Is the Flower Shop Business Model Broken?
“I say no, but we must do a better job providing service, quality and experiences for consumers.”
Well, judging by how fast retail florist stores have been contract-ing over the last 10 years, it sure seems like it. What is going on? Everyone has an opinion. It’s easy to blame all the usual suspects: the internet, the supermarkets, the order gatherers and the wire services. But there is something more fundamental going on: Consumers are voting with their pocketbooks for other product choices, for many reasons.
First, many retail florists have been reluctant to drop their price points. When your least-expensive arrangement option is $50 plus delivery and tax, you have just alienated a whole group of people who don’t have $70 to spend. This has contributed to the impression that flowers from a retail florist are expensive and only worth a trip for special occasions. Many florists don’t know how to make money at lower price points, but the supermarkets are succeeding with an average price point of $20 or less. They sell more than $6 billion a year at these lower price points, and they do it very profitably.
Second, millennials are choosing to spend their dollars on experiences rather than products. More than 70 percent of young people confirmed this fact in a recent survey by Eventbrite, a global ticketing and live-event technology platform.
When was the last time you held a flower-arranging class? Young people are going to painting classes in droves, as well as pottery classes, cooking classes, and any classes and events that give them memorable experiences they can share on social media. The irony is flower shops have the physical locations but are not doing anything at the “experience” level. While more than 10,000 flower shops have closed their doors during the past decade, more than 3,000 painting stores have opened during the same time. We live in an experience economy now. The people who come to your flower class will usually end up being some of your best and most loyal customers.
Third, quality and service have not been top priorities at many shops for decades. The larger shops have higher quality control and advanced POS technology, but smaller shops struggle with these two issues. If we expect someone to spend $75 to $100 with a floral retailer, it better be nothing short of an extraordinary product. The flowers need to last seven days or more (not two or three days), and we can’t cut corners at the service level. We must have appropriately trained people helping our customers every step of the way. They expect nothing less at these price points.
A lot of people used to say the “coffee shop” business was dead in the early 1990s. They said it was impossible to make money. Then came a new brand, with better quality and a wonderful experience. Starbucks reinvented the coffee market as we know it, and organically grew it many times larger than what it was before the mid-’90s.
There is no reason we cannot do this with flowers. Innovation is the key to succeeding in a declining market. Flower shops sell one of the most beautiful products in the world; we just need to do a much better job with consumers. If you think some of these ideas are risky, doing nothing is even more dangerous at this point.