Since April of this year, FloraHolland has worked on creating a new future for the auction. In recent months, a large number of individual and group meetings have been held domestically and internationally with members and customers.
Additionally, trends, clock and business developments both inside and outside the sector have been thoroughly examined. During the recent region meetings, The New Auction team presented insights that have been gained thanks to the above.
Developments so far
"Growers and customers feel that FloraHolland is responsible for establishing a healthy future for the clock. However, 75% of them also expect to use the clock less and this is a point of concern," says Ronald Teerds, The New Auction program director. "We are seeing clock sales continuing to decrease while direct sales steadily increase. At the same time, the clock still generates €2 billion in turnover. It is therefore something to be preserved, but we are seeing the sector developing toward a demand-driven chain and that requires more custom services. The clock must better meet these needs and something has to be done."
Auctioning according to four directions
"When we look at the information we have collected," Ronald continues. "We see that the auction could be developed in one of four directions. One of the options is 'Emotion': we return to physical auctions at all locations. An alternative is 'Central Mechanization': we build a single location by the A4 highway. We could also choose to 'Focus on Direct Sales': a direct day trade system that meets the needs of the demand-driven chain and for customized services. The fourth option is 'Ex-nursery Auctioning': selling products while they are still at the growers' locations."
Pricing and costs
"Due to the objectives of The New Auction, i.e. establishing optimal and stable pricing and reducing costs by 1/3, the first two scenarios are not likely to be chosen," admits Ronald. "In order to achieve the objectives, the destination of the products must already be known at the moment they are sold. In other words, growers at the nurseries have to know where their products are to be delivered. This will allow growers to truly meet the needs of the customer and add value, and in doing so, we can also meet the needs of a demand-driven chain and reduce costs. To realize this situation, it is essential that logistics and commerce be uncoupled."
"We will be further investigating the 'Focus on Direct Sales' and 'Ex-nursery Auctioning' scenarios. The most important question that has been posed is how are we going to realize optimal and stable pricing? This is a significant challenge and we will be looking into it in the coming period."
Change is needed
At this fall's region meetings, Ronald and his team again listened to growers' opinions and ideas. "Most growers feel that change is definitely needed," he says. "And the directions we have sketched are generally recognized as accurate. Their concerns lie in how they are going to be implemented, particularly in the areas where we have yet to formulate clear ideas. We are taking this to heart and at the spring region meetings, we will have more information to present."
Interested in reading more on The New Auction?
For more information about The New Auction, please read the FloraHolland 2020 file on their website.
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