Specialty retail Aug, 20 2010

Blooming Gains

Floral industry is gaining momentum in India. With franchising as an enticing option, entrepreneurs are cashing in on its benefits for higher returns. Read ahead for details

By Neha Malhotra
Sub Editor, Franchise India Holdings Limited, Web Division
Blooming Gains

Flowers adorn every moment and every occasion. The usage of flowers is on the rise. Be it as an expression of love or accessorising an event, people are making an increased purchase of flowers. Festivals, special occasions, corporate requirements and wedding are events where the requirement for flowers is at the maximum. Catering to this growing need, more and more brand names are blooming.

At present, the flower retailing industry is largely unorganised in India. However, the number of players in the organised space is slowly picking up. The organised industry is pegged at around Rs 1,500 crore, with franchising claiming 15 per cent share. With the existing gap, huge opportunity lies ahead in this retail segment.

Growth with franchising

A full-proof business with low risk factor makes franchising a better business proposal for aspirants. Pawan Gadia, Ferns N Petals, says, “Everyone realises that opening their own store can be a mistake if the idea and its ideologies are not clear. It may also take a long time for the brand to start chipping in profits. However, when they choose to partner with a brand name, the take off period begins from day one. Expertise of operations is passed on to them along with knowledge for interiors and suppliers as well.” Ferns N Petals, Florista, Flora 69, Fiore and Feelings are some of the significant brands that have taken up franchising.

Online retail: aiding franchising

Today, ordering flowers online has become a common practice. Anytime, anywhere accessibility has made this practice more widespread. Online orders are directed to franchisees around the area of delivery. The franchisees then make the deliveries at desired locations. Therefore, franchisees cash in on online retail customers as well. Gadia states, “Business worth Rs 25 crore comes to us through our online portal. It is our franchisees who make these deliveries possible. If they are not there, we will lose out on this entire sale.” Franchisors are looking at opening more number of florists franchise stores to reach out to different parts of the country to fulfill the needs of their online customers.

Challenges in operations

Running any business even with a set of guidelines is not an easy task. Daily hassles at the store level need to be dealt by the franchisees all by themselves. Long working hours are to be put in by the franchisees during initial months of the business. One of the biggest challenges with flowers is that they droop and die very soon. Ordering with precision is needed to be put to practice. Gadia says, “As flowers are a perishable item, they tend to die in about two days. The franchisee needs to maintain an optimum stock, order according to the requirement and maintain the level of sale accordingly. Some other challenges are lack of cold storage facilities and specific buying markets. Besides, there are no training institutes for those new in the business. These challenges need to be met in the interest of the industry.”

Financial concern

Opening a flower store does not demand as much investment as other realms of retail franchising. The initial investment for a standard store of around 300 sq.ft would range between Rs 8 to 9 lakh with working capital around Rs 3 lakh. The break even period can be reached in about 18 months with return on investment being 35 to40 per cent approximately. The typical franchise term is of three years with the option of renewal available. You can choose from three store formats that are offered in this industry, namely large format stores, standard size stores (300 sq.ft) and kiosks (50 sq.ft). Financial figures will vary with the format opted for. An ideal location for opening flower stores are ground floor shops in busy markets.

Latest trends

One of the latest trends in floral business is the concept of artificial flowers. They are catching up fast in India as artificial flowers do not fade, have catchy colours and are environment-friendly. They are said to contribute about 30 per cent to the total turnover of the floriculture market in India. A major drawback, however, is rise in its prices. They are five to seven times more expensive than real flowers, which is because of the raw materials that are used in their production. However, it is an upcoming trend which franchisors are exploring and an opportunity that franchisees can look forward to. Gadia avers, “Artificial flowers are becoming hugely popular and we expect a growth of about 30 per cent in the times to come.”

Floral jewellery is another concept that is gaining huge popularity. It refers to jewellery pieces made out of fresh flowers. The concept of floral jewellery is not a new one but its aesthetics have changed. Floral jewellery concept has yet not been tapped by a lot of players. Precision and designing are the pre-requisites to get this business going. Getting skilled labour and training them further will help develop this category. As there are not many players who are a part of this industry, it provides great opportunities, especially for those retail players who are already a part of the flower business.

What lies ahead?

Floral industry has ample opportunities for both the franchisors and franchisees. Entrepreneurs who want to invest at a higher level can work towards opening new individual chains while existing franchisors can expand further by offering an opportunity to potential franchisees. Franchise opportunity is wide open for floral jewellery and artificial flowers as well. Multi-unit franchising is also coming to the forefront. Gadia says, “I foresee immense success in this industry. With the contributing factors mentioned earlier, it will move ahead swiftly.”

If you want to invest less but reap more benefits, then this may be just the right option you are looking for.

Related: Personalisation is the key to profits

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