What Floral Retail Can Learn From The Travel Industry
On the surface retail floral and travel don't have much in common, but if you look a little deeper you see that there are a lot of similarities:
Both the florist and owner of a resort, airline, hotel, etc. deal in a highly perishable product. The nights at the resort that aren't sold? They spoil, just like unsold flowers. The chance to sell flowers at a premium at Valentine's Day or Mother's Day? That is is also a perishable opportunity.
The floral and travel industry both deal in a largely discretionary purchase. Just as most people don't have to purchase leisure travel most people don't have to buy flowers. They have to be sold on the idea.
Florists deal with peak periods at Valentine's Day and Mother's Day. Travel deals with peak periods at March Break, thanksgiving, etc. For both industries these periods are potentially great opportunities that must be handled very carefully.
The travel industry is very large, with a lot of money to do research. And research is critical because it is such a difficult low-margin business. Much of that research can benefit florists.
One of the most important discoveries of the travel industry was the concept of revenue management. Championed by Robert Crandall, former Chairman and CEO of American Airlines, his goal was to maximize the revenue generated from every seat. Ideally that meant pricing so that no seat ever went empty (spoiled inventory), and never discounting a fare to a customer that would pay more.
This early work in what we now consider value pricing can be tremendously beneficial to florists. Resorts sell at a premium during peak season and at a discount during low seasons to align prices with value. Florists can do the same. Airlines sell last minute seats at a discount to people that don't really need them (last minute sales) but charge a premium from travellers that absolutely have to get somewhere on short notice (try booking a flight to a specific destination at the last minute!).
There are many great lessons for florists in the work of the travel industry. Here is just one example.
A resort will typically have a formula that helps them determine pricing. They want to have sold X% of capacity Y days in advance. If, Y days in advance, that have booked more than X% of capacity than they can assume that their prices are too low, and raise them accordingly.
If on the other hand they have booked less than X% of capacity Y days in advance they can assume that their prices are too high and lower them accordingly.
Now imagine a florist who knows that they can physically handle 500 dozen roses at Valentine's Day, and are aggressively pursuing advance orders (a good practice). If they committed 400 of those dozen before January was over they could probably assume that there prices were too low, and raise them accordingly.
If on the other hand they had pre-sold a much smaller number later into January, maybe even into early February, they could then probably assume that they were charging too much and lower their prices.