State of the Industry: "Plenty of reason to celebrate"

As the industry takes action to overcome its biggest challenges, there is reason to celebrate, said the Society of American Florists’ CEO, Kate Penn, during the State of the Industry address last week at SAF Phoenix 2023, the organization’s 138th annual convention.

Labor shortages and the need for succession planning continue to “pose our industry’s biggest existential challenge,” Penn said. But, there is plenty to celebrate as other challenges, such as a bottlenecked supply chain, lack of product availability, competition for cargo space, and other factors, have normalized following two years of uncertainty.

Addressing Labor Shortages
One of the biggest challenges facing the industry is the shortage of labor in all sectors due to a number of factors, including the aging workforce, the rising cost of living, and a lack of awareness about the careers available in the floriculture industry.

“Labor is hard to find, hard to keep when you do get it — and very expensive,” Penn said.

SAF is tackling the issue from different angles. First, with its advocacy work on Capitol Hill, where floral pros lobby annually during SAF’s Congressional Action Days. This year — and in past years — SAF members have asked Congress for meaningful immigration reform and for research funding that can bring efficiencies to the growing process.

In addition, SAF’s partner, Seed Your Future, is leading the effort to bring new talent to the horticulture and floriculture industries. One of the ways the organization is doing that is through Green Career Week, slated for Oct. 2-6. Green Career Week is an initiative that asks businesses to host or visit schools and showcase the careers available at their company on social media.

It’s also important to retain that young talent, something that SAF has made a strategic priority with its Next Gen group and the in-person and virtual events SAF hosts specifically for them, Penn said. This year, nearly 200 floral pros, age 45 and younger, met in Miami for the second annual NextGen LIVE! Conference, which featured education, networking, and tours of the Miami importing scene and retail flower shops. The conference has been such a success, Penn said, that it is continuing next year, February 25-27, in San Diego.

“The learning and sharing at this event is an extraordinary thing to witness, and the event left attendees with a newfound enthusiasm for our industry,” Penn said.

Planning for the Future
Wholesalers and retailers are experiencing consolidations and closings, Penn said, though they appear to have slowed. There were 11,509 retailers in 2022, according to the U.S. Census Bureau, a slight decrease from 2021 and slight decreases predicted for the next few years.

“It’s nothing like the contraction we experienced in the early 2000s,” Penn said. “Since 2013, shop closings have leveled off to single digits.”

There is no quantitative data on why shops are closing, but Penn hears anecdotally that many didn’t have an exit strategy.

“In many cases, there’s no obvious successor, and they just didn’t plan far enough ahead to prepare the business for a successful sale,” she said. “And every time that happens, that’s a loss to the community and our industry.”

Penn pointed out that SAF has created resources to help floral pros plan for the future of their businesses. The topic was the focus of a cover story in Floral Management, a virtual roundtable, and at two convention sessions that featured former and current business owners who had or will soon sell their businesses. SAF’s Floral Education Hub also created a three-part course, “Forecasting Your Future,” with Manny and Clara Gonzales, who shared the strategies they used to ensure they had a business worth selling.

Reasons to Celebrate
Despite those challenges, there are a number of things to celebrate, Penn said.

The logistical issues — including air cargo capacity and a lack of trucks and drivers — that plagued the industry in 2020, 2021, and 2022 “have all but disappeared,” she said. “One wholesaler told us that this Valentine’s Day was the smoothest the industry has experienced in 10 years.”

Another reason that holiday and others went so well? There was more than enough fresh flowers, foliage, and hard goods this year, Penn said, noting that retailers had been hoarding supplies that were scarce.

“This year, we know where our hard goods are coming from, so we don’t need to tie up all of that cash and space in inventory,” she said.

And, though sales are down for many compared to 2022, according to SAF’s biannual economic outlook survey, they are up from 2019, and 42 percent feel optimistic about future sales.

Floral product purchases, which include seeds and potted plants, was also up in 2022, with a 13 percent increase, according to the U.S. Bureau of Economic Analysis.

Sales of U.S. floriculture crops grew 4.6 percent from 2021 to 2022, according to the U.S. Department of Agriculture’s National Agricultural Statistics Service.

Sales at retail florists also increased from 2021, according to the U.S. Department of Commerce. Sales were up in 2022 by 3 percent and are projected to grow at sub-2 percent increases in the coming years.

“Needless to say, we’d like to see those numbers increase at a bigger clip,” Penn said. She noted the Floral Board initiative, which, if it comes to fruition, will create a national promotion order for cut flowers, and the “That Flower Feeling” brand of campaigns started in 2022 by CalFlowers. That campaign won SAF’s Marketer of the Year award and is seeking voluntary funding for future campaigns.

SAF’s annual Petal It Forward goodwill initiative, which asks floral businesses to hand out two bouquets, one for the recipient to keep and another for them to give away, is another way the industry can market the feel-good power of its product.

“[Petal It Forward is] a powerful reminder of why we do what we do, and why we must keep working hard to keep our employees engaged, and our businesses strong and healthy and in the community,” Penn said.

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