacques, McLeod's, Collins, 

 Woodman's, Andenson, Mar\' 

 Anne, or Garrison Hill compete 

 with Hallmark? What if Sam Wal- 

 ton decides his Wal-Mart chain 



needs flower sales to add to his bil- 

 lions? Pretty scary stuff for the ap- 

 proximately 45,000 independent 

 flonst in the U.S.A. 



The local flower shop does have 

 some advantages. We know our 

 customer often by name and we 

 work six or seven days a week to 

 please them. Though our prices 

 seem high to the customer, they 

 are a good value when measured 

 against our own annual income. 

 We often take the order, make it, 

 deliver it and bill it. When mis- 

 takes are made, more often than 

 not, we — the owners — are to blame. 

 However, do most of our customers 

 really care who "owns" the local 

 flower shop? As consumers, we are 

 interested in quality, price, service, 

 and convenience, among other 

 things. If our customers can find 

 flowers and plants at Hallmark, 

 Wal-Mart, or any number of gro- 

 cery stores that satisfy their needs, 

 do they really need or want us? 



I believe there will he flower 

 shops in the future, but they will 

 be under increasing pressure from 

 many different competitive sources. 

 Those that survive will provide 

 quality (always), and service (better 

 than anywhere) at a good value to 

 price relationship. The consumer 

 will not care who owns that flower 

 shop, or whether it is a national, 

 regional, local chain or one-person 

 shop. 



Finally let's take a look at wire 

 services. The vast majority of 

 flower shops belong to a wire ser- 

 vice: I.e. FTD, Teleflora, Florafax, 

 Carik, Red Book, etc. Typically, 

 wire orders "In" comprise 20 per- 

 cent of a shop's sales. On the gross 

 dollar amount of the order (100 

 percent), 20 percent is paid as a 

 commission to the sending florist, 

 and an additional 6-9 percent is 

 deducted as cost of doing business 



with the various wire services. The 

 average New England flower shop 

 has the following cost structure; 

 Sales 100% 



C/G/S i40% 



Gross Proht Margin 60% 



Other Income •♦•5% 



delii'erv. wire oiii. comtrassion 



Thus if a wire "In" yields 71-74 

 percent of the gross dollar amount, 

 a florist can go broke fast filling 

 wire service orders "In". The solu- 

 tion IS to factor into the cost-of- 

 goods formula the anticipated an- 

 nual commission paid and other 

 fees. What does it all mean? Flow- 

 ers from a wire service-affiliated 

 florist must be higher priced than 

 a non-wire service-affiliated florist, 

 all other variables being equal. If 

 not, the wire services-affiliated flo- 

 rist will have less profit and/or 

 salary. 



Recently, the FTD magazine fea- 

 tured a New York City florist who 

 promoted his 1-800 number for 

 wire orders. If you sent an average 

 $30.00 order through this florist, he 

 added an $8.95 service charge. The 

 customer paid $38.95 The sending 

 florist earned: 



Service Charge $8.95 



Commission $6.00 



Rebate (through Carik) M^ 



TOTAL $19.45 



The filling florist received $21.30 

 to make and deliver this order 

 guaranteeing satisfaction (30.00 x 

 71%). Which florist would you 

 rather be? No contest here: SEND- 

 SEND-SEND! 



What do you think? 1 love talking 

 about the flower business. Call me 

 at 1-800-834-0069. 



Paul Godhout i$ die oimer of 

 Jacques Fknver Shop, 1 1 1 Front 

 Street. Marxchestcr. NH 05102.'^ 



October/November 1991 5 



