The Profit

Struggling to survive: The disappearance of the flower store

All signs point to a slowly recovering U.S. economy, but it has been a long and bumpy road for many small business owners, including florists.

Cautious consumers, more competition from online retailers, high overhead costs and rising gas prices—all have led to a decline in independent flower shops. Between 2000 and 2011, the number of such retailers decreased by roughly 37 percent, according to the Society of American Florists.

"The local florist market has been shrinking for years," said Eric Beder, managing director at Brean Capital. "And after 2008 and 2009, that accelerated. It's very tough for local florists to make it work anymore, especially with the internet and people no longer shopping" on Main Street.

According to Beder, the rise of online giants has contributed to the demise of smaller vendors for several reasons, including their diverse and specialty product offerings.

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"1-800 Flowers has done a really solid job. After the economy slowed down in 2008 and 2009, they consolidated operations [and] refocused the product, so they are no longer selling just basic flowers but selling value-added unique products."

Some customers also shop for flowers online for the potential savings.

"[Buying online] does save money in terms of shipping costs and ... not having to pay a middleman," Beder said.

Wholesale flower markets, big-box stores and supermarkets have gained share, as well.

It's more convenient to go into your "grocery store, your BJ's, your Wal-Mart, and buy there as opposed to a local florist because it's ... on your way," Beder said.

The product's perishability makes ordering and inventory control especially important for the small retailer.

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Once they're cut, flowers can be kept for only so long, Beder said. "There are technologies to keep them for a few weeks, but the truth is that it does hurt the local florist even more in the sense that they are the ones stuck with those flowers when they wilt, and that's something that again, affects the local florists a lot more than the wire services," he added.

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So what are mom and pop shops to do?

One way to stay competitive is through consolidation. When operators merge several stores into one location they save on the fixed costs, such as rent, and achieve other cost efficiencies, said Jenni Sparks of the Society of American Florists.

Another way for smaller stores to increase foot traffic is to specialize in a niche, such as weddings, table arrangement or small bouquets for walk-ins. Customers will know that they can rely on the shop for that specific need.

Perhaps the biggest challenge is making the florist top of mind, getting people to think of it as a go-to place for gifts or home decor items, Sparks said, because there are so many other options available.