SIC 5992
FLORISTS



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, Law 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.

NAICS Code(s)

453110 (Florists)

Industry Snapshot

According to the American Floral Endowment Consumer Tracking Study, conducted between June 1998 and May 1999, projected 1999 retail sales of floriculture items would reach $15 billion. Retail florist shops still dominated the industry, numbering 27,341 and averaging annual sales of $209,182 per shop. However, these traditional outlets faced increasing competition from floral departments in supermarkets, which numbered 23,000 at the time of the study, and 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; Florida came in a distant second, growing a mere 7 percent of cut flowers.

The traditional image of men buying women cut flowers for a date does not correlate with consumer sales trends tracked by the study, which tracked only personal consumer purchases, not business purchases. The study revealed that cut flower sales accounted for only 28 percent of florists' business; outdoor bedding and garden plants accounted for almost half (49 percent) of their sales; and flowering or green houseplants accounted for almost a quarter (23 percent) of sales. Also, women predominantly purchased flowers. Women made 81 percent of overall floral sales, though men caught up some in cut flower sales with one third of purchases. What's more, individuals purchased flowers for themselves a majority (64 percent) of the time, leaving only 36 percent of purchases as gifts. Cut flower sales turned this statistic on its head, though, with only 31 percent of purchases for the self, compared with 69 percent as gifts. Finally, calendar events accounted for only 15 percent of overall floral sales; Mother's Day accounted for 23 percent and Valentine's Day for 16 percent of these sales. The majority of floral sales (85 percent) marked no calendar occasion; only 4 percent of these purchases commemorated love or an anniversary, with exactly half of these sales marking no special occasion and 21 percent of these purchases for home decoration.

Organization and Structure

Florists either design arrangements per customer request or sell and design arrangements according to standard designs. 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. 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.

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 20,000 florists in the United States and 52,000 florists in 140 countries worldwide, reported 20 million wire orders in 1992. FTD is the only member-owned floral cooperative of its kind. 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 11 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 various florists, who in turn used various wire services like Florist Transworld Delivery, Teleflora, and AFS to send the flowers. Wire services offering memberships give 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. Other factors that helped this industry included telephones and credit cards. These allowed direct contact between retailers and growers —unlike the old days of telegrams —and provided a better way to pay, thereby protecting both parties even though they did not know each other.

While technology made it easier for florists to communicate, it also brought in heavy competition. Traditional florists lost market share because of the proliferation of "nonflorists"—supermarkets, discount retailers, department stores, and nurseries—selling the same products. According to Flowers magazine, in 1992 traditional florists held 56 percent of the market compared to nonflorists who held 44 percent.

Background and Development

The Society of American Florists formed in 1884 to represent retail florists and all segments of the industry. Unfortunately, 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, 15 florists banded 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 reports overall retail sales of floral items were slowing after unprecedented growth between 1982 and 1989. Between 1989 and 1990, growth slowed to less than $500 million or 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 represents the first decline in per capital sales in 17 years.

Individual floral shop sales also 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. U.S. retail sales of floral products remained steady at about $13 billion from 1990 to 1993, in part due to a sluggish worldwide economy. In the mid 1990s, the United States had 26,757 florists, which employed about 120,000 workers. In 1996, nonsupervisory workers earned about $8.76 per hour.

Roses remain the number one selling flower and were grown domestically and imported from 26 countries. Per capita purchases of roses were 4.1 stems per person in 1992, nearly double the amount purchased between 1975 to 1980. Sixty-five percent of all roses sold were red, and the majority, some 64 million, were sold around Valentine's Day. An increase in corporate gift giving was also helping 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.

Current Conditions

Growth continued to be divided among retail outlets and traditional florists. Supermarkets not only continued to sell flowers, but many were expanding their floral departments. According to a survey conducted by Super-market News, 9 percent of the surveyed operators planned to expand their floral departments and over 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. In the late 1990s, television commercials promoting gifts of flowers were becoming very common. The Internet played a substantial role in setting a new trend at the turn of the century. Many traditional florists were resorting to the Internet to sell flowers, and others only sold flowers via Web sites.

Industry Leaders

As the largest flowers-by-wire cooperative, FTD was the industry leader in the early 1990s. With its recognizable winged Mercury—messenger of the gods—logo in a yellow and black circle, FTD was estimated to have 60 to 70 percent of the flowers-by-wire market. 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 pay 7 percent of the value of their transactions in return for advertising support from FTD.

In May 1999 FTD announced increased sales for the third quarter (as well as for the first nine months) of its fiscal year. Third quarter net sales increased by $10.2 million or 21.1 percent, to $58.5 million from $48.3 million in the third quarter of fiscal 1998. Net sales for the first nine months of fiscal 1999 increased by $22.7 million or 16.8 percent, to $157.6 million from $134.9 million for the first nine months of fiscal 1998. The explosion in e-commerce pushed sales up dramatically, as FTD not only hosted its own World Wide Web site, but also inked an agreement with CompuServe in July 1998 making FTD the exclusive floral sales organization on this computer network.

The March 1999 acquisition of Florafax International, Inc., by Gerald Stevens, Inc., exemplified the diversity of the floral industry in the Late 1990s. Gerald Stevens was already a geographically diverse company, with 94 stores in 13 U.S. markets: 62 free-standing retail shops and 32 supermarket locations. Florafax represented the fourth-largest wire service in the floral industry, serving all 50 states by 5,300 member-florists. Gerald Stevens acquired the Florafax subsidiary National Flora, a company that generated more than 500,000 floral-product orders in 1998, increasing its net revenues by 24 percent over 1997, to $13 million. At the same time, Gerald Stevens acquired Internet Services, LP, parent of the oldest e-commerce company in the industry, FlowerLink, which experienced order increases of 60 percent for the first six weeks of 1999 as compared to the same six-week period in 1998.

Clearly, the Internet represented the biggest opportunity for growth in the floral industry, just as e-commerce was bolstering most every other business segment. 1-800-FLOWERS.com announced impressive growth in its first quarter of 2000, with online revenues increasing by 88.1 percent to $11.8 million and telephonic revenues increasing 9.5 percent to $37.6 million; total revenue climbed 22.1 percent to a record $58.1 million. What's more impressive is the fact that these increases occurred in the slowest quarter of the fiscal year for the floral industry, the summer, with fewer calendar events prompting consumers to purchase flowers.

America and the World

Foreign countries are 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. In the early 1990s, imports of Latin-American roses accounted for 40 percent of the roses sold in the United States, compared to 2 percent sold in 1971. American rose specialists protest that this will only devalue the rose and have launched campaigns emphasizing the rose as a strictly American product. More than $325 million worth of fresh cut flowers had been imported from overseas producers at the end of 1991, compared with less than $5 million in 1971.

Further Reading

1-800-FLOWERS.com. "1-800-FLOWERS.com Reports On-line Revenues Rise 88 percent in Fiscal 2000 First Quarter." Available from http://www.1800flowers.com .

Cavin, Bram. How to Run a Successful Florist & Plant Store. New York: David McKay Company, 1977.

Florafax International, Inc. "Florafax Announces Acquisition by Gerald Stevens," December 1999. Available from http://www.florafax.com/Floranews.htm .

"The Floral Industry and How it Works." Jindra Floral Design, 1997.

Society of American Florists. "Floral Stats," December 1999. Available from http://www.aboutflowers.com/floralstats.html .

U.S. Department of Labor. Bureau of Labor Statistics. Employment, Hours, and Earnings, United States, 1988-96. Washington, D.C.: GPO, 1996.



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