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Feature Article in the Dec. 4, 2004 Issue of Flower News
Florists Invest in Designing and Delivery
to Thwart Market Competition
Drs. Tom & Tim Prince, Prince & Prince, Inc., Columbus, Ohio U.S.A.FloralMarketResearch.com
NOTE: Updated retail florist market information is available in the Prince & Prince U.S. Retail Florist Tracking Survey, now available as a one-day, on-site, comprehensive seminar, with Q&A session, or as a "Seminar on Flash". Click on "SEMINARS" from the P&P Home Page.
Florists are facing increasing competition from a variety of floral outlets, and are actively taking actions to thwart this competition. Since 1998, Prince & Prince has been periodically tracking the product offerings, marketing practices, and operational aspects of florist shops throughout the United States through its market surveys, and will do so again in 2005 (see About the 2005 Research Update). In this article, we excerpt key statistics from our 2003 florist tracking research that reveal the changing composition of florist shop competition in the United States. Furthermore, we highlight two key florist services, designing and delivery, and show that florist investments in these service offerings have exhibited some rather large changes over the past few years. Our interpretation of the findings suggests that florists are expanding their core competencies in floral designing and delivery services to thwart, not match, the increasing mass-market competition in floral products.
In our surveys, we measure florists’ perceived level of competition across ten classes of floral competitors. These classes of floral market competition include other retail florists, supermarkets, super-discount stores, discount stores, home/hardware centers, wholesale stores/clubs, street vendors, event/party planners, farmers’ markets, and hobby/craft stores. For each outlet class, florists rate whether the level of floral competition in their primary market area is non-existent, low, moderate, high, or very high (5-point scale). Table 1 shows the average competition scores in rank order across the ten outlet classes for our 2003 study.
Overall, florists in 2003 perceived the top three sources of floral competition from other florist shops, supermarkets, and super-discount stores. Party/event planners and street vendors showed the relatively lowest level of market competition for florists, on average. While these statistics provide a frame of reference for florist market competition, of greater interest is how these outlet competition scores have changed over time, for that potentially signals the direction of florist competition for the future. Table 1 also shows the outlet competition scores for our 1998 study compared with scores from our 2003 study, and the percentage change in competition for each outlet class.
Table 1 shows that while other florists and supermarkets are the top two rated classes of competition, the level of competition from these two outlet classes has not increased since 1998. However, florists have perceived increasing floral competition from super-discount stores, wholesale stores/clubs, and home/hardware centers since 1998, with percentage increases ranging from 8% to 13%. Most other outlet classes showed no or little change in floral competition scores, and in some cases, declines in the level of perceived competition since 1998. Thus, super-discount stores, wholesale store/clubs, and home/hardware centers are increasing their presence as more serious floral-outlet competition for retail florists.
For one aspect of the florist research, we measured the operational areas where florists have "invested most resources" over the past two years to improve their floral business. In this reporting, we highlight two of twenty areas measured in the research, Designing, and Delivery, that showed the largest change nationwide between our 1998 and 2003 studies. Figure 1 shows the percentage of florists that have invested "most resources" in Designing and Delivery for the 1998 and 2003 studies.
The survey findings indicated that the percentage of florists throughout the US investing in Designing has increased from 50% in 1998 to 59% in 2003, a statistically significant nine percentage-point increase nationwide across the five-year period. Likewise, the percentage of florists in the US that have invested in Delivery increased from 25% in 1998 to 38% in 2003, a highly significant 13 percentage-point increase nationwide over the five-year period. On a national basis, these percentage movements for Designing and Delivery are rather large and dramatic.
Design Investment by Florist Sales Groups
To show the structure underlying this florist investment in Designing, we segmented the national findings by the size of the florist business. Figure 2 shows the florist design-investment profile by five annual sales groups, ranging from $100,000 or less, to over $1 million. In the chart, an asterisk next to the sales category indicates a statistically significant change in percentage investment between 1998 and 2003. For 2003, more florists invested in designing in 4 out of 5 annual sales groups (3 out of 5 statistically significant), compared with 1998. Only florists in the $500,000 to $1 million annual sales group did not register a percentage increase in design investment for 2003. The larger percentage increases in design investment were registered among florists with annual sales of $500,000 or less, and especially among the smallest-sized florists, where 2003 design investment showed an 18 percentage-point gain over 1998.
Delivery Investment by Florist Sales Groups
Figure 3 shows the florist delivery-investment profile by five annual sales groups. For 2003, all florist sales groups showed an increase in the percentage investing in floral delivery (4 out of 5 statistically significant), compared with 1998. The largest-sized florists with annual sales over $1 million registered the largest percentage gain in delivery investment since 1998, with a gain of 17 percentage points. Thus, the number of florists investing in delivery has shown a strong increase over the past five years.
These survey research findings indicate that the US florist industry has recently witnessed increases in specific mass-market competition, and has shifted its marketing and operational emphasis back to two traditional core competencies of retail florists: Designing & Delivery. On a national scale, the documented increases in florist investment in Designing and Delivery are rather large and pervasive, being exhibited by most florist-size groups. The survey findings suggest that florists are not engaged in strategies to match mass-market floral competition. Rather, florists are investing in those core competencies that most distinguish them from mass-market competition, namely design talent and delivery services. Thus today, more retail florists are differentiating their floral products and service offerings to consumers to thwart the increases in mass-market floral competition. Prince & Prince will continue to track these developments, and the behaviors of the retail florist industry though its 2005 Research Tracking Update.
About the 2005 Research Update. Being a valuable resource for the entire floral industry, Prince & Prince will update its US Retail Florist Tracking Research in early 2005. This nationwide marketing research project tracks recent changes in the retail florist product mix and identifies florist-usage trends for 65 cut-flower species, 20 potted plant species, and over 30 floral hardgood/gift-shop items. The Prince & Prince research also tracks changes in florist marketing practices, service offerings, shop operations, and florist financial performance.
The P&P Florist Tracking Research provides suppliers, distributors, and retailers in the US floral industry a broad understanding as to where the retail florist industry has been, where it is now, and where it is likely headed. Comparisons will be made across the three study periods (1998, 2003, 2005) to identify trends in the 200+ survey measures. The tracking research obtains independent responses from more than 1,000 randomly-selected florist shops throughout the US with a sampling error of +/- 3% in overall accuracy. Results from the P&P Retail Florist Tracking Research will be available in the Summer/Fall of 2005 through its seminar offerings to floral associations, and reports and on-site seminars provided to interested parties.
About the Authors. Drs. Tom and Tim Prince, formerly of The Ohio State University, are brothers and co-founders of Prince & Prince, Inc., a leading marketing research specialist in the floral and green plant industries. Prince & Prince has completed more than 50 major marketing research reports for the floral and floral-related industries in the US, and has also conducted floral marketing research in Canada, the United Kingdom, Holland, Germany, and has recently initiated floral marketing research in Spain. They conceptualize, design, and implement market studies, competitive research, and product tests for floral and green-plant suppliers, floral importers, wholesale florists, retail florists, and floral-industry associations. For more information about their marketing research, please visit their web site at www.FloralMarketResearch.com, or contact Prince & Prince, Inc., PO Box 2465, Columbus, OH 43216-2465, phone: 614-299-4050.
Prince & Prince, Inc. PO Box 2465, Columbus, OH 43216-2465
Telephone: 614-299-4050 E-mail: FloralMktResearch@att.net
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