Flora-Stats Annual Report 1994
American Floral Endowment
CONSUMER FLORAL PURCHASES TRACKING STUDY
1994 Flora-Stats Annual Report
Shifting Consumer Purchase Habits
The consumer market for floral and plant products thus far into 1994 (January through May) is enjoying some growth in consumer demand. The number of purchase transactions has advanced 3% over the same period last year, and higher spending per transaction has resulted in a stronger 7% increase in consumer dollar spending.
Yet, not all those retailing these products are experiencing this same trend. Some types of retailers are enjoying stronger growth and are capturing more of the market, others are not keeping pace with the overall trend and are losing share. At first blush, this pattern might suggest that those retail outlet types gaining share are doing so at the expense of those losing. If, in fact, they are all selling to the same type of customer, customer trading may be part of what is behind the story.
On the other hand, if those gaining share are attracting different types of households, competition between groups of retail outlets may be less direct than assumed and trends may instead be driven by market expansion in some cases (attracting new/different customers) and contraction (buying at certain types of places less than in the past) in others.
To gain insight into this issue, the demographic profile of customers was reviewed for each major class of retailer to see how similar or dissimilar they may be. For the sake of this discussion, the measure used to compare the profile across outlets will be a volume index, based on the number of transactions made per available household in each demographic cell. Groups with above average indices (above average buying rate) are those where a given outlet type has above average attraction or, said another way, has above average volume dependence.
To begin with, our information shows that both Florist Shops and Supermarkets lost share standing in the overall market during the January through May, 1994 period. Florist Shops were down 0.7 percentage points and Supermarkets lost a larger 2.1 percentage points. When combined, these outlets account for a full one third of all consumer floral/plant purchase transactions.
Florist Shops alone account for 14% of the purchases made but a very sizable 35% of all dollars consumer spent for floral products. In terms of customer appeal, Florist Shops attract an upscale customer. Households in 1993 with the highest propensity to purchase at these places have incomes of $50,000 or more, are 40-64 years old, higher educated with professional occupations. The female head works full or at least part time.
Supermarkets support a larger 21% of the purchase transactions, but because of their lower expenditure per transaction, they contribute just 13% of all consumer dollars spent. The types of customers they attract are very similar to those who purchase floral products at Florist Shops. They include households with incomes of $50,000 or more, middle aged, College graduates with professional careers.
Garden Centers are also key retailers in this industry. However, thus far into 1994, they are keeping pace with the market's performance overall. They are neither leading the trend nor lagging it. Their particular appeal is also with consumers who have incomes of $50,000+, a higher education with a professional career and who are aged 40 and older. The female head also works part-time.
The market growth noted earlier is being driven by other retailers. Discount Chain stores gained the most (+1.8 sharepoints), Department Stores picked up 1.2 share points and Home Improvement/Hardware Stores gained 0.9 share points.
Discount Chain Stores, with 15% of the transactions (8% of the dollars), appeal to a more diversified customer. A large percentage of their volume comes from middle income households who purchase at these places with some frequency. Households with incomes of $30,000 - 74,999 make up 55% of Discount Chain Store volume. Also demonstrating the broad appeal of Discount Chains is that no skew is seen in the attraction by Education of Household Head. Each group purchases at the level equal to their importance in the population. Further, both Professional and Blue Collar workers are likely to shop here. These households tend to be between 40 and 64 years old.
Department Stores attract a somewhat less educated, blue collar household where the female head works full-time. These households skew somewhat older, 40+, especially the 55 - 64 year old group. Department Stores captured about 5% of all transactions but, due to their lower spending per transaction, only about 3% of the total dollars.
Home Improvement/Hardware Stores account for 6% of the purchases made, and 6% of the dollars spent in 1993. The target Home Improvement/Hardware Store customer tends to have an income greater than $50,000 and have at least some college education. They are dual income families, with the female head more likely to work part-time rather than full-time. This profile is more similar to Florist Shops and Super markets than noted for Discount Chain and Department Stores.
Summary
A more definitive answer to the question of retail outlet shifting may be had with a special analysis following each specific customer’s behav ior change over time. However, using the information at hand, we would conclude that the outlet types driving most of the growth in the market this year are more likely expanding the market - reaching a somewhat different customer than those supporting the Florist Shops and Supermarkets, where shares have slipped. It does not seem that the gains made by Discount Chain and Department Stores particularly are simply a matter of customers shifting where they make their purchases. Some of this may be occurring, but in addition, a broader base of households are now purchasing floral products and plants - and they’re buying them in the less traditional Discount / Department / Home Improvement retail stores.
