COLUMBUS, Ohio -- Cold, hard numbers are the best means of selling senior management on the importance of floral departments, according to a panel at the Floral Marketing Association's annual convention here.
Floral executives know that flowers can add an image of freshness, color and quality to a supermarket like nothing else, but management may require more tangible proof of this department's potential, the panelists counseled.
"Our floral operations give us an edge that we have over all the supermarket industry in southern California," said Bill Davila, president emeritus of the Vons Cos., Arcadia, Calif. Of the chain's 330 stores, 230 have full service floral operations.
"And edges, or discernible differences, between you and your competition is what keeps you strong, what keeps your stores interesting -- fulfilling expectations and creating excitement," he said. "But can you convince management [of the importance of floral departments] with some of the things I've just mentioned? Probably not," he said. Davila told the audience, however, that management might be impressed to hear that, at Vons, the floral departments are more profitable than service delis, hot bakeries or pharmacies.
Floral sales have increased by 20% during the last five years at Vons, and now represent over 1% of total store sales, he said.
Floral departments in the Columbus division of the Kroger Co. now contribute more in dollars and percent sales than seafood departments
or deli departments, according to Bernie Dawson, produce merchandiser for the Columbus marketing area.
Floral shops are proven profit performers for the Cincinnati-based chain, Dawson said. Many new Kroger stores now position floral in the very front of the store, which is proof of senior management's commitment to the program, he added.
Davila of Vons said his chain has done the same in many of their new stores.
"The visual impression of the floral department enhances the ambiance of our stores," Davila said.
Dawson also said floral has been a great advertising focus for his division. Of the 97 stores in division, over 75 have full-service floral departments.
"Full-service now has been redefined to include local home delivery, Teleflora world-wide floral services, wedding capabilities, funeral arrangements and part of our catering operation," he said.
"Floral shops have given us an advertising weapon in event marketing. They have played an important role in hundreds of charity events, among other local events. "These opportunities have helped establish Kroger's floral reputation, as well as enhance Kroger's image," he said. "You might say it's good for business, as well as the support of Kroger's public relations program."
"We at Kroger look to floral to provide convenience and added value for our customers," he continued. "This important department has helped to improve our service image with direct customer contact, it enhances our freshness image, and provides us with what we consider competitive advantage."
Floral executives should look beyond gross margins when determining profitability for the department, advised Dave Clark, vice president and divisional merchandise manager for toys and seasonal, Target Stores, Minneapolis.
Target, which operates over 670 mass-merchandising stores with floral departments and 225 with year-round garden centers, started to sell senior management on floral and horticulture as early as fourteen years ago, Clark said.
When looking at gross margins, or the cost of sales minus the cost of goods, Target's floral business generated "okay" returns, he said. Then, Target decided to look into other areas of profitability, such as the amount of advertising expenses, amount of storage and processing involved and the interest on inventory.
After factoring in all those formulas, floral became one of the two most profitable departments that Target operates, Clark said.
"That's quite a contrast in terms of the attention you get, when you go to demonstrate [to senior management] that you are one of the two most profitable businesses in the building," he said. "The support became immediate."
Clark said that Target, as a mass merchandiser, does operate a little differently than a supermarket chain, with fewer turns and some different accounting methods. Nonetheless, numbers talk to anyone in senior management, he said.
"There's something else besides the bottom line," Clark added. "We need to expand our horizons. We are in the entertainment business. We need to make people feel good. And we are real excited about what a floral area does for that." Davila of Vons said floral and produce executives must work hard to get through to senior management with their message.
"Too often, those of us who have responsibilities for the company's performance have a tendency to focus mainly on the parts of the business that have the greatest impact on the bottom line," he said.
"Your management needs to understand this. You have to encourage, plead, and persuade. In my judgment, we in management will ultimately see the light, and smell the roses," Davila said.