This article is part of a Fortune Special Report: Business in the Coronavirus Economy—a look at the impact of the pandemic on more than 50 industries.
Farmgirl Flowers was on track to having a banner year in 2020. The San Francisco-based company hit $32 million in annual revenue in 2019, a rate of almost 50% growth year-over-year. And based on how well sales in January and February went, early projections were showing the flower vendor, which delivers across the contiguous United States, could meet a goal of $50 million in revenue for 2020.
“Long story short, things were going extremely well in the first quarter of 2020,” says Christina Stembel, founder and CEO of Farmgirl Flowers.
Then came the coronavirus outbreak. With the spread of COVID-19 making its deadly path around the world, local and state officials have raced to shutdown all non-essential businesses. Stembel had to close her entire operation within 12 hours once the shelter-in-place order went into place for the Bay Area, and soon after for the entire state of California, on March 15.
“As we’re coming up on Mother’s Day, what we like to call the Super Bowl of the flower industry, we’re now in a race against the clock to restructure the company in a way that will allow us to supply the demand we need to be there,” Stembel says, explaining that May revenue is critical to get through the summer months, when demand for flower delivery typically declines by as much as 30% to 50%.
“That revenue is the stopgap that allows us to not lay off our team and continue to pay the high Bay Area overhead costs that don’t see the same 30% to 50% decline that sales do during that time,” Stembel says.
The floral industry is a $7 billion market, and the U.S. Bureau of Labor Statistics recorded approximately 55,500 floral designers nationwide in 2018. However, even before the current economic crisis, both employment and revenue forecasts were withering to the growing rate of discounted prices on flowers online and in supermarkets, which have led consumers to purchase less flowers from industry operators.
Last year, floral giant 1-800-Flowers delivered more than 20 million stems for Mother’s Day, which the company says is the biggest occasion of the year for the brand. “We know this will be a very different Mother’s Day for everyone, and we have plans underway to help customers honor mom in a special way—even if they cannot be together,” says a company spokesperson, who also noted customers have been sending flowers, food, and other gifts for “virtual” Easter and Passover celebrations this month.
April and May are also two of the busiest months for wedding season, and Jennie Maretti, owner of Pixies and Petals in Orlando, usually finds herself working on three to five weddings per weekend—sometimes as many as three per day—and she says Pixies and Petals had been consistently booking new business coming out of “engagement season.” (Many couples get engaged around Christmas, New Year’s Eve, and Valentine’s Day.)
By the first week of March, a few clients started asking about postponing. But once just talk—not even the official order—about shelter-in-place came up, Maretti says the company was flooded with couples racing to rebook for later months. “I have offered reduced retainers and flexible payment plans for their wedding contracts and flexibility of moving their dates,” Maretti says. “We are trying to make the process as painless as possible for them. We should still remain the fun piece of their Big Day.”
Stembel had been aware of COVID-19 for weeks before the first case was discovered in the U.S. on January 20. By early March, she says she had heard rumors about Gov. Gavin Newsom’s plans to institute a shelter-in-place order for the Bay Area, up until the afternoon before it happened. That’s when she made the decision to cancel all flower orders that had not yet left the farms to lessen the risk of infection for her employees. But, even with that decision, Farmgirl Flowers had to throw out about $150,000 worth of flowers the next day that had already arrived for that week’s orders. She looked into donating them, sent as many home with her employees as possible, and tried to do what they could to reduce the floral waste. But the dollars weren’t salvageable.
Farmgirl Flowers’ business dropped by almost 60% immediately following the shelter-in-place mandate in the Bay Area and more widely across the country, resulting in the lowest growth week the company had since opening in 2010. Stembel had to furlough almost 200 of her team members immediately, saying it was one of the hardest things she has to do since starting the company.
“I have to admit that I spent about an hour feeling sorry for myself, which might have included crying my eyes out in the shower that evening, but then I got to work on what has become the first of many pivot plans that the last three weeks have consisted of,” she says.
Mother’s Day is on Sunday, May 10 this year, and as of April 9, counties within the Bay Area have ordered residents to shelter in place until at least May 3. And flowers are, indeed, one of the more popular gifts to give on Mother’s Day, with Americans spending $50 on average per bouquet, according to Statista. With its San Francisco headquarters and distribution temporarily out of commission for the foreseeable future, Farmgirl Flowers had to pivot more quickly than Stembel would have thought possible—in less than a day.
“Our San Francisco distribution center was a workhorse that I had spent 10 years building, so even though we’ve been able to launch a new one in a span of a week—which will probably go down as one of my proudest moments of my life—it takes time to build up production levels with newly trained team members, so we’re working to do just that as quickly as possible,” Stembel says.
The first pivot was the immediate shift of 85% more orders to its only other distribution center. “Luckily—and I don’t use that term lightly—we made the decision to open a distribution center in Ecuador earlier this year,” she notes. At the time of the Bay Area shutdown, Farmgirl Flowers was only doing about 10% to 20% of its orders from the Ecuador location, with the vast majority stemming from its San Francisco distribution center. The team shutdown the San Francisco location and shifted all future orders to the South American location within 12 hours. “It was not set up for that number of shipments each day, but our team in Ecuador worked with us at lightning speed in order to get it up and running ASAP,” Stembel says.
However, despite hasty travel bans, it’s clear now that the coronavirus outbreak knows no borders. In the weeks since, Farmgirl Flowers’ South American team has also been placed on a reduced workday schedule due to a government-mandated curfew. This reduced the number of orders the company could ship from that location so, rather than throwing in the towel, the company doubled down by opening a second distribution center in another region of Ecuador in order to double production within the shortened workday hours. Stembel is plotting a larger contingency plan by further diversifying distribution, with a plan to open at least five more distribution and fulfillment centers in the United States within the next five weeks.
“All this to say that this is usually an incredibly busy time for us even in a normal year,” Stembel says. “But with such extreme extenuating circumstances, my team and I have been working even more overtime than usual to make Mother’s Day the successful holiday that we need it to be.”
While sourcing and producing all of the bouquets by a small team in one location used to be a point of pride for Stembel, as the business grows and she struggles to keep it afloat during and after the pandemic, future plans rest on minimizing risk and eliminating vulnerability. Without the South American team, Stembel admits Farmgirl Flowers would probably have had to close the doors for good.
“All of my plans, both short-term and long-term, will involve opening new shipping points and distribution facilities to help ensure that if COVID-19 or any other future threat prevents itself, we don’t have all of our eggs in one basket,” she says.
Farmgirl Flowers is still shipping thousands of orders a day, but not at the same volume as before— simply because there isn’t the ability to meet demand. But even after that initial decline in mid-March, the company’s sales started to level again—and even surge to some extent. Farmgirl Flowers’ style for hand-tied bouquets with reused burlap coffee bags sourced from local roasters has generated a sizable and loyal following on social media over the last decade. Although customers can place orders now, Mother’s Day is still weeks away, so immediate orders have sprouted from a few different camps. For one, Stembel says she has received an “outpouring of messages on social media” from customers who ordered flowers simply to support the company.
“I know that flowers are a nice to have, not a need to have, especially in this time, and I couldn’t be more grateful,” Stembel says.
Well before anyone could order gifts online to deliver anywhere around the world, sending flowers has been distinct as a method for sharing love or condolences when one can’t be there in person. And when half of the world’s population is on lockdown, preventing friends and family from being able to see one another for an indefinite amount of time, flower delivery seems primed as the gift to give in this time of social distancing and self-isolation.
Where there are social distancing protocols, funerals, wakes, and memorial services have been cancelled, so consumers can’t send flowers to the services. When this initially happened, 1-800-Flowers saw its sympathy business impacted, but the company says customers have since found other ways to express their condolences, either by sending flowers to homes or buying food gifts, such as fruit baskets or prepared meals from its Harry & David brand. The company says it continues to see orders—with contactless delivery via local florist partners—for everyday occasions, including virtual birthday parties, as well as an uptick for floral gifts sent “just because.”
“It has been a very dynamic and evolving environment, and the team has had to rethink and reset plans almost daily to meet demand,” says a spokesperson for the company, noting that some hospitals, senior care centers, and other facilities have restricted deliveries, and this policy varies among cities to states.
Pixies and Petals responded to its current demand—possibly generated by COVID-19—by developing mini bouquets with some of the flowers intended for client weddings, which were postponed, but it was too late to cancel the goods. The company donated the rest of the perishable product to local hospitals. The company has also developed a non-contact delivery service for families: flower crown kits for kids, which Maretti says are meant to help ease boredom, and can be fun for parents and their kids to do together during the lockdown.
Typical day-to-day operations have temporarily ceased, with only Maretti working daily and a few staff members working remotely, picking up wedding planning projects intermittently. While June is a prime time for weddings in many other sites around the country, it is not in Florida as the heat and humidity ticks up considerably—not to mention hurricane season runs from June 1 through November 30. But as weddings get postponed and vendors and couples alike will need to be flexible, Maretti already expects June will be extremely busy for her team. Remaining optimistic, Maretti is trying to stay busy by looking into into floral trends and new product lines, forwarding tutorials and inspiration to her designers while consulting on different installations that Pixies and Petals plans to develop in the fall.
“I have been creating training programs for my team, and we are about to jump on a Zoom conference [call] so I can work on certifying them for wedding planning and coordination,” Maretti notes. “I have also been trying to keep spirits high by keeping them in the loop of the postponements and new business that we have been booking. We will be slammed once things pass.”
Stembel says she doesn’t have the data yet to make a conclusion if social distancing has actually contributed to the surge of orders in the last few weeks, especially as the company already based its business model around helping loved ones celebrate or wish someone a happy birthday from afar.
“I can say, however, from seeing some of the notes on our recipient cards, and the orders that have come in the past few weeks, that so many of our customers have come to us to help them be ‘there’ when they can’t actually be there in person,” Stembel says. “The casualties from COVID-19 have been devastating, but there are also so many lesser tragedies of this pandemic—families separated, cancelled weddings, graduations—which will never come to be. I’m grateful that we can help our customers help their friends and family feel loved, even from a distance.”
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