Cover Story: In Full Bloom
Having come a long way from its modest beginning as a chain of floral shops in metropolitan New York, 1-800-Flowers.com usually has set trends, not followed them.
Whether it was the foresight to be, reportedly, the first company to incorporate a toll-free phone number into its name in 1986 (the company was originally called Flora Plenty) or to anticipate the impact the Internet would have on modern-day businesses by being the first merchant of any kind to process an online transaction on AOL in early 1991, this integrated marketing powerhouse has kept innovation at the heart of its growth.
Such trailblazing vision has helped the Carle Place, N.Y.-based company grow its portfolio to nearly $1 billion in annual sales. It’s also accumulated 10 subsidiary brands, including such noteworthy marketers as The Popcorn Factory, Plow & Hearth and Fannie May. Amid all this expansion over the years, 1-800-Flowers.com has maintained a keen ability to integrate a consistent marketing strategy across catalog, Web, retail, e-mail and mobile channels.
This isn’t to say that 1-800-Flowers.com hasn’t been tested. “We’re not immune to being clipped by this economic firestorm that’s raged up around us,” says Founder and CEO Jim McCann. The company, which also faces increasing competition in the floral and gifts space, had the first round of layoffs in its 33-year history this past January. In addition, the 2008 fiscal year marks the first down year in company history, with revenues expected to drop by more than 5 percent from the year prior.
But with so many integrated marketing firsts in its timeline 1-800-Flowers.com truly believes its core values will make it even stronger as it emerges from these trying times.
4 Steps to Recovery
While not welcome news, last year’s hardships have strengthened McCann’s and 1-800-Flowers.com’s belief that innovation and investment in the future, notably in technology and talent, will pave the way for its “next 33 years in business.”
The company has targeted four areas to get that process started:
1. Take better care of customers. Although McCann already believes 1-800-Flowers.com is the best at customer care, he knows it can do a better job.
2. Take care of its finances. This includes working with cash, maintaining a strong balance sheet and being flexible so 1-800-Flowers.com is in position to act if the right acquisition opportunity presents itself. To that end, the company enters the 2009 fiscal year with 20 percent less operating expense than 2008.
3. Continue to invest in the future, particularly in mobile marketing and other new technologies.
4. Invest in talent. “Regardless of the business you’re in — except for maybe some very specialized technology or software products — the key to its success is the talent pool it’s able to attract, retain and develop,” McCann says. “We’re heavily focused on the next generation of managers in this company.”
Channel ‘Agnostic’
Florists have always been known as multichannel sellers — through their own retail stores, over the phone for delivery, peddlers at major intersections, etc. 1-800-Flowers.com is no exception.
“Coming from a retail floral heritage, we had a DNA predisposition to always think multichannel,” McCann says. “We’re agnostic as to channel. We’re not a cataloger. We’re not a retailer. We’re all of the above.”
All of the above includes a robust e-commerce site — which now accounts for more than half of 1-800-Flowers.com orders — more than 100 retail locations, a print catalog and a rapidly expanding mobile presence.
The roles of those channels are shifting, however. For instance, the catalog is no longer used as a prospecting tool, but instead focuses on retention and development.
“The catalog’s focus now is to bring relevancy to an existing customer who’s already engaged with us,” says President Chris McCann (Jim’s younger brother). “We found it more cost effective to acquire customers online as we started to cross-pollinate our brands with our technologies. We’re now using that experience to help the other brands use the Web and e-mail to acquire new customers vs. sending out catalogs.”
The Next Big Thing
Since May 2008, 1-800-Flowers.com has worked with Digby Mobile, a mobile commerce platform provider, to build its mobile capabilities. The marketer has a mobile Web browser-accessible site and application storefronts on the iPhone and BlackBerry, where customers can browse the catalog, check order statuses and “click-to-call” to place orders. That’s all designed to enable a sale in less than a minute.
“As a visionary company, 1-800-Flowers.com saw an opportunity to take a lead position in an emerging channel,” says Digby Mobile Founder/CEO Dave Sikora, regarding 1-800-Flowers.com’s investment in mobile marketing. He notes that the merchant views mobile similarly to the 1-800 number during its early days and the Internet in 1994, predicting that mobile “will represent a substantial percentage of its sales in the years to come.”
This investment isn’t limited to the 1-800-Flowers.com brand; the company is working to mobilize its subsidiary brands, too, even if only a small percentage of their products appear in the 1-800-Flowers.com Mobile Gift Center.
1-800-Flowers.com seeks to integrate not only its numerous brands with mobile, but also its various selling channels. The applications have been designed so other channels are easily accessible and vice versa. Shopping carts and products can be e-mailed for later checkout on the Web or sent as a wish list, for example. The application makes for an easy click-to-call for the telephone channel. Demand creation campaigns such as e-mail and SMS (text) marketing can provide a call to action that drops the customer right into the storefront app on the handheld device.
Growth Mode Inside & Out
While 1-800-Flowers.com doesn’t need to look outside its own walls for growth, it keeps that radar screen open as many companies turn to larger entities for shelter from the hard economy. But future acquisitions need to be two-way streets.
“We don’t need to make any acquisitions,” Jim McCann says. “But if we found the right group of people, the right product that would be beneficial to our customers and that we can help ‘Webify’ and take costs out of their operations, we’d give it a serious look. But all of those things have to line up: the right team of people who have the right visions for growth, the right product line that would be embraced by our customers, and our belief that we could genuinely benefit them by having them on our platform. Of course, this is all contingent upon the right risk profile, meaning price and
capital requirements.”
In addition to acquisitions, 1-800-Flowers.com expands via organic growth and internal development, such as its spin-off brands 1-800-Baskets.com and Celebrations.com. Like its acquired brands, these spin-offs complement 1-800-Flowers.com’s product offerings. 1-800-Baskets.com markets gift baskets, from fruit to gourmet meats and cheeses to chocolate, and Celebrations.com targets party planners with ideas and tips.
Rooted and Computed
It all comes back to its roots for 1-800-Flowers.com. “We’re a flower
and gift shop,” Jim McCann says. “Ironically, we’re using the tools and technology that we’ve embraced over the years to try and replicate the same relationship we had 30 years ago with our 30 customers — just 30 years later with 30 million customers now.”
