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Extra Features and Video Online FloristsReview.com R E A D O N L I N E 47 Some do a remarkable job with events, some are great with fl ower classes, some excel at operations and some are wizards at branding. No one is great at everything—at least not that we have seen so far. ere is always room for improvement or for someone doing something new and innovative. e most common phrase we hear, time and time again, is "We do it diff erently here." I can assure you that nothing is further from the truth! Whatever process, promotion or technology you have in place, there are dozens of other shops doing the exact same things. ere are few, if any, original ideas in the fl ower business, thanks to tens of thousands of fl ower shops all operating in diff erent manners. e key question is "Which combination of these generates the highest profi t year after year with the least amount of work possible? If we defi ne "successful" as profi table, there is no doubt that one operation we came across several years ago in the Northeast U.S. was the most profound, on many levels. It was also the most profi table fl ower shop we have ever seen—by far. How profi table? At fi rst, in our initial consultation meeting, I did not believe what I was being told by the owner. Coming from the traditional retail brick-and-mortar world, I am very well versed in the key ratios for traditional brick-and-mortar fl ower shops such as labor costs, COGS, fi xed expenses, EBITDA (earnings before interest, taxes, depreciation and amortization), and so on. When the owner told me his operation was making "X percent" profi t margins, I smiled politely and thought to myself, "No way! at is not possible in the fl ower business." He then handed me the tax returns for the last fi ve years, at which point, I realized his claim was true. He followed up with the comment, " ose are not true, either," and he proceeded to open a safe that had hundreds of thousands of dollars, in cash, in it. is seemed like an operation that was printing money, so what was the owner doing that made the company so fi nancially successful? Well, for starters, let's defi ne what a fl ower shop is. ere are traditional fl orists, boutique fl orists, event fl orists, online fl orists and bucket shops. ere are many variations of a retail fl ower business these days, but I think "fl ower shop" can be best summed up as "a company that sells perishable cut fl owers in one form or another." is shop did not take phone orders. It did not deliver anything and had no delivery vehicles. It did not employ any fl oral designers. It had no website or online orders. It had no wire services. It did no events or weddings. Wow, that sounds like a dream operation to most people in the fl ower business today struggling to fi nd people to work! is operation had managed to strip all the complexity out of an extremely labor-intensive business. Each location was then grossing more than $2 million per year, with many higher than that. In terms of sales per square foot, inventory turn and sales per employee, this company had, by far, some of the best KPIs (key performance indicators) we had ever seen. As most of you can guess by now, this was a bucket-shop operation—but on a scale rarely seen. e owner bought thousands of boxes of fl owers from growers twice a week and sold them at a consistent 2X markup. Translation, if he pays 20 cents for a stem of Iris, he sells it for 40 cents, $4 per bunch. ere are no stem sales—grower bunches only—and all the fl owers are wrapped in newspaper, all in an ugly industrial building. It does not get any more basic than that, in terms of fl ower sales. When I asked the owner who his competition was, he said, "Every supermarket within a fi ve-mile radius." He never mentioned traditional fl ower shops; those were not even on his radar. He also posited that most consumers won't drive more than fi ve miles to buy fresh fl owers. If you look at all the successful and innovative retailers that have emerged over the last few decades, you'll fi nd that they all have a few things in common: huge profi t margins, capital effi ciency, fanatical customer loyalty, great management, scalable models and killer branding. While this operation defi nitely had the fi rst three, it lacked the last three. Just like Cold Stone Creamery redefi ned what a local ice-cream shop is (when Dairy Queen and Baskin- Robbins dominated the market), the retail fl ower business is ripe for reinventing itself. Just when people said the neighborhood coff ee shop was dead and dying, Starbucks reinvented the coff ee business on so many levels and made it exciting again. Just when people said the doughnut business was stale, dying and could not grow any more, along came Krispy Kreme. So, before you think the retail fl ower business can't be profi table and might be dying, or that people are buying fewer fl owers, think again. Maybe they are just not buying them from you. I can assure you there are some people making more money than you can imagine by thinking outside the box.

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