Flora-Stats Annual Report 1999
Consumer Demand for Floriculture–State of the Industry
The US economic boom has continued through the first half of 1999, despite some conflicting signals. Expansion (GDP) continues to grow at a moderate pace, though growth has slowed somewhat over the past several quarters. Unemployment is at the lowest level in decades, while the number of people losing jobs due to layoffs has increased. Inflation remains non-existent and wages are up; even blue-collar workers are benefiting from a lift in pay. The stock market has reached heights never dreamed of just a few years ago. As a result, consumers have more disposable income than ever before. Personal savings are at record lows. Consumer confidence remains very high, reaching peak levels in June.
Businesses often compare their own performance to the overall economy, hoping their growth exceeds the countryÕs gains overall or at least keeps pace with the economic trend.
For the twelve months ending August 1999, consumer spending for floricultural products exceeded that of a year ago, supported by a lift in the amount spent on each purchase. However, when looking at consumer interest Ñ which provides a more accurate reflection of the state of the industry the news was not as positive. Based on number of floral purchases, the floral industry did not keep pace with the overall economic trend during the Ô99 crop year. The number of floral purchases made by consumers slipped below that of a year ago. The demand fall-off traced especially to a cut back in how often consumers made a floral product purchase, accounting for two-thirds of the losses posted this crop year. At the same time, the industry has been struggling to retain its buyer base. After reaching additional buying households during the Ô97 crop year, the number of households that bought at least one floral product over a twelve-month period has consistently declined.
Consumers cut back on their purchases of floral products broadly, especially green plants. cut flowers, and dried products. The bedding/outdoor plant segment was the strongest category performer in Ô99. Buying maintained last yearÕs level while flowering plants followed closely behind.
Consistent with the past several crop years, Home Centers outpaced the overall demand trend for floral products in '99 The remaining major retail outlet types struggled this year. In particular, buying fell at Florist Shops and Discount Chains at a greater rate than the overall market. These outlets lost share standing in Ô99, and were responsible for one-fourth of the industryÕs losses during the crop year.
To gain insight into the key factors driving these trends, each product segment was reviewed based on the input from study respondents.
Green Plants
For the second consecutive year, consumers made fewer green plant purchases in 1999 than they did the year before. An eroding customer base contributed to the segmentÕs downturn. At the same time, remaining households cut back on the frequency with which they bought green plants. Green plants continued to be bought primarily for the buyerÕs own enjoyment and were most often used to decorate oneÕs home or garden. However, consumers were less likely to buy foliage for decorating purposes this year compared to Ô98.
Clearly, price and convenience continue to be the key motivating factors influencing consumer outlet choices when purchasing green plants. Although these two reasons prompted one-half of the category purchases this year, this was down slightly from the level held a year ago.
Green plant purchasing declined at all major outlet types except at Home Centers such as Home Depot LoweÕs. and others. Home Centers received about a quarter of all green plant purchases in 1999. Supermarkets and Garden Centers each accounted for about one-fifth of all category buying, followed closely by Discount Chains. As the number of Home Centers continues to grow, consumers seem to be increasingly fulfilling their green plant needs at these outlets instead of Discount Chains or Supermarkets.
