Valentine’s Day kicks off a booming year for gifts

SmartGift and corporate gifting helps 1-800-Flowers set the stage for robust growth in 2021
Forbes
Forbes
February 7th 2021Feb 7, 2021

The National Retail Federation (NRF) is out with its Valentine’s Day retail forecasts and it expects a subdued lover’s holiday this February 14.

In this first-pandemic Valentine’s Day, the NRF predicts spending to decline by 20%, and only reach $21.8 billion after breaking records last year at $27.4 billion, right before Covid hit. If NRF’s forecast proves true, Valentine’s Day spending will top that from 2019, but not by much.

A significant drop in people’s plans to go out for the evening is behind much of the decline in spending. The average expenditures on Valentine’s Day this year will drop $32, from $196 last year to $165 this.

And that’s the reason why Chris McCann, CEO of 1-800-Flowers FLWS +0.1% FLWS +0.1%.com Inc., believes his company will enjoy the biggest Valentine’s Day in its history.

“Coming off a record end-of-year holiday season, we see a continuation of the accelerated momentum that began for us back in 2018, but picked up even more during the pandemic,” he shares. Chris McCann, 1-800-Flowers.com CEO

“If there’s anything we’ve learned throughout the pandemic, it’s the need for human connection to express ourselves and life’s everyday moments. For a company whose vision is to inspire expression, connection and celebration, we are well positioned in front of these trends,” he continues.

Online gifting headquarters

As the nation’s largest gifting retailer, 1-800-Flowers.com (FLWS) was leading in the gifting space even before the pandemic and store closures hit.

Now it offers 15 individual brands, starting with its eponymous 1-800-Flowers brand launched in 1986, about ten years before e-commerce arrived on the scene. However, the company quickly adopted online technology and its leadership in using technology to service customers and power its logistics network continues to this day.

With its diversified offerings, it’s got flowers and the other most popular Valentine’s Day gifts covered, including gourmet gift baskets (Harry & David), chocolates (Simply Chocolate) and chocolate-covered berries (Shari’s Berries), cookies (Cheryl’s Cookies), gourmet popcorn (The Popcorn Factory and Harry & David’s Moose Munch), steaks and chops for at-home celebrations (Stockyards), even personalized gifts, suited for consumer and corporate gifting (Personalization Mall).

“We see a pent up need to express our feelings this Valentine’s Day, which gave us confidence in our latest earnings release to guide top-line growth in the 45% to 50% range,” McCann says. And this despite the typical drag the company has seen when Valentine’s Day falls on a Sunday.

While Amazon dwarfs 1-800-Flowers in size – $1.49 billion in annual sales in fiscal 2020 – McCann is proud to report its 60% e-commerce growth over the October to December holiday season bettered that of Amazon, which reported a 40% rise in North America.

Setting the stage for robust growth in 2021

Despite the disruption to normal operations, the pandemic proved a windfall for the 1-800-Flowers.com business. Through the first six months of fiscal 2021, ending December 27, 2020, total revenues were up 46.4%, reaching $1.2 billion in sales, over $792.9 million previous year.

Complicating the year-over-year comparison was the contribution of PersonalizationMall.com (PMall), acquired from Bed Bath & Beyond for $245 million in August 2020 during its first fiscal quarter. Excluding PMall’s revenues, year-over-year sales advanced 28.5% percent.

The last three months of the year are FLWS’ biggest, accounting for over 40% of annual revenue in fiscal 2020. This year the sales gain during that time period was impressive, up 44.8% in total and 24.7% excluding PMall.

But what is even more impressive is the company’s dramatic growth from July 1 through September 27, 2020, a period without any major national gifting holiday.

Revenues advanced 51.5% in this period (40.6% without PMall) driven solely by occasion-specific gifting such as birthdays, weddings, anniversaries and just-because remembrance gifts that grew in importance as social distancing kept people from celebrating together.

It’s these personal gifting occasions that occur throughout the year that many retailers fail to optimize. FLWS can make the most of every gifting occasion and holiday and as it continues to explore cross-merchandising opportunities across its range of brands, it will have more and better gift options for anyone on a gifter’s list.

PMall is a particularly powerful addition to the FLWS family, offering free personalization for over 30,000 gift items in a wide range of product categories, including home decor which the company had largely been missing. “We are staying in front of the trend in people nesting and spending more time at home,” McCann shares.

For Valentine’s Day, a wide range of personalized options are offered on the PMall site and the 1-800-Flowers website will also carry about 100 products from PMall as well, not to mention appropriate gift ideas from its family of other brands.

Help for local florists

The company that would become FLWS started as a local Manhattan flower shop in 1976 by Chris’ brother Jim McCann, who grew it to a 14-store chain. Then in 1986, Jim acquired the 1-800-Flowers phone number and changed the company’s name. The company’s original mission was to “disrupt the floral industry,” but Jim never forgot his roots.

Today it relies on a network of about 5,000 local independent florists to fill orders under its BloomNet reporting segment.

“The independent florists are not just important to us, but to their local communities,” Chris McCann relates. “So when the pandemic hit, we mobilized immediately to help our florists survive. We gave them financial assistance ourselves, beyond keeping them informed about all government programs and local, state and federal guidelines. We provided masks, sanitizers and other equipment. We also waived fees during the pandemic and ramped up our marketing and social media capabilities to help these florists reach out into their local communities.”

Sales in the BloomNet reporting segment rose 30.5% year-over-year from July through December 2020.

“Yes, there have been lots of local flower shops closing across the country, but we’ve actually had less florists impacted than originally expected. Our florist network has moved from the survival phase into the thriving phase,” he reveals and adds, “Our florists don’t just handle deliveries, but we harness the creativity of these local artisans for design inspiration.”

Gifting’s unique customer-makes-a-customer opportunity

Unique in the gifting business is the opportunity to create two loyal customers from a single transaction. A delighted gift recipient makes for a delighted gift giver and both are likely to return again to the gifting service that delivered that delight. This is the viral sweet spot where FLWS sits.

It’s a phenomenon that the company observes frequently. “We have an inside joke in our company that the best recipients to convert to customers are those who receive Cheryl’s Cookies,” McCann quips. “There is something in those cookies that really gets people.”

Throughout the pandemic, and most especially during the holiday gift season when third-party delivery services were strained almost to breaking, FLWS was able to maintain on-time, as-promised delivery schedules for flowers through its florist network and for everything else, through its primary carrier FedEx.

And with the company’s eye toward innovation that will propel it further and faster, it has partnered with SmartGift to provide virtual delivery of gifts through text or email. This collaboration is especially important for its recently-launched Business Gifts Service.

“Corporate gifting is big right now since so many people are working remotely. It is especially challenging for gifting to clients when you don’t know the client’s home address,” McCann shares. “SmartGift allows the recipient to specify where the gift should be delivered and the delivery date. Besides that, you can even exchange the gift in advance, so the recipient is so much more involved. It elevates the gifting experience.”

Valentine’s Day will be big, Mother’s Day even bigger

In closing, McCann relates that after the Christmas holiday season, Valentine’s Day is its third-busiest holiday overall, but second busiest for flowers. And he is looking forward to an even bigger opportunity this coming Mother’s Day, which will be celebrated May 9.

“Mother’s Day is our second busiest holiday. Based on all the things we are doing, we are so well positioned because of people’s continued need to express, connect and celebrate,” he says.

“But Mother’s Day gifting is different from Valentine’s Day,” he adds. “That’s because there are so many more mother figures in your life, whether it is your natural mother, the mother of your children, grandmothers, sisters, caretakers. These are all ‘moms’ today and we expect more multiple purchases at Mother’s Day than we see at Valentine’s Day.”

As the year progresses, 1-800-Flowers.com will be going up against some steep year-over-year comparables, especially in its fiscal fourth quarter from April through June, right after the pandemic hit in 2020. During that quarter, sales exploded, rising 61.1% and that was even before PMall added its lift.

McCann remains convinced that his company is not just ready for but expecting continued dynamic growth in 2021 as people’s need to express, connect and celebrate this year will only grow stronger after the terrible hardships and forced separation people experienced throughout the pandemic.

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