Rabobank Report:Floriculture Growth Potential of Northwest Europe’s Supermarkets
In a stagnant Northwest European floriculture market, Rabobank expects supermarkets to increasingly become the preferred outlet for sales of cut flowers and potted plants. There is still a huge gap between floriculture sales in UK supermarkets and sales in other northwest European countries. UK supermarkets’ efforts to uplift their floriculture category have been successful, with a well-organised supply chain combined with proper category management being the key to this success.
According to Rabobank, it is important that suppliers tailor their services and products according to the specific role that their customer’s floriculture category fulfils. Indeed, to tap into the potential of the supermarket channel, growers, retailers and a facilitating player in-between will need to work closely together. If current intermediate suppliers do not tap into this potential, retailers will either invest in the opportunity themselves—integrating the role of facilitator into their business—or the floriculture sector will lose out on this market.
“The increasing segmentation of the market will offer new opportunities to suppliers, and the most potential for additional sales will be through the supermarket channel”, said Cindy van Rijswick, Rabobank analyst.“The example of floriculture expansion in the UK has shown that this is possible, even though the category might be complicated. A well-organised supply chain and proper category management are key factors contributing to the success of the floriculture category in supermarkets. But as there are different possible roles within the floriculture category, there are also different strategies suppliers could follow to tap into the supermarket potential. One point of similarity in all of the possible strategies is the role of the facilitator”.
The large UK food retail chains were among the first in Europe to recognise the potential of a fully fledged floriculture category. The UK ‘example’ shows that there is potential to enlarge supermarket sales of flowers and plants in other Western European countries. Rabobank believes that in order to become successful in floriculture sales, supermarkets must clearly define category roles and thereupon actually invest to develop the category according to the defined role. The leading UK supermarkets show that proper organisation of the supply chain is a key success factor. Another key success factor is proper category management.
To build a strategic relationship and develop the floriculture category to its full potential, suppliers should take up the role of being a true facilitator. Scale is often required to fulfil this role because of the resources (financial and human) needed to handle large product volumes, buy market data and develop better products and/or services. Facilitators link growers to retailers, make agreements on volumes and prices if needed, and take care of imports, transportation and packaging. Furthermore, facilitators advise customers on the assortment, presentation and other store-related activities to strengthen customer intimacy. It should be transparent what fee the facilitator requires for which services. Reliability, integrity and transparency are key to fulfilling this role successfully.
“It is up to the suppliers to take up the challenge of becoming a true facilitator that helps supermarkets tap into the floriculture potential”, concluded van Rijswick.
For more information about this publication please contact its author Cindy van Rijswick:
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