Blooming Business “The Florist”

Introduction

As per the report published by IMARC group, floriculture has blossomed into a major agri business in
over 140 countries. As Indian floriculture market is expected to soar INR 47200 crore by 2022, future
is looking brighter. Indian floriculture industry is growing in domestic as well as international levels.
Among the prominent players in floriculture space in India, Fern & Petals, The Kariki group, Syngenta
Flowers lead the segment. With increased purchasing power of consumers and changing lifestyle, the
demand for flowers is ever increasing in domestic market. Flowers are very intimately associated with
the social and religious activities in India. Flowers are needed in all the religious ceremonies functions
including marriages. Garlands and wreaths are offered on dead bodies. Flower is a token of love and
tenderness. The area under flower crops in India is expanding which presently stands at 3.06 lakh
hectares with a production of 16.99 thousand MT loose flower and about 6.93 thousand MT of cut
flowers (NHB Horticulture Statistic at a Glance, 2017). The demand for loose and cut flowers, and cut
foliage with attractive colours and fragrance has steadily increased in hospitality and wedding planning
segment last a few years. Foliage adds aesthetic value in weaving flowers and flower arrangements,
bouquets, wreaths, indoor decorations, weddings, etc. Flowers are also used for extracting essential
oils, which are used in perfumes. Many flowers have medicinal values and hence are used in Ayurveda.

Opportunity

In India, large number of flowers are grown in different parts according to soils and climate conditions.
Commonly grown flowers are rose, marigold, chrysanthemum, jasmine, lily, tuberose, aster, zinia,
carnation, gladiolus, galardia etc. The flower cultivation remains concentrated in the hinterland of big
cities like Mumbai, Pune, Bangalore, Mysore, Chennai, Calcutta, Delhi etc as successful marketing of
flowers need developed markets and well-organised marketing system. The tender and highly
perishable nature reduce the shelf life when marketed in fresh form. This poses great problems in their
marketing. However higher returns per unit area in shorter time span has attracted many growers
from remote farms in Tamil Nadu, AP, MP, Karnataka, and West Bengal into the business of floriculture.
None the less, the segment is facing challenges related to basic inputs like seed quality, planting
material, efficient irrigation and skilled manpower and technology. To address this issue, GOI has
initiated a CISR floriculture mission. CSIR institutes in 21 states and UT help farmers and industry with
knowledge delivery and agro technologies to grow quality crop. Despite such mission by CSIR, serving
the demand for flowers in urban and peri-urban areas by the growers from remote farm as per the
need and at consumer’s doorsteps is not completely bridged. As per a recent report, India is going to
be urban nation which shall be adding 404 million people to its urban population between 2014 and
2050 (UN World Urbanisation Prospects Report, 2014). The annual growth in urban population in India
between 2010 and 2015 was 1.1% the highest among the major economies (UN World Urbanisation
Prospects Report, 2014). This increasing the consumption of flowers in varieties of form for various
socio-cultural events and occasions in urban areas shall create huge demand for floricultural products
in urban and peri-urban cities of India. Startups and big business enterprises eye this opportunity to
transform into an organized business. Organized flower retailing has a potential to bridge the demand
supply gap and emerge into a profitable business venture. An appropriate organized retail business
model and proper marketing facilities shall bridge the gap between producers and consumers and
thereby fetching better returns to farmers and organized retailers. Largely cut flowers are produced
for export, however increased demand in the domestic the market has rapidly changed the
opportunities for retailing it in the local market as well. The domestic markets are catching up due to
the changing consumer perception towards use of flowers in improved lifestyle. The demand for novel
The case is soley written to provide material for class room discussion. The author do not intend to
illustrate either effective or in effective handling of a managerial situations.
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exotic flowers as well as indigenous flowers and filler is increasing. This calls for a need to establish an
organized flower retailing business to enhance the flower trade business. Historically consumers
purchase floricultural products because of traditions, culture, and lifestyle. Most of the floral products
are used to offer to the god either at homes or in temples. However, an Institutional use of floricultural
products in India has caught up fast contributing to the growth of floriculture in the country.
Consumers require products with uniform quality, regular supply, steady price and novel products at
accessible location and price.

Unorganized trade

The grower generally sells the loose and cut flower through the agents in wholesale market in ₹/kg.
The flower traders from the unorganized segment (local flower market, garland makers, decorators)
directly purchase the flowers from the whole sell market and APMC market. Presently Agricultural
Produce Marketing Committee act as a nodal point where traders and flower growers engage. APMC
flower market is very important market for farmers of the region. It also caters the need of temples
and household consumers. Traders are the key link for onward marketing of the flowers on whom the
farmers rely. Farmers depend on them for ensuring better price as well as for other useful information
like trending flowers, varieties, colour, seasons, etc in the market and most importantly information
about rate variations. However, the major issues identified with APMC market are 1. Lack of
transportation facility 2. Absence of grading facility 3. Low sale absorption capacity of market 4. Too
much price fluctuation 5. Lack of storage facility 6. Market knowledge 7. High tax payment and License
& marketing fee.

An independent study on various issues being faced by the consumers indicate that the nonavailability
of fresh cut and loose flowers around the year ranks at the top followed by the price fluctuation. Also,
non-availability of varieties in flower in the neighbourhood vicinity according to the occasion
disappoints the consumer. On the other hand, the low sale absorption capacity in some whole sale
flower market discourages the traders to maintain the stock. The unevenly distributed demand and
supply for the flowers emerged as one of the major challenges in most of the flower market. Other
than this, trader knowledge about market is also major challenge. Unlike the traditional crop, the
growers of flowers expect information from traders like time of planting and varieties trending in
market. Small growers also expect supply of pesticides supply of planting material and seeds,
Information about use of fertilizers, credit facility, purchase of produce at farm gate, transportation
support and grading of flowers at farm level, assuring fixed rate. Presently the traders are not very
keen to supplying inputs like pesticides, seeds, and fertilizers to the farmers. For such information
farmers depend on the agro-clinics located in his/her vicinity or neighbouring farmers. Traders provide
the credit facility to farmers. Traders are not comfortable in providing the support like purchase of
produce at farmer’s field, transport, grading at farmer level, giving fixed rate.

Business direction

A strong linkage in organized retailer’s value chain from farm gate to buyer will surely address most of
the issues and uplift the floriculture retail business and shall help in avoiding glut condition in peak
season and can overcome the losses too. It will also help the modern retailer to build high sale
absorption capacity and high margin. Building a symbiotic association is key to the success for the
organized retailer.

Q1 In view of the above market situation, a group of management graduates want to form a start-up
venture in organized retail space which would not only retail varieties of cut and loose flowers, but
also value-added flower products to address the growing demand of B2B and B2C market. An investor
The case is soley written to provide material for class room discussion. The author do not intend to
illustrate either effective or in effective handling of a managerial situations.
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is ready to fund the project provided the group can convince the business model, three-year growth
plan and marketing initiatives. Assume your study group as a start-up venture and explain the
approach you will initiate to develop an organized retail business model and marketing initiatives. The
expected business model should also address the recycling process of the waste flowers generated by
the large and regular buyers like decorators and temples.
Q2Design a retail value chain for the chosen business model and justify your position as a cost leader
or differentiator.
Q3Develop a category plan to include agro- clinic services and cut foliage, indoor potted plants,
climbers, bedding plants, nursery plants, palms, Ferns, dried flower and floral essence and oils to
address various applications like aesthetics and decorative, Flavours and fragrance and medicines.

Q4 Design a channel and promotion strategy to build awareness and penetration into the market to
build high revenue growth and momentum in the first three years.

The case is soley written to provide material for class room discussion. The author do not intend to
illustrate either effective or in effective handling of a managerial situations.
3