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Friday, February 15, 2013

Internet wilts sales at flower shops

COLLEGE PARK, Md. – Online flower stores seized a larger portion of the market for bouquets of Valentine’s Day roses and other floral arrangements.

The growing dominance of large Web-based flower retailers like 1-800-Flowers.com and ProFlowers, combined with discounted “cash-and-carry” supermarket flowers, has contributed to eroding sales at flower shops. Revenues at U.S. flower shops have fallen 22 percent in the past decade, according to industry analyst IBISWorld, from $9.79 billion in 2003 to $7.62 billion in 2012. And more small flower shops go out of business every year. ...

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COLLEGE PARK, Md. – Online flower stores seized a larger portion of the market for bouquets of Valentine’s Day roses and other floral arrangements.

The growing dominance of large Web-based flower retailers like 1-800-Flowers.com and ProFlowers, combined with discounted “cash-and-carry” supermarket flowers, has contributed to eroding sales at flower shops. Revenues at U.S. flower shops have fallen 22 percent in the past decade, according to industry analyst IBISWorld, from $9.79 billion in 2003 to $7.62 billion in 2012. And more small flower shops go out of business every year.

“Online retailers have crushed the mom-and-pop florist,” said Tracy Callahan, president of Bethesda Florist in Bethesda, Md.

In the past five years, the number of local flower shops in the U.S. has declined from 41,496 in 2008 to 37,086 at the end of 2012, according to IBISWorld.

The decline of small flower shops at the hands of Internet retailers mirrors the decline of brick-and-mortar bookstores and record stores from competition like Amazon.com Inc. and Apple Inc.’s iTunes.

“We have certainly seen some attrition in the number of florists across the country,” said Jennifer Sparks, vice president of marketing for the Society of American Florists.

1-800-Flowers.com and other Web-based retailers have used advanced logistics to ship flowers directly to consumers. When an online order is placed, floral arrangements are shipped from wholesale nurseries or distributed from company-operated franchise stores.

In some ways, the Internet has made it easier for customers to connect to local flower shops. Flower “wire services” like FTD and Teleflora _ which allow customers to place phone orders that are filled by local flower shops _ existed long before the Internet. But those companies now have websites that make it easy for customers to order online.

But filling orders from FTD and Teleflora is not as lucrative for local florists as orders placed directly with the shop. FTD and Teleflora charge fees that cut into local flower shops’ profit margins.

If business is down for local florists, it’s hard to tell on Valentine’s Day, one of the biggest sales days of the year for independent retailers.

“On an average day we’ll do between 55 and 68 deliveries. We just made our 700th delivery for the day,” Callahan said Wednesday, Valentine’s Day eve. “We’re probably going to come close to 750-775, and we’ll hopefully equal that number” on Valentine’s Day

Similarly, Barbara Wood, owner of family-run Wood’s Flowers in College Park, Md., has had to quadruple the number of drivers to ensure all deliveries arrive on time for Valentine’s Day.

Retailers have also turned to Internet technology to adapt to an increasingly competitive environment. Callahan estimated that a quarter of his business now comes from purchases on his website. Customers can also use a mobile application to purchase flowers directly from his business.

Wood said local flower stores offer something customers cannot get from online retailers: an element of personalization and community.

“It helps to keep the community atmosphere and feeling in a neighborhood when you know you’re buying from somebody that actually lives somewhere in the vicinity,” she said. “It’s really important that people try to patronize local businesses.”