As the owner of Mr. King's shop, I must emphatically state that Mr. King had no right to post this announcement, nor does he know all of the facts for the withdrawal from FTD. Last week, I discussed this matter with him in the event that someone asked a question about this issue. This announcement is a management decision - and the timing of the announcement should not be decided by an employee.
Now that the cat is out of the bag...I will disclose the reason for the
voluntary withdrawal from FTD:
A disturbing FTD business trend has surfaced over the last several years, causing my company to reevaluate its continued business relationship with FTD.
While the FTD co-op was sold in the 1990’s, in the several years that followed the sale, FTD continued to promote retail florists and encouraged consumers to purchase flowers and gifts from their local florists. Those promotions have disappeared in the past several years and even the latest advertising budget for the retail florist segment of FTD was reduced 10% in the ’06-’07 financial year. Furthermore, the numerous industry promotions, trade shows and design schools are virtually non-existent.
Now, it is quite obvious that FTD is competing directly against the local florists – the very businesses that are responsible for the success of FTD for almost 100 years!
One needs to look no further than the local Yellow Pages or www.yellowpages.com to confirm this fact. Furthermore, FTD’s 2006 and 2007 Form 10-K Annual Reports state:
June 2006 and June 2007 Reports: “The consumer markets for flowers and specialty gifts are highly competitive and fragmented, and the products the Company offers can be purchased from numerous sources. In the Company’s consumer and international segments, the Company competes with traditional florists and gift retailers, as consumers choose whether to give their business to a traditional florist, specialty gift retailer or a direct marketer.” (Emphasis added)
June 2006 Report: “The Company plans to continue to direct consumers to the Company’s www.ftd.com Web site for their floral and specialty gift purchasing needs, as processing orders over the Internet is a profitable order generating vehicle for the Company and an efficient and convenient ordering method for the consumer.” (Emphasis added)
and:
June 2007 Report: “The Company plans to continue to direct consumers to the Company’s www.ftd.com and www.interflora.co.uk Web sites for their floral and specialty gift purchasing needs, as processing orders over the Internet is a profitable order generating vehicle for the Company and an efficient and convenient ordering method for the consumer.” (Emphasis added)
Finally, both the 2006 and 2007 reports state:
“Market competition among the Company’s existing and potential competitors could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.” (Emphasis added)
In simple terms, FTD is convinced that the local florist is a competitor and has also admitted that the company’s competitors could have an adverse effect on the company’s financial performance. Therefore,
to satisfy investors, increase growth and improve the company’s bottom line, it is imperative that FTD do whatever is necessary to conquer their competition. It has been said “a rising tide lifts all ships” but not in this case – one of the ships is trying to sink the smaller ships.
This is a very disturbing trend as it appears that FTD has taken an adversarial role against my florist. While my 54-year old family business has supported FTD for almost 30 years, FTD’s obvious attempt to take away my retail customer has placed our relationship with FTD at a crossroad. Do I (1) continue to support FTD with the constant flow of monthly fees, only to have FTD take the profits and suck away the very lifeblood of my business or (2) take my business elsewhere and invest the FTD dollars into promoting my local business? I have questioned my local FTD representative about this issue and other members of my family have attempted to discuss this matter with other FTD personnel, only to be “pooh-poohed” by the FTD staff. The bottom line...Why should I support an organization that is one of my largest competitors?
It does not take a rocket scientist to arrive at the answer.
Let me firmly stress that the purpose of this message is not to encourage anyone to withdraw their membership from any specific wire service. Instead, with the changes in the wire services, I think that it is imperative that the traditional florists start a dialog about our rapidly changing industry. Hopefully, this message can serve as a catalyst for that dialog.
Rex D. Rish
President
Rish Florist
West Columbia, SC