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A Happy Mother's Day for America's Independent Florists?

With a Sales Dip Expected for the Year, Mom-and-Pop Florists Are Losing Market Share to Big Retailers, Says Business Information Analysts IBISWorld

NEW YORK, May 12 /PRNewswire/ -- Sunday is Mother's Day, the time of year when children young and old say thanks for the compassion, nurturing and relentless hard work that goes with being a mom. And in millions of households across America, the preferred gift for mom again this year will be a bouquet of flowers.

Will a surge of flower power be a boost to the nation's independent florists? Yes, but probably not enough to counteract a predicted small sales dip for 2006, or to reverse the momentum away from the mom-and-pop stores that still dominate the business. Just as in so much of modern retailing, the little guy is being squeezed by big retailers.

To be sure, Mother's Day is an important annual milestone for the $7.7 billion (2005 sales) U.S. retail floral industry. About one-fifth of the year's holiday retail flower sales occur over the days leading up to Mother's Day.

The industry remains, for now, a decidedly decentralized business. According to a recent IBISWorld Report (www.ibisworld.com/industry/definition.asp?industry_id=1096), there are some 47,000 independent florists in the U.S., employing about 136,000 workers. The industry today has a low level of concentration, with the top four enterprises accounting for less than 2% of overall retail sales.

But as is so often true, there are emerging trends behind today's numbers that could mean a very different business environment on the horizon.

"Larger economic factors have taken a toll on the nation's floral business," says IBISWorld's Richard Buczynski, Ph.D. "Over the past few decades, the U.S. fresh-cut flower growing business has been negatively affected by more liberal trade policies, particularly those with South American countries. The market share of domestic flower growers dropped from 96% in 1971 to an estimated 12% at present today."

At the same time, Buczynski says, anecdotal evidence suggests that traditional florists have been losing market share to supermarkets and box- store mass merchandisers, as well as to online flower-ordering services such as 1-800-FLOWERS.com, Proflowers.com, FTD.com and others.

"We see growing sales by large retailers and the online services," Buczynski notes. "In a relatively flat market, that can only come out of the pockets of the Main Street retailer."

And the trend will continue.

"It is the big retailers which are most able to benefit from the cross- border supply chain," says Buczynski. "In our increasingly price-driven retail culture, it is not surprising that the independents are losing share - they simply can't get their costs down enough."

What's more, the remainder of this year does not look particularly robust for independent florists either.

"Flower purchases represent discretionary spending and are determined by disposable income and consumer sentiment," Buczynski says. "We see the

prospects of high fuel costs and rising interest rates potentially impacting much of the retail sector, including flowers. There is a palpable downside."

IBISWorld expects floral sales will drop by 2 to 3% in 2006.

Against that backdrop, it is not surprising to see independent florists moving fast to expand their product range to include non-floral items and other related merchandise, such as chocolates, teddy bears, balloons, gift cards and, in some states, champagne.

"If there is one thing that we have seen again and again across any number of the industries we track," said Buczynski, "it is that business people are resilient. They can deal with change, and that holds true for the nation's independent florists. Mother's Day may always mean flowers for mom, but there's change ahead for the nation's independent florists."


     MEDIA CONTACT
     John Buckman
     Buckman Communications
     for IBISWorld
     412.381.2900
     jbuckman@buckman.biz

	

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