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A Stellar Supply
How to create the perfect product mix |
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Written by Bernice Klassen
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Determining the proper product mix for your shop is paramount to your survival during these tough economic times. You need to develop an inventory that your customer can’t live without while at the same time not overstocking and losing money on product that you can’t move.
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How much of your inventory should be made up of fresh flowers, giftware, permanent botanicals, containers or sundry? You need to evaluate your shop to decide.
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Not every florist will stock and sell the same amount of fresh flowers, giftware, permanent botanicals, potted plants and hard goods week after week. There’s no one equation that suits every Canadian florist. To find the best product mix for your shop, you need to take a good, long, hard look at your operations before you place your next order.
1) Geography matters. If you are located in an area where fresh wholesale flowers are readily available around every corner, dried and permanent botanicals may not be the best investment for your shop. Permanent botanicals sell more readily in communities located in the north due to the weather conditions and the extra expense involved with transporting fresh product. Different areas require different needs and knowing this will save you time and money.
2) Who shops at your store? Are your customers homeowners or apartment dwellers? Is there a nationality demographic where certain religious or cultural ceremonies are popular? Are your customers “green” thinkers? Talk with shoppers to find out what kind of products they would be interested in.
3) Crunch the numbers. When you receive your invoices, put all your items in categories so sales of certain products can be monitored and evaluated. For example, products given the SKU 100 could be fresh flowers, 200 could identify potted plants and 300 could be giftware. Once you’ve done this, now you can go back to each category and make sub categories for closer evaluations (that is, 110 could be roses, 120 carnations, 130 poms, and so on). Do this monthly to keep a good handle on your overall expenses. If you do not do the accounting yourself, make sure you get together with your accountant and find out how you can get this information on a regular basis.
At the end of each sales quarter or month, take the total amount of dollars spent for the time period and divide it by the total dollars spent in each category. It’s easy math and the formula goes like this: If you spend $3,000 in one month on cut flowers and shelled out $5,000 in total on all your products, then the formula would go as follows: $3,000 divided by $5,000 = 0.60. If you multiply that number by 100, you would get 60 per cent, thereby meaning that 60 per cent of your total expenses were cut flowers. Of course, you could get more specific with individual cut flower varieties to give you a more accurate and precise picture of your product spending each month. Doing this ahead of time, you will save yourself from running into deficits that are difficult to crawl out of.
But what if you want to try something different and bring in a new item? Adding new products encourages your customers to come into the shop to see what’s new and keeps shoppers excited about doing business with you. So how can you add new items without jeopardizing your bottom line? Here are a few things you should consider:
1) Evaluate the item. Does it have value that the customer will see? Is the market already inundated with the product? Ask one of your regular customers what they think of the item and tell them to be honest!
2) Decide the quantity you feel comfortable with. If it’s brand new to the market and the vendor wants to get his foot in the door, ask for an initial discount. Be prepared to find alternative uses within your store if it doesn’t sell!
3) Promote the product and show your customers you believe in it. It may be as simple as using it in a window display, making a professional looking sign explaining the features or providing staff with knowledge and incentives to sell.
4) Give yourself a deadline. If it’s not selling, stop kicking a dead horse! Don’t use valuable retail space for dead items that you’ve paid for.
Of course, the key to adding a new product is that you need to continually analyze your sales. The general rule of thumb is that 80 per cent of your business comes from 20 to 30 per cent of your product line. It’s the other 70 to 80 per cent that requires constant evaluation.
You need to ask yourself questions like: how easy can you assess the sale of the product? What quantities are you required to purchase? Will it incur unnecessary labour costs?
As far as numbers go, here are benchmark numbers to help you begin making your own evaluation:
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fresh flowers = 50 per cent
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potted plants =15 per cent
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permanent botanicals =5 per cent
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giftware =18 per cent
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sundry/supplies =12 per cent
Will you agree with these percentages? I hope not. You are in too creative a field to be the same as everyone else. What I hope you find, however, is a chance to re-evaluate. See if you have missed valuable opportunities you may never have realized before and take the time to search out the mix that works best for you.
M.G. Bernice Klassen is experienced in nearly every aspect of the floral industry, including retail, wholesale and grocery chain. Armed with a business administration degree, with a specialty in marketing and management, Bernice is now offering her services as a floral consultant to the industry. Contact Bernice directly at
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