ANAHEIM, Calif. — Facing tight household budgets, shoppers are trimming back their discretionary purchases, but by knowing their customers and strengthening relationships with their suppliers, supermarket floral departments can still find ways to succeed in this difficult climate, industry experts agreed.
“The economy has affected floral … I think nationwide. We've all taken a hit because it's a non-necessity,” said Michael Schrader, director of floral for Schnuck Markets, St. Louis. Schrader was scheduled to speak here on Oct. 2 at the Produce Marketing Association's 2009 Fresh Summit International Convention and Exposition in a workshop called “Increasing Floral Profits in the New Economy: How to Do More With Less.”
“We've re-evaluated what we're doing because everybody's looking for value,” Schrader said.
“A lot of folks consider [flowers] a luxury item as opposed to an everyday item,” he added.
As the recession has dragged on, shoppers have become much more price conscious, and the price points highlighted in floral ads have to reflect this trend, he noted.
“We've found that ad items have to be $6, $7 or less in order to drive any sales, where before, we'd have [ads on items] for $10-$12 and we'd drive sales that way.”
Other industry experts agreed.
“Consumer sales are off in the floral area; the consumer is definitely looking for the value items,” Terry Humfeld, PMA's vice president of volunteer leadership relations, told SN prior to the show.
“Over the course of this recession, we've seen some decline in some key areas. For example, arrangements are way off on all the holidays — not that that was ever a big item, it's usually a higher priced item — [but] it's an indication that consumers really are looking for a greater value for the dollars that they spend.”
As an example, Humfeld pointed out that there has been an uptick in sales of indoor blooming potted plants. Many shoppers may view these items as having more value, since they last longer than cut flowers.
As the challenging economy leads to changes in shopping behavior, retailers and suppliers should be strengthening their partnerships, and looking for ways to increase sales, Humfeld said.
“The most successful suppliers and retailers out there are working very closely together and in alignment with each other. They're leaning on each other and utilizing each other's talents and expertise.”
He continued: “They're sharing information, sales data, perceptions on what might work in a different area. True collaboration needs to happen on a regular basis in good times or bad, but of course, it's more important now when times are a little tougher, and consumers are hanging onto their dollars a little tighter.”
Schrader agreed, noting that now would be a good time for retailers and suppliers to explore new ways of analyzing the floral category and increasing sales.
“Why aren't we taking advantage of some of these sophisticated category management [tools] that are out there in Center Store and applying them to floral?” Schrader asked.
During challenging times like these, suppliers could really help customers with industry data, merchandising and display ideas and other tools to help build the category. However, Schrader noted that the industry does not have a history of information sharing.
For example, supermarket floral departments and independent florists often view each other as primary competitors, Schrader said. But, he argued that the industry should broaden its view of competition, and think instead about how shoppers are spending their disposable income.
“That's who our competition is — the people who are buying the movie tickets, or using their disposable income for wine, or going on a trip, instead of buying a bouquet.
“People who are buying bouquets are buying bouquets. We want them to buy bouquets. So, we're all secretive about our data. And it's like, ‘Why?'”
Humfeld agreed, noting that most “secrets” in retailing can't be kept for long, and that there might be several scenarios where information sharing and collaboration would benefit all parties involved.
“As soon as that new arrangement or that new innovative idea has hit the street, everybody knows about it. So, the advantages that you may have for something new are fairly short-lived,” Humfeld said.
“It doesn't mean that you go out and share all of your secrets, but I do think that there's some value in exchanging ideas about how to crack a tough market, how to work more effectively with your suppliers and so on. And that's what we're trying to do at Fresh Summit is to provide forums where buyers and sellers can sit down and talk about some of their common problems.
“Retailers and suppliers need to be working together to figure out how to deliver greater value and to do so in a manner where both sides make money,” Humfeld added.
With a discretionary category like floral, he noted, shoppers may maintain their spending, they may trade down or they may trade out of the category completely, if they don't see what they need in the floral department.
“You really have to work harder to try and recapture or hang onto that customer that you have,” Humfeld said. “It's a balancing act, I think you just have to be careful that you don't just go one direction or the other too far.”
Chris Jacobs, managing director of Keepsake Plants, and Ben Pauley, executive vice president, grocery division for FTD, were also scheduled to speak at the Oct. 2 presentation.
FRIDAY, OCT. 2, 2:45-4:45 P.M., Room 211 B
INCREASING FLORAL PROFITS IN THE NEW ECONOMY: HOW TO DO MORE WITH LESS
managing director, Keepsake Plants
executive VP grocery division, FTD
floral director, Schnuck Markets