Flowers tend to be one of the first discretionary items severely hit as individuals cut back on spending
Melbourne, Australia (PRWEB) November 20, 2014
Businesses in the Flower Wholesaling industry procure flowers from growers, which they then sell to retail outlets. Flowers tend to be one of the first discretionary items severely hit as individuals cut back on spending. Demand for flowers is highly susceptible to movements in consumer sentiment, as individuals are likely to forego flower purchases when economic conditions are weak. Consumer sentiment has sustained some level of volatility over the past five years, constraining industry revenue. However, according to IBISWorld industry analyst Nick Flores, “demand for flowers has been supported by real household discretionary income, which has exhibited steady growth over the period.” Industry revenue is forecast to expand by an annualised 0.9% in the five years through 2014-15, to reach $297.9 million. This includes forecast growth of 1.5% in 2014-15.
The Flower Wholesaling industry is highly fragmented, and industry operators typically operate in a set geographic area, as transportation costs and the fragile nature of flowers make it difficult to operate on a national scale. “Industry profit margins have strengthened over the past five years, buoyed by a decline in purchase costs combined with the focus of flower wholesalers on boosting operational efficiency,” says Flores. The adoption of temperature-controlled rooms and a persistently high Australian dollar have supported demand for low-cost flower imports, but these still remain at a low level due to the perishable nature of flowers combined with the preference for locally grown products. The focus on cost by the major supermarket chains is expected to induce strong price competition, which in will weaken profit margins over the next five years. The expansion of supermarket chains in providing flower products will lead to some level of wholesale bypass. Flowers will be increasingly purchased online, as specialist retailers provide some level of customisation to further differentiate their offerings from supermarket chains.
The Flower Wholesaling industry has moderate market share concentration. The dominant player is Lynch Group. Many wholesalers are small-scale operators that work out of flower markets in capital cities like Sydney, Melbourne and Brisbane, while others combine both flower growing and wholesaling to expand their market share. Companies that build relationships with key customers like supermarkets will be able to increase their market share. Concentration is projected to have grown over the past five years due to the growth of Lynch Group.
For more information, visit IBISWorld’s Flower Wholesaling industry in Australia report page.
Operators in this industry wholesale flowers and other flowering plants. Wholesalers source these products from domestic and international growers and sell them to registered businesses such as florists, flower shops, gift stores, department stores and supermarkets. The industry does not grow flowers or plants, nor does it distribute Christmas trees, plant seeds or plant bulbs.
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