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Floral Research Reveals What Retailers Need to Know Now

WGB presents exclusive IRI insights highlighting budding opportunities to accelerate the category’s role as a key fresh driver
Photograph: Shutterstock

The use of syndicated sales performance data to monitor and strategically manage consumer packaged goods in retail has been around for decades and has been used since the early 2000s for fresh, non-UPC departments. However, while the insights industry is blossoming in all other store aisles, the floral department has remained an overrun forest rather than a carefully cultivated garden. With no easily derived national, regional or competitive market data, floral directors and suppliers have traditionally been left to use shipment data, macro-level CPG and economic trends and gut instinct to determine assortments, set price points and drive repeat traffic to flowers, plants and giftware.

To bridge the gap, Winsight Grocery Business presents Chicago-based IRI’s fresh-picked floral department sales tracking insights for grocery, mass and club stores that unlocks deep detail and performance metrics. Insights from this data clearly illustrate that the floral department has been a key part of the overall fresh boom happening at retail, where department sales topped $4.7 billion during the past year and have spiked more than $560 million since 2015.

Tracking Fluctuating Sales in Floral

Because the floral department is so critical to the prosperity of grocery stores, it is equally critical to understand what is driving erratic trends across floral categories. For instance, outdoor plants, which account for 19% of total department sales, saw a phenomenal 10% leap in sales during the past year on the heels of stark declines the year prior. Similarly, bouquets accounted for 25% of department dollar sales during the past three-year period, but yearly trends show sharp fluctuations.

Cut Flowers Represent Over 50% of National Sales

The floral department increased sales 5.5% as bouquets, outdoor plants and roses drove sales up and took share from the catch-all “all other” group.

Total U.S. multioutlet data for 52 weeks ending Aug. 12, 2018. % = Share of total floral sales, dollar sales change vs. year ago

Department growth leader outdoor plants is showing strong momentum, with particularly strong growth in blooming outdoor plants (up 12%), bushes (up 7.1%) and vegetable plants (up 6.6%). Smaller outdoor plant sectors such as greenery and herb outdoor plants also posted impressive 11% growth rates. Ensuring that assortment reflects growth pockets like these will allow retailers to stay relevant, and therefore protect against competitive encroachment and grow a growing area of the business.

Outdoor Plants Sales Growth Driven by Blooming Plants

Geography: Total U.S. multioutlet Time: Rolling 52 weeks ending Aug. 12, 2018

Identifying Budding Opportunities

Important floral holidays offer major growth opportunities for retailers that key in on hot trends in assortment and pricing. For instance, the first two weeks of May accounted for 15% of annual department sales, which were boosted by Mother’s Day and Memorial Day. The outdoor-plants sector also saw a huge spike during these weeks as new varieties of spring plants were introduced to stores.

With insights into floral trends across the country, retailers can pinpoint opportunities to extend spring sales spikes. For instance, retailers can develop programs that educate consumers on other outdoor and potted plants that can bloom or renew a garden during nonpeak periods. Additionally, retailers can look to other regions to “borrow” ideas on hot floral attributes, including fruit trees, specific blooms such as alstroemeria and bouquet sizes. With weekly store-level sales data, an assortment and promotional strategy can be set throughout the year to ensure that national and regional retailers are receiving assortment and promotional programs that reflect an intimate understanding of weather and shopper demand.

Total U.S. Multioutlet Dollar Sales Trends

There’s opportunity to extend the season beyond specific holidays, especially in outdoor plants and in the midsummer and late fall periods.

By month ending August 2018

Pricing and Promotion

Creating, executing and measuring effective pricing and promotion has also been very much a mystery to floral marketers. New insights, however, reveal that average price per unit is up across all floral categories, with the department averaging an overall increase of 3.2%, higher than the total fresh average of 2.5%. Floral price per unit increases were led by a 5% jump in arrangements and 4.2% price increase in outdoor plants.

In 2018, the floral department sold an average of 15.9% of all units sold on price discount promotion, compared to 32.8% of the CPG industry as a whole. Interestingly, the strongest sales growth category, outdoor plants, saw the sharpest decline of share of items sold on price promotion, with 2.6 fewer percentage points of unit sales sold at discounted prices compared to the prior year. This underscores the importance and impact of getting everyday pricing right and may also provide guidance for the development of future floral promotional strategies.

Sales Growth Trends by Region

Dollar sales, percent change from a year ago. Total U.S. multioutlet: +4.5%

Time: 52 weeks ending Aug. 12, 2018 Product: DEPT-FLORAL

Sales Velocity Trends by Region

Dollars per $MM ACV, current. Total U.S. multioutlet: $826 per $MM ACV

Time: 52 weeks ending Aug. 12, 2018 Product: DEPT-FLORAL

The floral department is a critical contributor to overall CPG retail sales and offers retailers critical opportunities to engage with shoppers on an emotional, tactile and multisensory level. While retailers have been relegated to generalizations and suppositions in the past, data, technology and analytics have evolved to provide broad, deep insights into the true trends and growth opportunities this sector has to offer. Embracing these capabilities allows retailers to stay one step ahead.

Jonna Parker is principal of IRI’s Fresh Center of Excellence.

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