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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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