Valentine's Day is right around the corner and 1-800-Flowers.com has been working overtime in an attempt to deliver the perfect gift. Chris McCann, CEO of 1-800-Flowers.com, joins The Long and The Short to discuss the season of love.
McCann says Valentine's Day is actually the company's third busiest time of year. He says other companies within the 1-800-Flowers.com brand, such as Harry & David, have boosted the company's revenue and growth. The company has had to widen its product offerings in an effort to attract younger customers. McCann says the sentiment of gifting hasn't changed, but the type of gifts have. However, the biggest trend for this Valentine's Day season? Purple flowers!
Plus, how technology has impacted the way flowers are sold. McCann says voice assistants are becoming a popular way to order flowers. 1-800-Flowers.com has tried to embrace technology as much as possible to cater to the changing needs of its customers.
FEMALE_1: We're happy to be joined now by the Chris McCan, CEO of 1-800-FLOWERS.COM. Chris, it is great to have you with us. Thanks for joining us.
MALE_1: It's been an honor. Thank you very much.
FEMALE_1: We've got some beautiful fresh flowers up here that are smelling so nice and on point this morning. How important is this Valentines Day to the company's profitability for the year?
MALE_1: So, every Valentine's Day is important to us. It's actually our third largest holiday. The Christmas holiday season because we've moved so much into the gourmet food business is our largest holiday season. And then, in the floral business, Mother's Day is actually bigger, but Valentine's is a very important business. But while we have these bumps from these seasonal bumps, it's really the every day business especially for the flowers business. The birthdays, the anniversaries, the get-well occasions that really drives the 1-800-FLOWERS brand.
MALE_2: Well, let's talk about the different businesses that you have because I think when people think about 1-800-FLOWERS.COM, they oftentimes think of, of course, flowers. It's in the name, of course.
MALE_1: Especially a Valentine's Day.
MALE_2: But, er, but is food a higher margin for you guys and is that increasing mix especially in recent years?
MALE_1: We've grown our business over the years by adding these other iconic gourmet food brands. Harry and David being the most well known. Cheryl's Cookies, The Popcorn Factory, 1-800 Baskets, several others, and the gourmet food business stands to bring a higher gross margin for us. So, as the mix has grown so has our margin.
FEMALE_2: Um- um. And in terms of what we're seeing this season, does it depend- just sales depend that much on which day it falls on, what the weather is like. I mean I feel like weather obviously can always be a factor here. What about the day of which day of the week Valentine's Day falls on?
MALE_1: Yes. Weather can always play a factor and we're always watching the weather reports. It will not be weather someplace in the country, right? But the day placement is very important. So, this year, we get a little bump. It's one of the tailwinds we have. It's moving from a Tuesday last year to a Wednesday. And because people all remember last minute, wait till the last minute because it's an extra sellings day and an extra day for delivery so it should be- so we are well-positioned to take advantage of that slight tailwind that we have.
MALE_2: Chris, you've been in the business for years. How have you seen different demographics and different age groups attracted to buying flowers as a gift and how has that changed over the last few years? I guess my question is are millennials as interested in, in buying flowers for their significant others as our parents were?
MALE_1: I would say that's one of the reasons why we've diversified a bit is because we want to make sure that we're capturing all of your gifting needs. So, as we see the different generational shift change, what doesn't change is the need for human being to express themselves. As we like to say, we're in the business of delivering smiles on behalf of our customers. Whether that's floral, whether it's gourmet food, whether it's our cookies, our candy product. So, we launched the new brand recently called Simply Chocolate because we see that while chocolate, overall, has been challenged. Chocolate gifting is very much a vibrant, a vibrant business for us so we're not seeing a generational shift in the need to gift but some product changes come along.
FEMALE_1: Let's talk about technology. You, of course, when you're on with us around this time last year, we were talking about some of the Chatbot features that you were rolling out with, some of the AI-powered technology behind some of this. Of course, now rolling out on Amazon's, Alexa, Assistant as well. How has that driven sales? How has that impacted sales for you?
MALE_1: Now, one of the great things is we've been able, as a company, to stay on the forefront of technology that starts to change consumer behavior. So, we got involved early on in these modes of conversational commerce and we talked about launching on bots. We launched on Alexa. We recently launched on Google Assistant, and Google Express, and Facebook Messenger were evolved trying to be where the customers are and where they're going to be. So, it hasn't really impacted sales dramatically for us yet. It's starting to, but it's positioning in front of a younger demographic. And then, also, we have to pay attention. Well, how do we serve that demographic? So, we recently launched a new flowers brand, a fully digital customer self-service portal. That's the way people want to interact with brands today. So, we're making sure we're taking the friction out of you acting on your thoughtfulness.
MALE_2: Chris, what are some of the themes that you are seeing this year for Valentine's Day in terms of colors of flowers, types of flowers? And the second part of that question is, when you do start planning a year ahead of time, how do you anticipate what consumers will be interested in, what will sort of be in fashion, muh, for the next year?
MALE_1: One of the things our product development design and the merchants do a great job of doing, is staying in front of the trends and those trends have to be at least a year out. So, when we go to market last year, we also knew that one of the trends this year then the color would be ultra violet. So, you could see even in this arrangement, we start to pay attention to the violet, the purple passion colors, and things like that so they're always looking to do that. But for Valentine's Day, trends don't change that much for your major holidays. Roses are not going to be popular every Valentine's Day. But like I say, different colors, different varieties will come in and out of trend a little bit but our team does a great job on staying in front of those trends.
FEMALE_1: We see the stock up about two percent or so today so it seems to be obviously-Yeah, yeah bullish you are heading in to to the holiday season. Of course, this is a longer term chart here that we are seeing going back to just before the beginning of 2017 a bit. Now, when we think about the the farm-to-table, right, that's a concept that some of these well startups have tried to sort of put at the forefront of their own mission in trying to bring fresh bouquets into different people. How has the company looked at that? Has it readjusted its strategy because of that?
MALE_1: Well, our company has actually been doing delivered fresh from the farm flowers since about 1987 so that's a big part of our business. We give out to our customer's choice. You can either have it shipped direct from the farms where it's more of a do it yourself type product, or you could then get something like this. It is so artfully designed by a florist and delivered as a finished product so we think it's important that then not only to give the choice to the consumer but for the consumer to know the types of growers that we work with. To know that whether the US-based growers of which there are many. Well, the South American growers, they provide a large portion of flowers. They are all certified, you know, trade-certified growers. We have people at the farms. We want to make sure we're doing the right thing with the right people.
FEMALE_1: Um- um.
MALE_2: In terms of other businesses that you own, Popcorn Factory, Harry and David, of course, Simply Chocolate, as you mentioned, talk about the synergies there between 1-800-FLOWERS core product and these other tertiary businesses and the businesses that you have added in recent years. Is it really just about delivery and sort of increasing the average revenue per customer at that checkout, and offering, you know, more than just flowers, or are there other synergies that you are able that you've been able to work in and find?
MALE_1: The most important thing is we learned over the years just to stay close to our customer. To understand, what trends are changing for them. What they are using to give a gift to deliver a smile in their life. That's led us down to increase the gourmet food gifts. So, what we find when we do that is our customers are coming to us not to buy less flowers perhaps, but now they are coming us to is to buy a gourmet food, gift for another, for another occasion, another recipient. So, we are solving more of their gifting needs and being a total gifting solution. That increases the retention rate, the frequency, and the lifetime value for us, tremendously.
FEMALE_1: All right, Chris McCann. Happy Valentine's Day to you. Thank you for joining us as always.
MALE_1: Thank you so much. Great. Thank you. Happy Valentine's Day.