Floral Consulting Group Article

I wrote the following article in May, 2009, for Tom Lavagetto, President of Floral Consulting Group, a Spokane, WA-based company that provides consulting services to the retail floral industry. (Retail floral includes large-scale floral sellers such as Wal-Mart, Home Depot, and various supermarket chains, but does not include neighborhood floral shops.)

The article is a follow-up to a previous article by Tom Lavagetto, in which he predicted a coming turnaround in retail floral sales following the 2008 recession. The article was posted on the Floral Consulting Group company web site.

 

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Sewing Seeds for Fall:

How to Prepare for the Coming Turnaround

in the Retail Floral Business

By Tom Lavagetto

 

I hate to say "I told you so"…but…well…

At the end of 2008, most everyone I knew in the retail floral business was in a state of despair. Our country was in the middle of the worst financial crisis since the Great Depression. Economists throughout the land were predicting "doom and gloom" scenarios. Christmas flower sales were down 10-20% or more.

In my November article, I tried to give everyone a little pep talk. I basically said, "Don't panic!" Yes, times will be tough for a while, but now is the time to take the initiative. With a bit of strategic planning and a lot of promotion, your retail floral business will not only make it through the recession, but will prosper in 2009.

 

A Spring Comeback

At the beginning of the year, I advised my clients that they needed to be "strategically aggressive." I told them to have a variety of top-quality products available for their customers, and to get the word out to the consumer: "We have what you want!"

In prepping for Valentine's Day, I predicted that sales to be flat, or to be down as much as 5% over last year…but no more than 5% down. Yes, I said, sales would still be low, but Valentine's Day would not be nearly as bad as last Christmas had been. If retailers had top-quality and value products available, the customers would come back to the stores.

As Valentine's Day approached, most retailers across the U.S. stocked their stores in anticipation of how they thought they would perform. Those who anticipated only a 0-5% drop in sales brought in more product for the customers.

But those who anticipated a much larger 10-15% sales drop -- based on their dismal Christmas performance -- brought in less product, not wanting to be overstocked if the customers didn't come.

So what happened? The customers did come, and most retailers met their expectations. Retailers who anticipated only a 0-5% sales drop (and who had aggresively promoted) still sold well, and had the products in stock to meet customer demand.

But retailers who anticipated a much larger drop in sales found themselves selling 110% of their product. They cleared their shelves on Valentine's Day, and ran out of product too early. While this resulted in excellent gross profits, these retailers missed the opportunity to maximize sales and additional gross profit. They achieved what they expected -- a 10-15% sales drop over last year -- because they understocked their stores in anticipation of lower demand.

Still, most retailers were fairly pleased with Valentine's Day results. They tentatively increased their product stock in anticipation of better sales at Easter and Mother's Day. And they were right! For Easter, most retailers had either flat sales or gains of a few percentage points over last year's sales. For Mother's Day, most retailers had small gains in sales over last year.

 

Looking Ahead

So what does this mean? Are there better days ahead for the retail floral industry? Have we turned the corner on the bad economy?

Based on floral sales this Spring, I think we have. Even if the economy itself only stabilizes, I predict that the rest of the year will be profitable for retailers who take the initiative in promoting and growing their business.

Here's what to expect. First, for this summer, I think sales of floral products will be flat. But even so, summer is still a good time to sell flowers, and to promote your business -- especially now, when many people are staying home instead of taking summer trips. These people will need flowers to liven up their homes and gardens.

As we head into Fall and Christmas, however, I predict that the momentum of this Spring will carry over into floral sales. In fact, I project a 3-to-7 percent increase in floral sales over last year for the Fall 2009 season.

Again, this is the time to be bold. If you project that your sales for Fall and Christmas will be even with last year, you will miss an opportunity to sell more. Plan for a 3-to-7 percent increase in sales, and you will not be disappointed.

THINGS TO KEEP IN MIND FOR THE REST OF THE YEAR: