RETAILERS BUILD UP ONLINE FLORAL BUSINESS 2004-10-11 (2)

TOM ZIND

PITTSBURGH -- Increasingly, supermarkets are delving into online floral ordering and delivery services in response to more marketing overtures from providers and because the Internet has the potential to be a low-cost source of revenue for retailers.

Giant Eagle recently became the latest retailer to put floral delivery just a few keystrokes away for customers. In conjunction with becoming an FTD-member florist, the Pittsburgh-based chain of 200-plus stores announced an online tie-in allowing customers to route an order through FTD by first logging onto the GiantEagle.com site.

"Giant Eagle now has an FTD-affiliate Web site where customers can order flowers for delivery to all 50 states," the company said in a news release. "In addition, the site offers member features, such as valuable information on various flowers, an online address book, an e-mail reminder service, and order history."

While Giant Eagle's Internet floral foray is not groundbreaking, it's a by-product of what appears to be a successful recent push by FTD and other floral delivery providers, such as grower-direct provider ProFlowers, to bring more supermarkets into their networks. "FTD, for instance, has begun offering supermarkets an affiliation arrangement that's different from its traditional model, under which you had to be both an originator and a fulfiller of orders," said floriculture industry consultant Stan Pohmer, Minnetonka, Minn. "The new program, which is being sold by a new sales force dedicated to building the supermarket business, allows them to join without having to be an order filler."

While supermarkets can participate without offering an online ordering component, there's mounting evidence that more are opting to provide one. Boise, Idaho-based Albertsons, for instance, rolled out an online floral program just prior to the winter holidays last year. To help promote it, the chain offered a seven-day freshness guarantee.

According to chains that have had online programs, promoting the service is essential. That's especially important because the vast majority of shoppers probably don't even know their supermarket has an Internet site, much less that they can order flowers from it online.

For that reason, Price Chopper Supermarkets, Schenectady, N.Y., recently ran a special promotion that earmarked $2 of every Internet order for a breast cancer charity, said Jon Strom, vice president of floral merchandising.

"This year we've seen our overall FTD business increase by about 30%, and our next step is to more vigorously promote and advertise the Internet service," Strom stated. "It's something we'll promote in an e-mail newsletter for card holders, as well as in store around key flower-sending holidays."

St. Louis-based Dierbergs Markets, another early adopter of Internet-enabled FTD delivery, regularly promotes the Internet site and the floral ordering capability through in-store signs, weekly ad circulars, and signs on its floral delivery trucks. Its reputation as one of the leading full-line florists in its service area also has helped Dierbergs get customers comfortable with online floral ordering.

"Our Internet floral business has probably doubled or tripled since it began in the late '90s," said Val Hinman, director of floral operations.

Like Price Chopper, Dierbergs generates revenue from filling many of its Internet orders, and not just from a fee that FTD order originators collect. Since both have extensive florist-quality floral operations, many Internet orders can be filled by individual stores or, in the case of Dierbergs, from a central design facility, provided the recipient is in the service area. Strom estimated that 70% of all Internet-generated orders are filled by Price Chopper, whose floral operation runs under the Central Market Florist banner.

In addition to being a revenue and profit generator, an online floral component can serve as an image builder. It can help burnish a retailer's reputation as being in tune with the public's growing interest in online shopping. In cases where the supermarket also fills the order, whether online or store-originated, flowers that arrive bearing the store name can be a good marketing vehicle.

Of course, that can be a two-edged sword. If the flowers don't arrive in good shape or don't hold up, the retailer who originated the order can suffer the consequences. Retailers have to take a calculated risk that an order filled by another florist will be up to par, and that word of a botched order won't find its way back to the customer who placed it.

Even with that potential downside, online floral programs are increasingly being viewed by supermarkets as a generally inexpensive, low-risk way of building floral sales; enhancing a store's image with younger, Internet-savvy consumers; and driving traffic to the company Web site.

"The more services a retailer can provide today, the better, because supermarkets are looking to offer anything they can that will set them apart from the discount food competition," said Pohmer. "Plus, many of these online orders can go through untouched by supermarket hands, but the retailer can still get a piece of the transaction with very little up-front investment."