U.S. Floral Gifting Market: The Five-Year Forecast
We’ve all experienced the impact of COVID-19 on our floral businesses this year. And we would certainly like a bit of insight into what all this upheaval means for the floral industry’s future. We dug into a report from the market research firm Arizton Advisory & Intelligence to provide that insight. This report, entitled Floral Gifting Market in U.S. – Industry Outlook and Forecast 2020-2025, breaks down its analysis by Occasions (Personal Gifting, Wedding, Self-Gifting, Corporate, and Sympathy), Platform (In-store, Online, and Mobile), Product (Bouquets & Arrangements and Stems), and Purchasing Options (One-Time Purchase and Subscriptions).
We’ll summarize their findings in this article, but here’s the big picture: They predict that the U.S. Floral gifting market will grow at a compound annual growth rate (CAGR) of 5%, reaching $17.5 billion by 2025. There are a few critical reasons for this:
- Fresh, cut-to-order flowers are becoming more available, and they’re coming straight out of sustainable farms, many from within the U.S.
- The supply chain is witnessing massive consolidation. Major flower producers are looking to vertical integration to increase their profitability and are acquiring small farms, making for intense competition.
- The personal gifting segment is expected to see an incremental growth of over $2 billion over the next five years. The U.S. floral gifting market has witnessed a wide range of innovations, most prominently in delivery.
- The online segment is likely to grow at a CAGR of over 7%, due to increased personal gifting and high average spending per floral arrangement. New generations are looking to digital platforms for most of their purchase decisions.
- The bouquet and arrangement segment is projected to grow to more than $3 billion by 2025. However, the demand for extravagant and intricate bouquets has declined with a movement toward cut flowers.
Here are a few more key takeaways from the report:
Gifting by Occasion
The two major revenue generators by occasion are Valentine’s Day and Mother’s Day. Customers usually purchase these flowers online, as they want to see all their arrangement options in one place before buying.
The wedding segment has done well in the past, and with the economy getting better, guests are willing to spend more on exotic floral arrangements like the ones they see on social media. Therefore, the profitability has gone up, and more florists are focusing on large wedding events to increase their revenue.
Gifting by Platform
Traditional in-store florists have seen their sales decline for two main reasons: competition from mass-market retailers and online orders. While some brick-and-mortar florists have been closing their shops, others are focusing their business on weddings and corporate events. Many have evolved into studio florists, designing for weddings, parties, and corporate events.
The online marketplace has rapidly evolved to keep up with the ever-increasing demand from stay-at-home consumers. The result is a more refined, hassle-free flower gift delivery for the customer, which leads to more comparison shopping and more educated decisions. The mobile segment is also witnessing growth, courtesy of Gen-Z customers.
What used to be the domain of network florists like FTD and 1-800-Flowers is now home to lots of innovation from tech-driven start-ups. These companies are developing a propriety supply chain and can deliver on-demand flowers as a new standard. Yet, while U.S. online retailers are experiencing more consistent sales, they still tend to be clustered around occasions like Mother’s Day and Valentine’s Day.
Gifting by Product
Stems and bunches have continued to be the preferred floral product since they are quick and easy to package and deliver. Spending on cut flowers correlates to disposable incomes, and the U.S. recorded an all-time high in disposable incomes in January 2020.
Bouquets and arrangements are becoming more popular with millennials, who are more likely to buy flowers to make a good impression on guests. As a result, florists are experimenting with arrangements by taking inspiration from other countries and basing designs on new elements.
One example of this is the growing popularity of Ikebana, the ancient Japanese art of flower arranging. However, with floral foams not being environmentally sustainable, arrangements made with these foams are declining, and many florists are reverting to more traditional and sustainable design methods.
Gifting by Purchasing Option
One-time purchases are made mostly for generic gifting, and more and more on mobile devices. These are usually the more well-known flowers, but genetic modifications and advancements in growing techniques have made larger and more resilient stocks available at lower prices.
When it comes to in-store purchasing, it’s all about the personalized experience. Florists are more likely to incorporate different textures and floral scents in their shops and allow customers to see the process of creating arrangements. This personal experience is expected to increase in-store floral gifting revenues.
Subscription services are growing consistently due to technological changes in retail, aggressive brand-building strategies, and the element of surprise attached to subscriptions. These services are ideal for consumers as they simply choose their preferred flowers and frequency of delivery, then have them brought to their doorstep. Floral subscription companies closely follow trends and practice sustainability.
What This Forecast Means for You
These are just the highlights of this extensive report but they give a good indication of the floral industry’s state. Now that you’re familiar with these trends and the forecast, it’s time to align your actions to make sure you reap the benefits for the rest of the year, and in the years to come.