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State of the industry: Q&A with SAF’s CEO Kate Penn

I recently had the pleasure of chatting on the phone with Kate Penn, chief executive officer at the Society of American Florists in Alexandria, VA, about some current floral industry topics. She has her finger firmly on the pulse of the flower business and the results of that conversation are as follows.

The Produce News: How did Amazon’s entry into the cut flower/plant market affect Valentine’s Day retailers’ flower sales?

KATE-PENNKate Penn, chief executive officer at the Society of American Florists.Kate Penn: Between SAF’s post-holiday survey, as well as feedback from SAF’s Retailers Council, it seems that Valentine’s Day was even more last-minute of a holiday than it has been in the past — and that’s saying a lot — and many retailers attribute that to the “Amazon Effect.” Many are concerned that the compressed timeline will only intensify.

In a sense, Amazon could be training businesses to think and be more last-minute, as many retailers shifted their product availability well in advance of Valentine’s Day and slimmed down their inventory to offer Valentine’s Day arrangements by Valentine’s Day.

Some retailers had success with early order and delivery incentives, but the bulk of what we’ve heard is that orders came in late, and people still wanted delivery to arrive the day of. We have also heard, interestingly enough, that the day after Valentine’s Day is becoming busier.

But even beyond Valentine’s Day, the SAF Retail Council agrees that the “Amazon Effect” will be felt year-round. “Free” and “last minute” are becoming the new normal.

Amazon is also getting involved in the same-day delivery space by allowing local retailers to be listed as a local vendor on their site.

TPN: What are your thoughts about Women’s Day and its growth as a floral holiday? Is it consistent throughout the country or more of a regional event?

KP: From what we’ve observed this year in particular, it is gaining traction in the U.S. more than ever from an awareness standpoint — we think this has been bolstered in a big way by #metoo and #timesup movements. How that translated into retail sales for 2018, it’s too early to tell — we’ll survey our members about it after Mother’s Day. Even my 16-year-old daughter came home from school that day – I had not mentioned the holiday that morning — and said, “Hey Mom, where are my Women’s Day flowers?” I pointed to the vase of flowers that had been on the table for the last few days (laughs).

Anecdotally, we know the holiday is an easy sell in markets with large Eastern European populations, where there’s an appreciation for the holiday, but it takes a bigger push in markets where that’s not the case. Retailers who take advantage of it — promoting specials/discounts, partnering with women’s organizations and cause marketing — will have sales and increase their visibility/customer loyalty by recognizing what it represents. If you search ‘Women’s Day’ on safnow.org, you’ll get links to some of those stories.

TPN: Are there any other industry issues of which our readers should be aware?

 KP: All segments report strong sales overall for the year so far, after a pretty good 2017 – and there’s a healthy amount of optimism for 2018. Read about it at www.safnow.org.

In terms of product trends, the interest in green plants continues to grow — many see it as the key to capturing the millennial market.

As far as challenges, transportation was a big topic at SAF’s Wholesale Council. The delays in transportation continue to put a tremendous amount of stress on all departments. 

The shipping window for holidays has become very small and everyone is trying to get their flowers out at the same time, causing a tremendous bottleneck at the airport.

In addition, the rising cost of airfreight is increasing at an alarming rate, while the cost of the product has pretty much remained the same. 

There are significant changes in the trucking industry as well. The new ELOGS [Electronic Logging Device] regulation has played a major role in disrupting this market, by requiring more drivers to be hired in a market that already has a major driver shortfall.

What’s more alarming is the new regulation has not really taken effect yet. A few weeks before the Dec.18 regulation was to take effect, the government decided to only issue warnings on the 18th and they moved the new enforcement date to April 1, 2018. Currently, there are many carriers — but mostly small carriers — who still have not made the move to ELOGS. 

To learn more about SAF, visit safnow.org.