Consulting Group Article
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
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.
Seeds for Fall:
to Prepare for the Coming Turnaround
the Retail Floral Business
I hate to
say "I told you so"
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.
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.
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
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.
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
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.
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.
does this mean? Are there better days ahead for the retail floral
industry? Have we turned the corner on the bad economy?
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
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.
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.
TO KEEP IN MIND FOR THE REST OF THE YEAR:
- Plan well.
-- Once again, your best asset is a business plan that maps
out your goals for Summer, Fall, Christmas, and into 2010. Include
action steps on how you will meet your goals and deadlines.
- Don't be afraid
of "shrink." -- In the retail floral business,
you don't know how well you could have done unless you press
the envelope. Don't be afraid to buy a little more product than
you think you'll need. Your business needs to have some losses
in order to measure the effectiveness of your sales. If you
know what sales level your business is at now, you'll know what
sales levels you need to plan to reach in the next quarter,
and over the next year.
- Promote! - Promote!
- Promote! -- I say it again! This is the time to get the
word out! Know what products your customers want, and let them
know that you have it (or will have it) for them.
- Offer quality!
-- Give your customers a variety of top-quality products, and
back it up with exceptional service.