Wednesday, August 3, 2011

Flowers: Supply and Demand

Being a perishable product, flowers are a classic example of supply and demand.

Virtually all flower buyers are aware of this during the Valentine’s period when roses are in extremely high demand and supply is low. During February the rose production is at its lowest due to the climate and production cost is highest. Supply and demand kicks in.

Most florists, including us, are unwilling to pass along to the consumer all of the cost increase that we occur. (Resulting in a break even P & L for February) If the normal mark up was done with the roses, the retail cost would more than double.

During the summer months, when flowers are over abundant and demand is lower, the growers have a choice of either growing fewer flowers or reducing the wholesale cost or maintaining the average year round cost and dumping the surplus.

Many growers reduce the price to have some cash flow and hope to get lucky with sales. The problem is accelerated due to the location of the flower farms. Most are near the Equator where the sun is the most intense, the days longer, the climate perfect for growing. The consumer demand for flowers is located in the United States, Europe and Asia.

So they ship the flowers to the markets, occurring shipping expenses and hope to sell them. If they do not sell within a day or two, they have the option of reducing the price or paying the trash collector to dispose of them. The flowers have to be moved out quickly to maintain quality. The smart option is to reduce the price and hope.

Now the retail florist purchases flowers at a reduced cost. What happens then?

Flower sales are slower in the summer and cash flow is less for the retail florist also, so how do you price the discounted flowers? Maintain the normal mark up or reduce the price and pass on the bargain to the consumer? The majority of the florists keep their normal mark up to make up for slow sales.

At City Line Florist, we always pass on the price reduction to our customers! Thus our cash & carry specials on roses which you know bounces around a little in price due to supply and demand.

Currently you can buy a dozen roses for $10.95 cash and carry as well as big price reduction on delivered and arranged roses locally.

So expect to pay more for quality roses during February and take advantage of the cash & carry deals during the non-holiday times.

2 comments:

  1. Yes you are write that flowers are the best examples of supply and demand and it can not be easy for a florist to do that ....thanks

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  2. Just want to say your flowers are top quality; your floral artists are the best (Thank you Candy!) and our little girl was thrilled with her bouquets for her performance this evening. Everyone commented on how exquisite the roses were and so lush, plump and fresh. Some kids got grocery flowers and they looked limp, skimpy and sad next to our gorgeous City Line flowers!! Thank you to your amazing staff and for the great job you did wrapping up the flowers in such a unique and beautiful way!

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