Main Street florists battle against start-ups
This year Americans will spend $2.1 billion on flowers for Valentine's Day alone. But the battle for holiday-related spending is getting fiercer than ever as small business florists face increasing competition from e-commerce players and big box retailers.
While overall spending on flowers has remained stable, smaller florists have seen sales slide nearly 40 percent in the past few years to $5.9 billion in 2014 from $9.4 billion in 2006, according to IBISWorld, a global research firm. Large e-commerce players have been in the space for years, including FTD, 1-800-Flowers and ProFlowers. Now supermarkets and big retailers are getting in on the flower action, says James Chartier, an analyst at Monness, Crespi, Hardt & Co., a boutique equity research firm in New York City.
"Over the last few years, the entry and expansion of big box retailers like Wal-Mart (NYSE: WMT) and supermarkets has likely had a much bigger impact on smaller florists," said Chartier in an email to CNBC. "The shift of floral sales from florist shops to online is mostly complete so online florists are only growing at a slightly faster rate than the overall market."
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Caldwell Flowerland, a mom-and-pop florist in Caldwell, New Jersey, has been in business for 30 years, and has seen some sales taper off amid new competitors. But shop owner Frank Delli Santi says there's a silver lining.
"It took a little dip, but it also educated customers about where to come back to," says Delli Santi, adding his in-person service keeps customers coming back.
And the flower space continues to grow with more players. AngelList, which compiles start-up data, says there are 30 new flower businesses in the U.S. alone including BloomThat and UrbanStems, which delivers flowers on demand in select cities within hours, for around $35.
And this year Whole Foods (NASDAQ: WFM) is partnering with grocery delivery start-up InstaCart in 15 cities to deliver flowers on demand for $25, plus an delivery fee.
Despite the new players in the space, Delli Santi argues that his competition is missing one asset he has: a personal touch. For example, he hosts parties in his flower store to offer customers an in-person sense of his inventory.
"We try to keep an all-year-round price, as well as consistency and quality," he said.
