Challenges, problems, and triumphs
-- from a manufacturer's perspective.
The State of the Floral Market
A blunt conversation with Aldik's Larry Gold.
Interviewed by Mike Hartnett (February 7, 2005)
(Note: Larry Gold is CEO of Aldik Artificial Flowers. He
graduated from UCLA in 1975 and joined Aldik the same year. He held
many positions within the company, including office manager,
computer programmer, and import manager, working his way to the
President of the company in the early 1990’s. (Mike Stadlberger is
president now.) Mr. Gold is one of
the founding members of the American Flowers Importers Association (AFIA)
and was a charter board member from 1994-1997.)
CLN: How would you describe the recent history and current
state of the silk flower market?
GOLD: I think the silk flower market is in good shape at the
upper end. Good design, good quality and trend-forward looks are
selling very well. Because of the increase in sales of pre-made
arrangements the last couple of years, I think the industry has
taken their eye off the floral stem market. But Aldik has
concentrated on the stem florals as well as the pre-made product,
and we have seen big increases in sales of both types of product.
CLN: So your recent product introductions reflect your
GOLD: We introduced Chelsea Cuttings in the summer,
mainly roses and peonies and gardenias (long and short stems) that
look like they are cut from the garden and can be put into water to
give a truly realistic look. In addition, we introduced Chelsea
Cuttings Fragrances that can be put on the flowers to give a
truly realistic fragrance to the flower. They can either be put on
the flower head or into the water, and they truly complete the
illusion from silk to real. Very realistic fragrances that are not
We introduced a new Citrus Garden line of floral stems and
containers that were incredibly successful. They were in the Lemon,
Lime and Tangerine colors that are very popular now. This has been
one of our best introductions.
At the recent winter shows, we introduced a new palette of
colors, Sonoma Gardens, that takes the citrus colors to a
more sophisticated and classy level. Lemon becomes gold, lime
becomes avocado, and tangerine becomes paprika. The response has
been great, and we expect this line to be a big success.
In addition, we introduced a line of floral stems and containers
in brown tones that match almost any color. Most brown tones have
either green, yellow or gray in them, and it precludes them from
blending with the other colors. Our Warm Neutral line is a
neutral brown line that goes with greens, blues, whites, and
yellows, and virtually any other color. It is a classy, upscale
neutral brown line that goes with almost any decor.
CLN: Are you seeing craft stores shrinking the size of their
floral departments in order to make room for categories such as yarn
and scrapbooking that are currently growing? If so, doesn't that
almost guarantee floral sales will decrease because the consumer has
less to choose from?
GOLD: Yes. While some of the consolidation of the departments
was warranted, I think for the craft stores to succeed in the silk
floral business, their offering needs to be fairly broad. They need
to offer various price points, and some medium to high quality
floral stems in addition to the basic color lines. In addition, a
new color or trend theme needs enough components shown to make a
statement. The shrinking floral departments are being done at the
expense of the better quality stems, and this is making the floral
offering much less interesting and more lower-end.
CLN: Retailers seem to be constantly trying to lower prices
– and pressure vendors to do the same. Is there a danger that the
ultimate result will be poorer quality florals that the consumer
GOLD: That is already happening. As the price-point and
ultimately the quality in the department decreases, the sales
decrease. The department may sell more units, but that just
increases their transaction costs, and the sales figures are less.
Consequently the profit in the department decreases and there is
further pressure to decrease the size of the department.
CLN: Some retailers try importing, thinking that by cutting
out the middleman, they'll improve their margins. But doesn't this
just create new types of problems for them?
GOLD: It increases their margin. It also puts all of the
inventory risk on them. If they don't buy enough, they will lose
sales and profit. If they overbuy, they will have to dispose of
excess inventory and they will lose profit. If they put the
inventory burden on the importers and buy domestically, they will
lose some margin, but completely eliminate the inventory risk, and
ultimately net a higher profit. Also, if they deal directly with the
factory, they lose the design ability that the importers provide.
The importers are the designers and innovators in this industry, and
by dealing direct with the factories, the retailers lose this.
CLN: Maybe years ago when the quality of imported florals was
poor, crafters used to make and arrange florals. Then as the quality
improved, consumers just arranged the florals. Is there a trend now
that consumers are buying silk flower arrangements?
GOLD: Consumers are buying silk flower arrangements, because
the quality is so much better than before. But, in addition, the
trend is that when consumers do their own arrangement, they are not
necessarily "arranging" it. They are buying several stems
of a high quality flower and placing it in a vase, the same as they
would do with real flowers. They can even put water in the
vase, and the "arrangement" will appear to be real.
This only works with high quality stems, and I think the craft
stores are missing the boat because they are buying less of these
quality stem florals than ever before.
CLN: Where should the floral industry go from here? What do
retailers, vendors, and trade associations need to do to improve
GOLD: I think the floral industry is going in the right
direction. I think the demand for quality is increasing, and the
price points are rising. The craft industry is running counter to
this trend, and I think that is hurting their floral sales. Aldik
has spent a lot of effort increasing the quality and design of our
silk floral stems, and as a result our increases in floral sales at
the recent trade shows were up by over 28%.
(Note: To read previous "Vinny" columns, click on
the headlines in the right-hand column. To comment on the contents
of this column – or any other industry issue – email Mike
Hartnett at firstname.lastname@example.org.)