SIC 5992

Companies in this industry

Industry report:

This category covers establishments primarily engaged in the retail sale of cut flowers and growing plants. Establishments primarily engaged in the retail sale of seeds, bulbs, and nursery stock are classified in SIC 5261: Retail Nurseries, Lawn and Garden Supply Stores. Greenhouses and nurseries primarily engaged in growing seeds, bulbs, flowers, and nursery stock are classified in SIC 0181: Agriculture. Establishments primarily engaged in the retail sale of artificial flowers are classified in SIC 5999: Miscellaneous Retail Stores, Not Elsewhere Classified.

Industry Snapshot

Florists design arrangements either per customer request or according to standard designs for general sales. Their job also entails floral decoration of buildings, cost and price consulting, and training others in floriculture. Most traditional retail florists are affiliated with national wire services that handle long-distance orders by telephone or the Internet. The receiving florist gets a commission from the sending florist depending on the size of the order. Often, customers are charged an additional service fee by the sending florist.

Retail sales in this industry were estimated at $20.8 billion in 2006. Annual sales from the nearly 23,000 specialty florist shops averaged $290,000. Also contributing to the sales total were purchases from nearly 22,000 supermarkets, approximately 16,500 nurseries and garden centers and 10,500 domestic growers, plus roughly 900 wholesalers.

California accounts for almost three-quarters of the fresh flowers grown in the United States. Washington and Florida grow 5 percent of the nation's output, Hawaii 4 percent, Oregon 3 percent, and New Jersey 2 percent. There were approximately 102,000 florists employed in 2006, according to the Bureau of Labor Statistics.

According to U.S. Census Bureau, the total number of florists fell 6.3 percent between 2007 and 2008. Additionally, that figure only climbed further during 2009 and 2010 as the economy weakened. "�many florists couldn't generate enough cash flow to sustain their operations, and small companies had extreme difficulty obtaining lines of credit," Stan Pohmer wrote in the 2011 State of the Industry published in the Florists' Review. Moreover, while florists sales fell throughout 2010, supermarket floral department sales averaged -5 percent to 5 percent compared to 2009, outperforming traditional florists while gaining market share. Some florists were using creative marketing to lure potential consumers into their flower shop.

Background and Development

The Society of American Florists formed in 1884 to represent retail florists and all segments of the industry. Association officials have no records of the first retail floral establishments in the United States. Florist Transworld Delivery (FTD) of Downers Grove, Illinois, was the first floral wire service to standardize order placement among florists nationwide. Originally, fifteen florists joined together in 1910 in Rochester, New York, as the Florists' Telegraph Delivery Association to exchange orders for out-of-town deliveries by telegraph. Before the formation of FTD, floral arrangements were shipped out of town via train or mail. FTD was the first to create a standard special bouquet order with its member florists and was also the first such company to publish floral arrangement catalogs to help consumers select the proper arrangements.

A green plant boom in the 1970s, coupled with a big demand for imported cut flowers, prompted a rapid nationwide expansion in the number of florists. The Floral Index, Inc., a Chicago-based marketing and consulting service, reported overall retail sales of floral items slowed after unprecedented growth between 1982 and 1989. Between 1989 and 1990, growth dropped to less than $500 million, which was one-half the rate of previous years. Americans purchased floral products at about $49.33 per capita in 1992, more than double the amount purchased in 1982, but 3 percent less than in 1991. According to Flowers magazine, this figure represented the first decline in per capita sales in 17 years.

Wire services play an important role in the industry. According to Bram Cavin, in his book How to Run a Successful Florist and Plant Store, the number of wire orders increased from 4 million in 1947 to 10 million in 1965. FTD, a cooperative of 45,000 florists in North America and the United Kingdom, reported 20 million wire orders in 1992. The Society of American Florists estimates the flower-by-wire business accounts for 20 percent of a traditional florists' sales. Most florists belong to one or more of the flower-by-wire services serving the floral industry.

In order to increase service, computers were used to send customers' orders to other towns. Some consumers used toll-free numbers to reach the florist who actually sent the product. Others used local florists, who in turn used various wire services like Florist Transworld Delivery, Teleflora, and AFS to send the flowers. Wire services offering memberships gave florists advertising and promotional materials and assistance, as well as training in management, marketing, and point-of-purchase aids. Standard arrangements were designed to make it easier for the customer to order. While technology made it easier for florists to communicate, it also brought heavy competition. Traditional florists lost market share because of the proliferation of "nonflorists," such as supermarkets, discount retailers, department stores, and nurseries, who sold the same products.

Individual floral shop sales experienced a 3 percent decline from $185,200 in 1991 to $180,000 in 1992, based on estimates from some 40,480 shops in the United States. American consumers paid an average of about $16.15 per unit for their floral items in the early 1990s. Imports of fresh-cut flowers such as carnations and roses were forcing prices down, causing some retail flower shops to lose market share to nontraditional shops with low overhead. Close to 70,000 retail florists and supermarket flower departments sold cut flowers and growing plants in the early 1990s, compared to about 20,000 such shops in the early 1970s.

Roses remain the number one selling flower. Red roses accounted for 65 percent of all roses sold in the mid-1990s, and the majority of approximately 64 million were sold around Valentine's Day. An increase in corporate gift giving also helped to expand the floral market. Plants and flowers, according to a Gallup poll commissioned by the American Floral Marketing Council in 1990, were the "most convenient gift" and the best "I love you gift." Green plants, while losing market share, continued to be a $1 to $2 billion industry segment.

In the late 1990s, television commercials promoting gifts of flowers became very common. The Internet also played a substantial role in setting a new trend at the turn of the century.

Retail florist shops still dominated the industry in the late 1990s, numbering 27,341 and averaging annual sales of $209,182 per shop. However, these traditional outlets faced increasing competition from floral departments in 23,000 supermarkets, and from 10,857 retail nurseries and lawn and garden supply stores. The industry imported about 60 percent of the cut flowers sold in the United States, with 64 percent of these imports originating from Colombia. Ecuador held a distant second with 12 percent of cut flowers imported to the United States. California controlled the domestic growing of cut flowers, with 65 percent of the market, while Florida came in a distant second, growing 7 percent of cut flowers.

By 2004, the most popular place to purchase floral products was in the supermarket, largely because of the convenience. Consequently, many supermarkets were expanding their floral departments. According to a survey by Supermarket News, 9 percent of the surveyed operators planned to expand their floral departments and more than 15 percent planned to add full-service floral departments. According to Supermarket News, the expansion was fueled by higher profit margins.

Increasing competition between the traditional and nontraditional florists spurred uses of new technology such as flowers-via-computer and toll-free numbers to make floral item purchases more accessible to the public. Advertising campaigns were also focusing on non-occasion uses for flowers and plants. Many traditional florists were resorting to the Internet to sell flowers, and others only sold flowers via Web sites. By 2004, even supermarkets such as Giant Eagle were getting into the online floral market. The two top specialty companies in the floral industry, 1-800-Flowers and FTD, expanded Internet offerings in the 2000s, from which most of the industry growth came. In the middle of the decade, 1-800-Flowers, largely through its Web site, surpassed longtime number one FTD in terms of overall sales.

In data collected by an Ipsos-Insight FloralTrends Consumer Tracking Study in 2005, non-calendar occasions accounted for 86 percent of personal purchases (business purchases excluded) of fresh flowers, flowering houseplants, green plants and bedding/garden plants. Outdoor bedding/garden plants made up 46 percent of all purchases, with fresh flowers garnering 34 percent. Women make almost 80 percent of the overall purchases and 65 percent of the fresh flower purchases. Consumers make 63 percent of the overall purchases for themselves, but 67 percent of the fresh flower purchases are a gift for someone else.

The Christmas/Chanukah season accounts for 30 percent of purchases for specific calendar occasions, with Mother's Day getting 24 percent and Valentine's Day 20 percent. Mother's Day and Valentine's Day were equal in terms of dollar volume at 25 percent each. Valentine's Day is the top holiday for specialty florist shops and is the leading holiday in terms of fresh flower purchases only with 36 percent of the holiday transactions. An estimated 214 million roses were produced for Valentine's Day in 2007.

In the mid- to late 2000s, FTD was feeling the squeeze of competition from and Teleflora. Green Equity Investors, a business unit of Leonard Green & Partners, paid $420 million for FTD Group in 2004, then the group acquired a British floral network in 2006. That acquisition helped keep FTD's revenues from shrinking as and Teleflora grew. In 2007, 1-800-Flowers took in 11.6 million orders for flowers, candies, and gift baskets in the United States, compared to 4.6 million orders for FTD, a successful result of founder James F. McCann forming his own network called BloomNet in 2006 rather than using the FTD florist network to complete orders as had been done previously. McCann offered rebates to florists to use BloomNet, and 9,000 florists had signed up for the service as of February 2008. Teleflora has also surged in the market since launching an online store in 2004, which has increased in productivity by double-digit percentages annually.

Current Conditions

Over the past few years, florists have enjoyed rising sales; however, the onset of the economic recession began to effect floral sales. Still, the Society of American Florists reported that in 2008, 20,277 U.S. florists sold 214 million roses for Valentine's Day. Retail sales for Valentine's Day were expected to fall by 13.5 percent to $14.7 billion for 2009, a reflection of a stagnant economy.

In 2009, one survey conducted by the National Retail Federation and Big Research learned that two-thirds of consumers planned to purchase flowers for Mother's Day, however, they admitted they would be spending less than they did in the prior year. Florist's retail business fell by five percent in 2009, compared to 2008 and a 15 percent decline over 2007.

That trend continued into 2010 with many florists reporting double digit sales declines, and those reporting increases remained below pre-recession totals. Some floral retailers like 1-800-Flowers stepped up its marketing efforts increasing its ad dollars by some 50 percent of their operating budget. TNS Media Intelligence reported the company spent $59.1 million on marketing in 2008 alone.

Industry Leaders

After passing FTD in overall sales in the mid-2000s, continued to grow into the late 2000s. The company reported revenues of $912.6 million in 2007 and employed 3,700 people. revenues grew slightly to $10 million in 2009.

As the first flowers-by-wire cooperative, FTD was the most well-known company company reported $613 million in 2007 sales. The company made florists accessible by placing ordering outlets in gas stations, car dealerships, fast-food franchises, and even pizza parlors. It also distinguished itself from other floral wire services with its 100 percent satisfaction guarantee. FTD members paid approximately 7 percent of the value of their transactions in return for advertising support from FTD. The company reported revenues of nearly $546 million in 2009.

Teleflora, with a network of about 25,000 florists across the United States and Canada and another 20,000 outside North America, reported 2007 revenues of $21.1 million. Teleflora, a subsidiary of Roll International had a network of about 18,000 florists in 2009.

America and the World

In 2005, 79 percent of the fresh flowers sold in the United States were imports, with 59 percent of those being imported from Colombia and 18 percent from Ecuador. Foreign countries were stepping up their efforts to gain more of the U.S. market by flooding the market with exports and establishing retail stores, thus driving prices down.

America and the World

More than 80 percent of all cut flowers in the U.S. are supplied by Columbia and Ecuador. Normally if the U.S. was in a slump, Columbia and Ecuador flower growers were able to market their cut flowers elsewhere, but the effects of this economic downturn were felt worldwide so U.S. flower retailers in general were purchasing their stems for less.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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