How to profit when buyers are broke
Even in a recession, savvy retailers can boost their business.
The Flower Lady, Suwanee, Ga.
How does a florist sell more in this economy? We changed our business to designing weddings and events only, as the everyday flowers are not selling. We had to throw out too much product at the end of the week — flowers are perishable!
By Coeli Carr, CNNMoney.com contributing writer
As budgets get tight, people are spending less on luxury items — which means retailers in that market also need to clamp down and mind the bottom line.
Flowers’ short shelf life mandates that you control buying and adhere to a strict formula, says Keith Riewe, owner of Bice’s Florist in Fort Worth, Texas. The industry standard rule is that the wholesale cost of your flowers should be one-third of what you sell them for, he says.
The moment you realize you’ve got product left over, it’s time to cut your orders, says Riewe. Although many florists pay less for flowers by using a standing order, it’s often more cost effective to customize your orders. You’ll pay a little more, but you won’t be throwing unsold flowers away. It’s better to run out than to have unsold product, he says. Some florists have hybrid ordering systems that consist of a smaller standing order, and a separate, supplemental order when necessary.
Another way to cut your expenses is to keep a detailed count of what goes into your bouquets.
“Designers love to overstuff an arrangement to make it look pretty,” says Riewe. “When that happens, you’re giving the customer way more than what they pay for.”
Louie Theofanis, owner of Major Wholesale Florist in New York’s flower district, suggests boosting your margins by filling out bouquets with less expensive but attractive blooms. “Presentation is always important,” he says. “It’s important that customers feel they’re going out of the store with an armful of flowers, and that they’re getting their money’s worth.” Greens have a longer shelf life, he adds.
But no matter how gorgeous your merchandise is, you need to get customers into your store. That’s why advertising and promotions are even more important in a sluggish economy. Riewe recently gave away 500 rose bouquets, featuring a dozen flowers in each. The only thing people had to do to get one was come to his shop and provide contact info. Along with the bouquets, recipients got a card prompting them to visit the shop's Web site. Remarkably, 298 out of the 500 people did so.
That's another way to boost business. “It’s imperative you become technically savvy,” says Riewe, adding that most flower shops, compared to other retailers, are lagging by five or six years. He suggests using point-of-sale software to collect information from those who send and receive your flowers. Using the data he collects, Riewe sends out "preferred customer" cards, which offer an opportunity to earn reward points and be notified by e-mail of special offers.
Riewe suggests that florists rely less on corporate clients and focus on consumers. If one big company’s account represents a large part of your business, your revenues will become too dependent on them. Expanding into weddings and events is a smart move because those orders are typically paid for up front.
Give us your advice: Check out recent “Ask & Answer” questions.
Turning customers into repeat buyers
From Jim M., Lilburn GA Bargain bouquets. Use taste and style to create nice lower-priced bouquets (go ikeban-style) for people with less money in their pockets AND PUT A BIG SIGN IN THE WINDOW SAYING THAT. Dump the balloons and creepy plastic trimmings – you can get that stuff in the dollar store anyway.
From Joe Harkins, Jersey City, NJ Reduce expenses while taking more control of your web site. Typical florist web sites are created for them by an upstream supplier who provides a "package" of site software and hosting. Some even take a percentage of sales. Item changes usually cost hundreds per item. Shop around for a small, local web developer who specializes in eCommerce sites that do not contain "flash" animation? Look for a fast-running, "buy me in three clicks" Open Source (free) shopping carts with an easy-to-use backend Admin Control Panel that let's you change products, photos and prices without computer code. Arrange for competitively priced hosting that you control. A typical situation will cut thousands of dollars from annual expenses and send them to the bottom line as profit. You'll also be able to manage your own promotion and search engine results.
From Ebony London I would suggest you reduce your inventory and rent a much smaller space. The smaller space will make your remaining inventory appear full. There is a lot of competition in the floral industry. With my business I provide wedding and wedding reception decorating services. I have establish business relationships with the owners of companies who also provided services and products for weddings and wedding receptions. This includes a "mom and pop" florist, a wedding reception DJ, a chair cover provider, a wedding arch supplier and bridal shops as well. Spend time networking!!!
From Charly Caldwell, Fort Myers, Florida One of the things we did, is offered interest free payment plans for clients. We actually created a new option in our contracts called the "Budget Plan".
It has helped people get started with a web site, who otherwise couldn't, AND kept our bottom line looking good as well.
In our industry, Web Development & Marketing, payment plans are very hard to find.
Charly Caldwell II
http://www.ISGFL.com
From Ron, Chicago Illinois I grew my business over the past 3 years by forming partnerships with already established companies. This allowed me to offer more value to our members and a bigger bang for their buck. I refer to this is partnered recession marketing. We also do a lot of FREE events and have picked up sponsors along the way. In addition, I spend a lot of time working on product and service logistics, processes, our demographics, and fine tuning our primary, secondary and alternative target markets. What I mean is that we have a higher end vertical turnkey-solution, a valued added solution, and an entry point solution. By creating such niche solution in our industry and partnering up with larger companies, we gained immediate credibility, and profitability. The bottom line is that it appears that the flower shop needs to create new ways of doing business, go after new markets\expand, and learn how to create value from everyday products while cutting costs.
From Mary Donating the unsellable flowers to a shelter, hospital, hospice, etc. is a terrific idea, particularly if those flowers are accompanied by a card from your shop. It's great publicity for you plus will bring a smile to someone's face.
From William callam,Arcadia, CA Why could not break-even on the CGS, and donate losses on unsold inventory? I am not a CPA, so my question may be obvious to some of you,
From Brandon Tucson, AZ My online jewelry business transitioned from having product on site to a dropship from the jeweler. Although dropshipping is not a new concept, for many business, it could transition many from negative to positive returns. For my wedding, the florist did just that.
From Mike Atlanta GA there are some really great comments here… I am wondering what kind of an online presense do you have? Are you using all of the free marketing that you could take advantage of which could help to increase business?
For example – let's say you have 3 dozen roses that are about to be thrown out tomorrow… if you had a solid web presense with such sites as Facebook or Twitter, then you could send out a blast that states – we have 3 – 1 dozen bundles of roses ready to go out – x cost today only. First come first get…
If you have more takers than you have flowers at discount, perhaps give them a "discounted" rate on fresher flowers…
There are a ton of great ideas out here…
Keep Saving!
Mike
Michael K Holland
CEO
ChasingSavings.com
From Jon, Milwaukee, WI You can't write them off as donation. You've already expensed(deducted) them as cost of goods sold.
From Patti, Los Angeles, California You could save money by adding more non perishable items to your bouquets like ornaments, decorative paper fans, leis and a wide variety of items found in party stores.
You could also offer package deals to people ordering multiple bouquets throughout the year. A businessman could pre-order 6 bouquets at one time at a 10% savings, which could save him money and would allow you rather than he to keep track of when each would be sent – 1 for secretary's birthday in January, 1 for wife for Valetine's day, 1 for mother's birthday in April, 3 for business associates' birthdays in March, September and October.
You could also advertise "end of the day" flowers at a discount. After all, if you're going to have to throw them away anyway, why not sell them for something like 60% and make something on them?
From Andrew, Melboune, Florida Interesting, I'm a wedding videographer and in my area of Central Florida weddings and wedding spending is down over 40% from 2007 figures. I belong to well established proffesional bridal associations and the Florist I know are not getting nearly the wedding business the use.
From Given Campbell, Florida I would donate all leftover flowers to local women's shelters, Ronald McDonald Houses Pediatric cancer wards or Hospice, with the theory being that you can write off the flowers you can't sell. Even though you've spent the money you can at least recoup your cost the following year and brighten someone's day.
From Gavin Tonks Johannesburg Gauteng I had a similar problem and used to recycle my flowers as pot pourie
I found a way to chop the flowers and stems into a mix and learnt the scents and techniques to make it last and then made beautiful linen draw posies and gifts, providing an income and profit much higher than the flowers although the client saw a nice gift that was inexpensive
I also learnt drying the flowers and presented beautiful dried options as well
From I .Jayamaha – Sri Lanka When you are at a risk, You start thinking of all the avenues to retain in the business. There is no other time than now to think differently and work differently. Why not start Buy 1 & get 1 free offer.
As some one pointed out people will come with their friends, relatives – Finaly Word of Mounth will work for you.
From Martin B, Burnsville, NC Make contact with local B&B's, Inn's and Restaurants. Perhaps contract with them for flowers they can use for display on tables and common areas at a low price by using up your end-of-week stock. Get them to put a link on their websites so that customers planning romantic weekends can pre-order from you flowers delivered to the guest's room. Get agreement to put discount coupons in guest rooms (We do this at our B&B).
Morbid as it may be, we (at our B&B) often get asked about local flower shops by people coming in to town to attend funerals (you should have good contact with your local funeral companies).
From Dr Bill Toth, Houston TX Dr Bill Toth says;
You say you "changed" your business to designing weddings and events. Are you crystal clear as to who your ideal client would be? Where would you find that person or company?
Traditional advertising and even web advertising seem to be less effective these days…leaving the oldest and most effective form of advertising…word of mouth.
One strategy you might employ would be to re-coonect with prior customers and ask for referrals.
Live with Intention
Dr Bill Toth
http://www.CreateYourFate.com
From Skandelous, San Francisco, CA Have you considered any of the following:
- Online Sales?
- Marketing to high schools for events like prom and homecoming?
- Turning the dried flowers into dry flower arrangements?
- Selling the dry flowers as potpourri?
Buyers are not broke. Millions of Americans still have good paying jobs, but hey are just looking for more value and bang for their buck. Get creative. Gone are the days when people get a $50k loan and THROW UP a business. Unfortunately, most of thees businesses fail because they should have never been in business to begin with. I have automated and helped small businesses for over 30 years, and have seen it all.