The Profit
All signs point to a slowly recovering U.S. economy, but it has been a long and bumpy road for many small business owners, including florists.
Cautious consumers, more competition from online retailers, high overhead costs and rising gas prices—all have led to a decline in independent flower shops. Between 2000 and 2011, the number of such retailers decreased by roughly 37 percent, according to the Society of American Florists.
"The local florist market has been shrinking for years," said Eric Beder, managing director at Brean Capital. "And after 2008 and 2009, that accelerated. It's very tough for local florists to make it work anymore, especially with the internet and people no longer shopping" on Main Street.
According to Beder, the rise of online giants has contributed to the demise of smaller vendors for several reasons, including their diverse and specialty product offerings.
(Read more: Business transformations: The good, the bad, the ugly)
"1-800 Flowers has done a really solid job. After the economy slowed down in 2008 and 2009, they consolidated operations [and] refocused the product, so they are no longer selling just basic flowers but selling value-added unique products."
Some customers also shop for flowers online for the potential savings.
"[Buying online] does save money in terms of shipping costs and ... not having to pay a middleman," Beder said.
Wholesale flower markets, big-box stores and supermarkets have gained share, as well.
It's more convenient to go into your "grocery store, your BJ's, your Wal-Mart, and buy there as opposed to a local florist because it's ... on your way," Beder said.
The product's perishability makes ordering and inventory control especially important for the small retailer.
Hybrid Images | Getty Images
Once they're cut, flowers can be kept for only so long, Beder said. "There are technologies to keep them for a few weeks, but the truth is that it does hurt the local florist even more in the sense that they are the ones stuck with those flowers when they wilt, and that's something that again, affects the local florists a lot more than the wire services," he added.
(Read more: Making millions on nothing but a handshake)
So what are mom and pop shops to do?
One way to stay competitive is through consolidation. When operators merge several stores into one location they save on the fixed costs, such as rent, and achieve other cost efficiencies, said Jenni Sparks of the Society of American Florists.
Another way for smaller stores to increase foot traffic is to specialize in a niche, such as weddings, table arrangement or small bouquets for walk-ins. Customers will know that they can rely on the shop for that specific need.
Perhaps the biggest challenge is making the florist top of mind, getting people to think of it as a go-to place for gifts or home decor items, Sparks said, because there are so many other options available.
Playing
Watch Next...
As an expert in the field, I have a deep understanding of the challenges faced by small businesses, particularly in the floral industry, as highlighted in the article about the local florist market. The evidence presented in the article aligns with industry trends and economic factors affecting independent flower shops.
-
Market Decline and Economic Challenges: The article discusses the decline in the number of independent flower shops between 2000 and 2011, attributing it to a range of challenges, including cautious consumers, increased competition from online retailers, high overhead costs, and rising gas prices. This aligns with broader economic trends during that period, marked by the aftermath of the 2008 financial crisis.
-
Impact of Online Retailers: The rise of online giants, such as 1-800 Flowers, is identified as a contributing factor to the struggles of smaller vendors. The article points out that these online platforms have successfully adapted by diversifying their product offerings, moving beyond basic flowers to include value-added unique products. This demonstrates the adaptability and strategic business decisions made by successful players in the online floral market.
-
Consumer Behavior and Online Shopping: The article highlights changes in consumer behavior, noting that people are increasingly turning to online platforms for flower purchases due to potential savings in shipping costs and the absence of a middleman. This reflects a shift in consumer preferences and the growing influence of e-commerce on traditional brick-and-mortar businesses.
-
Competition from Wholesale Markets and Big-Box Stores: The convenience of purchasing flowers from wholesale flower markets, big-box stores, and supermarkets is emphasized. The article suggests that consumers find it more convenient to buy flowers along with their regular groceries, impacting the foot traffic for local florists.
-
Challenges of Perishability: The perishable nature of flowers is discussed as a significant challenge for local florists. The article points out that once flowers are cut, they have a limited lifespan, and technologies to prolong their freshness may not fully address the issues faced by small retailers. This highlights a unique challenge specific to the floral industry.
-
Strategies for Small Businesses: The article suggests strategies for small businesses to remain competitive, such as consolidation to reduce fixed costs and specialization in niches like weddings, table arrangements, or small bouquets. These strategies aim to address the economic challenges and changing consumer preferences faced by local florists.
In conclusion, the insights provided in the article underscore the complex dynamics shaping the local florist market and the need for strategic adaptation to survive in an evolving business landscape.
