Insights on the Future of Floral

Originally printed in the December 2020 issue of Produce Business.

Conversation with Tony Mirack of McCaffrey’s reveals possible trends as COVID-19 fallout winds down.

So we stand at the end of the year…and what a year it has been! While food and pandemic-related safety equipment have gotten the headlines at supermarket retail, sometimes the activity in the shadows is, itself, illuminating.

As part of The New York Produce Show and Conference — all virtual this year of course — we held a series of conversations with industry luminaries, such as Tony Mirack, director of produce and floral at McCaffrey’s Food Markets, headquartered in Newtown Grant, PA.

The discussion was wide-ranging but, crucially, we shared this moment on the Floral Department:

Jim Prevor: You’re in charge of both produce and floral. What we recall, of course, is that a lot of the attention in the consumer media has been to the food supply side of the business.

What was happening to Floral in all this? I heard in the initial days of panic that many supermarkets weren’t even selling Floral because they didn’t have the capacity to handle it. The distribution centers were crowded, trucks were maxed out, and stores were filling any available spaces with masks and hand sanitizer. And then it seems to have bounced back. What has your experience been?

Tony Mirack: So it was really interesting. The thing that really hurt us in Floral was that a lot of vendors just stop shipping! Now, you’ve got to realize we’re right on the border of two states. So we have stores in New Jersey, and we have stores in Pennsylvania. At the time, each Governor was establishing different regulations.

So when we approached vendors in New Jersey, they were saying, well, the rules are different and we can’t come over to Pennsylvania. So we literally had to just keep adjusting. But what was interesting at one point, like for Easter, our sales were down, but then, it slowly started to climb up.

Now, what really helped us with Floral was a lot of the giftware — the balloons, the candles, hardware items — those categories were off the charts. So even though fresh flowers were down, it was all those other non-fresh categories that were up and boosted the overall department sales into a positive range.

Remember, the competitive environment was different. A lot of the dollar stores had to close. There was a lot of other gift stores that had to close. Even if they were open, they involved an extra stop, which consumers didn’t necessarily want to make. Consumers were already visiting us for food. For us, it was those “hardware” categories that really kept Floral afloat and really kept them in the positive area as a sales trend.

Jim Prevor: Oh, very interesting. I have heard things from people reporting that since they had to stay home more, they were more interested in making their homes nice and maybe that impacted floral as well.

Tony Mirack: Well, you know what is interesting, Jim, is you say that, but, you know, bird foods and Floral are in the same department in our company, and before the pandemic, bird food sales were actually down. And then when this hit, bird food sales just leapt off the charts, and they have sustained those sales levels.

I do believe it’s because a lot of people are sitting home right now looking for something to do! But it is little crazy things like that you notice. You just ask what’s going on here? So it has been a challenging, but also interesting, experience.

Indeed, for most of the industry, those words — “Challenging, but also interesting” — define this tumultuous year.

Of course, the final numbers are not in as of this writing but a few things echoing and extending the discussion this author had with Tony, are clear:

A) There was a moment of panic when the COVID-19 pandemic first became clear. Many supermarkets reduced or stopped buying or selling fresh flowers and plants while they needed warehouse space, trucking capacity and store space for essentials.

B) Even buyers and suppliers who desired to keep selling flowers and plants were sometimes frozen by unclear laws, regulations and difficult space allocation issues.

C) Very quickly, though, the supermarket floral departments rebounded. This was primarily due to six factors:

1. Overall consumer traffic in supermarkets boomed as restaurant sales declined due to consumer fears and regulations restricting restaurant capacity and hours of operation.
2. The work-from-home requirements of the pandemic led to increased consumer interest in making their homes more pleasant and beautiful places.
3. Restrictions on the ability to spend money, such as on vacations, going out, etc., increased the disposable income available to spend on home beautification.
4. Pandemic relief measures, such as supplemental unemployment insurance and one-time distributions, also made funds available for discretionary purposes such as home beautification.
5. Alternative retail outlets such as independent floral shops, craft stores, etc., often closed or had restricted hours, and, if open, required consumers to visit another outlet where they feared getting COVID. This made supermarkets a better option for some purposes.
6. Delivery services from supermarkets facilitated ordering both flowers and ancillary items such as balloons.

This situation is likely to continue for a while, but with various COVID-19 vaccines starting to roll out — first to selected cohorts, such as medical personnel and the vulnerable elderly, but, gradually, to a more general cohort — it is clear that change lies ahead.

How quickly the rollout of the vaccines will proceed is not 100% clear — several new ones are up for approval — nor is the willingness of people to get the vaccines clear. Equally, the willingness of authorities to mandate vaccination broadly or specifically, say to attend public school — remains unclear. Some countries, such as Israel, have indicated that they will likely create some kind of “vaccination pass” that allows people who have been vaccinated to go on airplanes whereas others may be restricted.

Still, however, things evolve… it seems likely that by the middle of 2021, the combination of widespread inoculation with the rebound of warmer-weather outdoor activity and additional immunity caused by more people having had COVID-19 due to the spike in cases right now will result in some “new normal.”

What this new normal will mean for supermarket floral is less certain. First, supermarkets themselves will likely see a sales decline as consumers start eating out more. Second, alternative retailers are likely to be open, have longer hours and to start engaging supermarkets in a more competitive battle as they offer larger assortments on things such as home décor than supermarket floral departments can offer. This much seems certain.

To some extent, horrible events such as wars and pandemics, always lead to an intense focus and investment in areas thought useful in those circumstances. The “Manhattan Project” in World War II leapt ahead all things nuclear and, now, “Operation Warp Speed” has set up a new model of vaccination that may help us with cancer, heart disease and a hundred other challenges.

On a smaller basis, things are likely to leap ahead by years. Even after it is safe to meet “up close and personal,” many will have learned the convenience of Zoom calls and will choose that path. Same thing with grocery delivery. This will surely see a reset, lower than the current numbers, but higher, forever, from what it was pre-pandemic.

The impact on Floral remains to be seen. On the one hand, floral, more than most departments, depends on beauty. So it is easy to imagine a sales decline when consumers only see a picture on a computer, and one suspects that picture will not be very accurate as floral availability fluctuates.

On the other hand, if at-home working becomes more common, one can imagine people caring more about filling their homes with freshness and beauty, and so we can imagine a higher demand for floral.

Home delivery may also change. Filling up a store with slow-selling hardware items isn’t a winner, but it is also true that paying high rent for a retail store convenient to consumers and using that as a warehouse for home delivery doesn’t make much sense. Ahold just announced the purchase of Fresh Direct, a warehouse-based home delivery model.

If deliveries start being made out of warehouses rather than stores, floral departments could carry hundreds of hardware items, which would never make sense to inventory in each store.

In any case, we have been tested by this pandemic, we will be tested by the recovery, and we will be tested by the “new normal.” The great challenge is for the industry veterans to not assume that what they knew as optimal will be optimal in the future.