MIXING IT UP 2005

Lynne Miller

It takes a green thumb to grow gift sales in floral departments.

Though balloons, ceramic vases and other non-perishable gifts can be profitable, retailers must know what they're doing to move the items out of the stores. Like a bouquet of flowers that's starting to wilt, knickknacks should not be left to gather dust on store shelves.

"You have to have a good representation of decent non-perishable merchandise," said Tom Lavagetto, president of The Floral Consulting Group, Spokane, Wash. "If you ignore that category, you're losing sales and missing opportunities. If that non-perishable stuff doesn't sell, you'll have to mark it down to get rid of it."

From years of experience, floral industry veteran Jon Strom developed a simple rule of thumb.

"If something is tremendously successful, only order it one more time," said Strom, vice president of floral at Price Chopper, Schenectady, N.Y. "You can bring it in one more time but not a third. It's the same population that comes through your store. Once they've seen it, you've got to make sure you don't bring in too much or there will be leftover merchandise."

Price Chopper's Central Market Florist, a popular department within the chain's 110 stores, carries a large assortment of non-perishable products including lawn and garden accessories, ceramic and earthenware vases, silk floral arrangements and wreaths, plush bears and new birthday banners that let shoppers customize the printed message. Balloons, including new balloon sculptures, are a popular category.

"One of the really hot products, believe it or not, are singing balloons," Strom told SN. "They have little birthday cards that open up and sing 'Happy Birthday.' That's new and hot."

Price Chopper's floral departments are a high-volume destination. The retailer employs 350 certified floral designers that support the departments and provide extensive services to shoppers planning weddings and other special occasions. Strom declined to say how much the department contributes to overall store sales, but noted sales are 20% to 40% higher than the industry average. Gifts, accessories and other non-perishables contribute about 5% to overall department sales, Strom said.

"We're really a fresh-oriented company," he said. "Our floral has been upgrading year to year to year, in response to what our customers request. In the last three to four years, the quality especially of our permanent botanicals [artificial flowers] has gone up by at least 100%. That's what our customers are looking for. If they wanted something down and dirty, they'd go to a dollar store."

Ukrop's Super Markets has upgraded its non-perishables to differentiate the stores from supercenters. The Richmond, Va.-based chain carries higher-end home decor products that are comparable to what upscale gift shops sell, said Donna Shultz, floral category manager at Ukrop's.

The non-perishable side of the business has its ups and downs, and sales often reflect the economy. Sales are a "little flat," Shultz said. "The economy is a little flat. Things haven't been growing since last year.

"We're cutting back on smaller decorative pieces," she said. "Floor space is such a premium for all of us. There are so many more venues, like Target, for purchasing those things. It's more competitive. I think customers are becoming more particular in what they want. We're trying to be more selective on what we're choosing. There's less competition in that area, the high end. That's an area where we can stand out."

Floral gifts are usually impulse purchases. Therefore, interesting displays are essential to triggering sales, Shultz said. At Ukrop's, the floral displays change with the seasons. For example, a beach theme, featuring ceramic fish and decorative lighthouses, will dominate floral departments starting over Father's Day weekend.

"You've got a few seconds to get their attention," Shultz said. "Very few people need anything I sell. They really don't."

In the balloon category, Shultz encourages the stores to promote balloons with movie tie-ins, especially during the summer when a slew of juvenile movies are released to theaters. At Ukrop's, one perennially popular item is a balloon bouquet, featuring four latex balloons in colors that coordinate with one 18-inch printed mylar balloon. The bouquet retails for $4.99. Colorful balloons also serve as decoration for other store departments.

"Kids are where most balloons are going," Shultz said. "We try to keep them inflated in the stores for that reason."

Balloons can be a money maker for supermarkets, Lavagetto said.

"Balloons are an important category," he said. "That part of the flower shop can range from 7% to 10% of floral sales. It's extremely profitable. If not the highest gross margin category in the flower shop, it's awfully close."

Many supermarkets sell balloons, but some carry them in the nonfood departments. For example, Macey's flagship supermarket in Pleasant Grove, Utah, sells balloons in the nonfood section, though other stores in the chain carry them in the floral departments.

Perishable products represent about 90% of the floral department's business, said Colter Manning, floral manager at the 70,000-square foot-store. In recent months, his store has seen dramatic increases in sales, partly due to a new outdoor greenhouse stocked with bedding plants, hanging baskets and potted plants. Manning's store fends off a lot of competition. That was a factor in the decision to cut back on non-perishable items in floral. The resulting sales would suggest store officials made the right decision.

"By reducing non-perishables, I increased my sales," Manning told SN. "I'm sandwiched between two Wal-Marts and several local floral departments. Other departments [at other Macey's] go through tons of non-perishable product. I used to do heavy, really heavy knickknack business."

What's left on the non-perishable side includes a handful of products, including Minky, a stuffed teddy bear with corduroy-padded feet. The bear, a steady seller ever since the store opened three years ago, retails for $6.99. It is popular year-round, especially as a gift for babies born at the area hospital. The store also carries a variety of stained wicker or rope baskets, retailing for $1.98 to $34.98. The majority of baskets sold are in the $6 to $10 range.

Other gifts have seasonal appeal, such as candles and holiday decorating items. Clear or printed gift bags in two sizes, retailing for $1 for eight bags, have good margins, Manning said. During the Christmas season, he can sell up to 30,000 gift bags. During the school year, hundreds of jigsaw puzzles by Utah artist Eric Dowdle fly off the shelves.