Leaf & Petal Flower Studio Ltd Case Study

INTRODUCTION

Leaf & Petal Flower Studio Ltd. is a flower shop located in Duncan B.C. The company's tag line is "Celebrating with Flowers". As such, they aim to position themselves as a source for components of a good celebration. Business activities include; sourcing and stocking fresh imported flowers from around the world, designing floral arrangements for weddings, funerals and other celebrations. Leaf & Petal also sells and rents "hard goods", such as, vases and unique pottery pieces. They sell their products from the storefront which is a high visibility, corner lot, in downtown Duncan. Leaf & Petal also accepts orders and conducts sales over the internet via their website. The bulk of their business comes from the sale of fresh cut flowers, chocolates and related products to local customers and regular clients. Leaf & Petal specializes in superb presentation of its floral designs. They offer the "best in modern floral design... at affordable prices" (Leaf & Petal, 2011). Leaf & Petal opened for business in 2006, since then, 4 other flowers shops in Duncan have closed; however, they continue to face stiff competition from local grocery stores and their main established competitor in town. This case analysis will focus on Leaf & Petals' current business operations and the potential for an increase in profits by implementing a coherent strategy for success.

GENERAL ENVIRONMENT ANALYSIS

Diagram 1: General Environmental Analysis

GENERAL ENVIRONMENT ANALYSIS

RETAILING INDUSTRY (FLOWERY INDUSTRY)

POLITICAL/ LEGAL FACTORS

On the 26th of August 2011, BC's HST referendum's result showed 54.7% in favor of extinguishing the tax. The repeal will be in effect in approximately 18 months. Most consumers will cut their major spending amid the news of the repeal (Marowits, 2011). Helmut Pastrick discussed how the repeal will help those of lower income who would be able to purchase certain essentials which will be no longer taxed (CBC News Canada, 2011). He also argued that business investments will most probably decrease in British Columbia. The move back to PST/GST will lower their tax claims and hence their net income. Overall, uncertainty surrounds the effect of the HST's repeal, both on the retail industry and specifically on florists.

ECONOMIC FACTORS

In 2010, the GDP growth rate by retail industry was up 3.8% after a decline of 0.4% in 2009 (Industry Canada, 2011). So far, 2011 holds further growth of 2.4% for all industries and 1.5% in retail (Statistics Canada, 2011). These figures add further confidence in the ability of Canada's retail industry to satisfy further demands and boost consumer confidence. Disposable income in the 2nd quarter of 2011 shows a 1.6% increase from last year (Statistics Canada, 2011). Given the increase of per capita disposable income and the decrease of unemployment rates, we can assume the consumer now has greater purchasing power. Positive demand for the retail industry and florists in particular, is expected to continue. Additionally, the average gasoline price has steadily increased over the last 3 years (GasBuddy, 2011). With ever increasing demand and limited world reserves of crude oil, we can expect higher gasoline prices over the long run. As far as the floral industry is concerned, higher fuel prices adds to the cost of delivering and supplying flowers.

SOCIO-CULTURAL FACTORS

As lifestyle changes have affected consumer's attitudes, ethical consumption has decreased sales in the retailing industry for leisure and luxury products such as flowers. British Columbia has recorded the highest proportion of citizens who have consumed or boycotted certain products for ethical reasons (31%) (Turcotte, 2011). A significant movement marking the last decade is the greater awareness Canadians have about the impact their daily activities can have on the environment. There have been many studies since 1990 suggesting that cut flowers have a serious environmental impact due to substances including DDT and methyl-bromide that are used in flower production (Smith, 2011). The environment is , therefore, one of the reasons for which many consumers are now buying artificial flowers or using e-greetings.

DEMOGRAPHICAL FACTORS

In Canada, the proportion of seniors is increasing more rapidly than all other age groups. The 2006 Canadian Census revealed that 15.2% of the total population is aged over 65 years, while in Duncan it is about 28.78% (City Data, 2007). The increasing trend of elderly people is beneficial for the floral industry because there will be an increase in funerals. According to Statistics Canada, 48.97% of Duncan's population is currently in the labor force, and their families' median income in 2005 was about $45,469.00 while the median income of economic families in Canada is about $66,343.00 (Statistics Canada, 2008). As noted, the trend for family income in Duncan is decreasing compared to the average income in Canada. This detrimental to the flower industry because consumer's purchases will be based mainly on basic goods, not luxury products, such as flowers.

TECHNOLOGICAL FACTORS

The use of more artificial flowers is likely to occur due to changes caused by technological progress (Statistics Canada, 2011). New discoveries in the field of Flori-culture / Horticulture have improved planting methods. Plant biotechnology improves the production of plants and flowers. New technologies such as the permastem or permasilk processes fuse flowers to their stems, making them more durable, and ensuring the functionality and beauty of faux flowers (Montgomery College Biotech Institute, 2007).

Online shopping is also affecting the floral Industry. Internet is becoming a substitute for products, particularly those which can be delivered easily. The impact of the Internet on retail shopping depends on the specific product category and other factors including consumer behavior and concern for online security. According to Statistics Canada there has been a rough increase in Internet Shopping by consumers. By 2005, 13% of individuals purchased products such as "Flowers and Gifts" and by 2007 there was an increase