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 Feature Story
The
low-price
question
by Morgan Chilson
Does the focus on cost end up hurting flowers’ value? Experts
weigh in.
They are questions that can raise philosophical tempers and poke
at nervous stomachs. Are flowers becoming too much of a
commodity and losing their sense of “specialness”? Does the
focus on price cause quality to be neglected?
Resounding opinions aren’t difficult to find, but the truth is,
there are no definitive answers. They are subjective and
dependent upon myriad variables.
THE FOCUS ON PRICE
“The product has become somewhat commoditized,” says Stan Pohmer,
CEO of Pohmer Consulting Group and executive director of the
Flower Promotion Organization. “That just means that something
becomes very mainstream and very available, and, therefore, the
price becomes more the focus than the product itself.”
The challenge lies in determining whether such a situation is
beneficial or detrimental to mass-market floral retailers. In
many instances, floral business leaders are pushing to change
the perception of flowers in the United States so the selling
atmosphere is more like Europe, where consumers purchase flowers
routinely, which would give them more of a commodity concept.
“In Europe, flowers are very much more a part of everyday
lifestyle,” Mr. Pohmer says. “You always have flowers. The
profitability on flowers there is actually less than it is here
because it has become ... like a loaf of bread. Here, it’s the
complete opposite.”
In the United States, flowers still are purchased primarily for
special occasions and as gifts, he says. Floral mass
merchandisers have centered on trying to change that concept, to
draw consumers in to make floral purchases on a more regular
basis and for themselves. Unfortunately, in Mr. Pohmer’s
opinion, supermarkets have tried to do this by focusing on the
price of flowers in their supercompetitive market.
“They are focused more on price than on the benefits of
flowers,” he explains. “If you sell your product based on the
merit of price alone, you put yourself at the mercy of your
dumbest competitor. If the guy down the street undercuts you by
a nickel, the only way you can compete is to get under him.
That’s the situation many supermarkets are in right now.”
EDUCATING CONSUMERS
Mr. Pohmer recommends that supermarkets pull their floral
products out of the “commodity” range by adding value to the
arrangements, enhancing them in some way. And he also would like
to see the buying public educated about flowers and
understanding the emotion imparted with a floral purchase.
“If we can demonstrate to the consumer some of the benefits of
flowers, it takes the edge off of price,” Mr. Pohmer says.
“Price doesn’t become the only reason for selling or buying. If
I know that when I get these flowers home and put them on my
table, I’m going to feel better, my outlook on life is going to
be better, that makes a difference.”
A GROWER’S APPROACH
Peter Ullrich, owner of Esmeralda Farms, a Miami, Fla.-based cut
flower grower, is banking a new line of products on the idea
that price and high stem counts aren’t primary considerations to
consumers. Instead, he believes shoppers will respond to
bouquets that have more volume and quality.
His company has just started offering bouquets that have fewer
stems than the popular 20-stem supermarket bouquets. But those
stems are special, super-grade quality.
“We’ve run volume comparisons, and the super-grade aster versus
the fancy-grade aster is about three times the volume,” Mr.
Ullrich says. “The price of the super grade is not three times
the price of the fancy. So what we are doing now, in order to
give real value, is selling volume bouquets. The volume of each
stem will be double. The consumers will get bigger bunches for
less money, but they will also get fewer stems.”
For Mr. Ullrich, the concept grew from his frustration at the
market’s focus on price. “Nobody looks anymore at the total
volume of the bunch, and that’s where I believe business has
gone wrong,” he says. “I think this will be something people
will be pursuing, because at the end, have you ever counted the
stems when you bought something?”
PUTTING QUALITY FIRST
For Ben Pauley, FTD Group, Inc. vice president of mass markets,
retailers may not do well if they focus only on keeping those
lower prices. “Retailers are always more successful if quality
is the first benchmark,” he says. “If you start there and then
negotiate the best cost, your store and your customers are going
to have a better experience and going to be ultimately more
satisfied.”
Mr. Pauley says he believes consumer preferences cover a wide
range, and some look first at the bulk or total size of the
package while others look for type of flower and design as their
measurement of value.
“There’s certainly a market for upscale flowers like calla
lilies and orchids, bouquets with fewer stems but a more premium
look,” he says. “But also, there are times of the year, seasons
of the year, when we can promote lots of stems of good quality,
what we would call ‘everyday flowers,’ and make the customers
just as happy because they’re buying a different product.”
Chrysanthemums, for instance, have become such a popular fall
flower that they certainly could be considered something of a
commodity.
“But the better growers have concentrated on getting the right
varieties and the right colors to create a more attractive
package for the consumers,” Mr. Pauley says. “You really don’t
have to draw a line and say flowers have become a commodity and
that’s bad, or only upscale flowers are perceived as quality.
There’s a way to have both packages and make different types of
customers happy.”
CHANGING MINDS
Mr. Ullrich acknowledges that there may be some challenge in
introducing his new line to supermarkets. But he doesn’t think
that challenge will rest with consumers, who he believes will
immediately see the difference in his bigger volume, bigger stem
bouquets.
“It will be difficult to implement in the beginning,” he says.
“Supermarkets are creatures of habit. Years ago, stem count was
not the issue; it was bunches. Then it turned into stem count.
Because of price pressure, growers have been reducing quality.
We have customers who do understand, and they’re going to be our
first customers.
“I’m tired of talking about pricing when pricing really is not
the issue,” Mr. Ullrich adds. “We want our customer to get the
best value, but the best value is not established by the
cheapest stem. But supermarket buyers relate to purchasing
measurable items, such as a box of oranges or a 24-count of
apples. If you order a stem, what stem are you getting?”
Mr. Ullrich is obviously frustrated with the trends toward
keeping prices down but stem counts high. And he’s adamant that
his new focus isn’t about getting supermarkets to pay more per
stem.
“We can use fewer stems, sell the customer the best product, not
the cheapest product, and give them an aesthetic value,” Mr.
Ullrich says.
WORDS OF ADVICE
No matter what a mass-market floral buyer may decide—high stem
count, bigger volume bouquets or somewhere in between—Mr. Pohmer
and Mr. Pauley both have firm advice on marketing the end
product.
“It’s selling the benefits of flowers rather than just selling
the flower themselves,” Mr. Pohmer says. “Take Valentine’s Day
as an example. In a supermarket or even a retail flower shop,
it’s a dozen long-stem red roses for ‘x’ amount of dollars.
There’s nothing that ties it into the emotion of giving flowers,
the impact on the recipient. Yet, you hear the jewelry people,
and all the competitive categories—lingerie, fragrances, the
hotel industry—selling emotion.
“Last Valentine’s Day, I was listening to a radio ad for, I
think, Hilton,” he continues. “They talked about a weekend
getaway and wine and roses and candlelight. They set a tone.
They’re selling rooms. They didn’t even mention a room. They
also didn’t mention a price.”
And from Mr. Pauley, practical advice before making any
inventory changes. “The retailers have to be very cognizant of
the demographics of their customer base,” he says. “In some
areas, consumers may respond more to a bulky bunch of flowers
that’s perceived as higher value. In other neighborhoods, where
the average income may be much higher, the consumers may respond
to a smaller stem count but higher perceived quality. Look at
your market.”
Morgan Chilson, formerly a business reporter and editor in the
newspaper industry, is now a freelance writer living in Topeka,
Kan.
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