In the retail flower market there is a large number of small businesses- stores, plant nurseries, and other businesses. Most independent stores are active in a relatively limited geographical area.
The industry is characterized by high seasonality- high seasons are usually holiday seasons (September-October and March-April). High fluctuation is also reflected in weekly activity level- approximately 40% of weekly sales occur towards the weekend (Thursday-Friday).
Some stores are associated with a chain: ZER4U- and some other stores are also associated with additional stores in Israel and abroad in order to expand geographical coverage.
In recent years, online flower stores have been established, allowing for orders and delivery services via the internet.
Customers: Defining the Target Market and Its Size, Market Segmenting
The target market is defined as the general population, and the business sector.
Private customers purchase small amounts of flowers at irregular intervals, while business customers (hotels, restaurants, and offices) purchase flowers at larger, more regular quantities, both for events and decoration.
The private customer sector can be segmented according to a number of parameters:
- Income level.
- Geographical vicinity- flower stores usually serve customers in a defined radius.
- Regular customers (who purchase each Friday or holiday eve) vs. random/occasional customers.
Competition in the industry stems mainly from competitors located in the same geographical vicinity. Competition can be segmented as follows:
- Flower shop competition usually stems from stores with similar specialties. Therefore, a neighborhood store will not constitute competition for prestigious stores and vice-versa.
- Street vendors- a general term defining all temporary points of sale at large intersections, mall entrances, cemeteries, hospitals, etc. A survey has shown that 21% of people purchasing flowers tend to do so at these temporary points of sale.
- Plan nurseries- customer survey has shown that 11% of people purchasing flowers do so at plant nurseries. Plant nurseries are portrayed as having a large variety, fresh flowers, at a reasonable price. In areas with a large number of plant nurseries, they constitute an alternative and compete with flower stores.
- Independent flower weavers- operate without a retail sales location and constitute competition especially in the reception facility branch.
A store can purchase flowers in two primary manners:
- A vendor arrives at the business in a refrigerated vehicle a number of times each week. The storeowner chooses the flowers. Payment is conducted on a monthly basis
- Storeowner travels to the plant growing facility and chooses flowers. Unique flowers can be purchased this way, and there is no need to compromise on the inventory carried in the vendor's vehicle.
Average flower shops usually work with a small number of vendors simultaneously, utilizing both methods.
Plants and accessories- communication is usually conducted with regular vendors. A flower shop may also sell consigned accessories.
- High importance is credited to the store’s shop window design. As flowers are an aesthetic accessory, occasional customers are drawn to the store if display is attractive.
- Signs are effective mainly for stores that are not located in an easily accessible area.
- Home delivery- stores conducting deliveries to customer homes increase their service area. Occasionally regular customer or customers of reputable stores may place an order for a bouquet to be chosen and delivered by the store.
- Advertising in yellow pages and local print.
- Reputation- this is mainly important for stores of a medium specialty level or up, based mainly on a regular clientele. Reputation is a result of long-term investment in service, credibility, and quality throughout the year.
- Participation in an international flower chain such as Interflora allows customer to order flowers by credit card to be sent by any participating flower shop to and from international destinations.
- Cooperation with reception gardens, facilities, and hotels- as a sub-contractor for their events or as part of a package deal offered to their customers in exchange for commission.
- Expanding the product basket by selling accessories that enable integration of flower wreaths or gifts that supplement the flowers (such as wine bottles).
- Monthly or periodic membership services for private (flowers are delivered to the customer’s home each Friday) or business (flowers on employee or customer birthdays, etc. according to a prearranged list).
- Distribution of flyers to customer mailboxes.
- Regional and inter-regional deliveries.
Factors Affecting Success:
Reputation and location are central to the attainment of new customers. In order to retain reputation, only high quality service and products should be offered. Professional knowledge, courtesy, delivery service, wide selection, etc.
Manager- usually store owner. Manager should have professional knowledge and understanding of the subject.
Clerk/salesperson- no professional knowledge is necessary. This knowledge is usually attained with experience.
Wreathe maker- necessary in order to create the store’s professional reputation. In many cases, the storeowner is also the wreath maker.
Delivery person- may be a store employee or sub-contractor.
Equipment- sales and work counter, air conditioning, shelves, storage and display equipment, telephone, and fax. A refrigerator is an expensive piece of equipment, and is only found at some stores due to its high cost.
Vehicle- required for a store operating a delivery service or for conducting reception hall events.
Basic tools such as pruning shears.
Industry Revenue and Profitability
Live flowers: 48-53%
Artificial and dried flowers: 35-40%
When calculating revenue and profitability, depreciation should be taken into account. This depreciation is caused by broken flowers and the flower’s limited lifespan: In summer- two to seven days, and in winter- one to two weeks. Typical depreciation in the industry is 15%.
It is recommended to present the required investment structure and running cost of store management in order to estimate profitability.
Typical Terms of Payment
Customer sales are conducted by cash, check, or credit cards. Occasionally a business allows customers to pay using a postponed check or credit card installments.
Vendor payment terms are usually EOM+30 to EOM+60. (This year it has even been EOM+90)
Licenses and Certifications:
Local authority licensing is required.
Content and inventory insurance.
Third party insurance.
Employer’s liability insurance.
Loss of income insurance.
In addition to the above, an insurance agent should be consulted in regards to the need for additional insurance.
- Competition focuses mainly in the geographical vicinity; therefore, supply of flower shops in the area and potential relevant market in the area should be examined.
- It is recommended to utilize design services in order to emphasize flower and plant inventory.
- It is recommended to retain customer information: Names, addresses, important dates- with customer consent. An event reminder may be conducted using this information.
- Credibility and professionalism are determined mainly according to the salesperson's knowledge and ability to portray it to customers.
- Good customer service will draw more customers.
Deliveries and wreath making is another service that may draw customers to the business. As professional level is higher, clientele will grow.
t is recommended to utilize the aid of your local Business Development Center branch in establishing and operating the business.