Flowers.com changes business strategy

Carle Place-based florist and gift retailer 1-800-Flowers.com is expanding its franchise program and will eventually close its Bethpage distribution center, aiming to boost the reach of its brand and shift millions of dollars of orders to local florists joining the franchise, company officials said.

The retailer, which has about 45 franchise shops nationwide, has not added franchisees in the past six to seven years, Joseph D. Pititto, investor relations vice president, said. The company had been focused on growing its BloomNet wire service, a network of affiliated florists that help the company fill its floral orders.

"In markets where we have a franchise store, which acts as a billboard, those markets actually have higher sales online than markets that don't," Pititto said. "If we advertise on radio and TV in a market that has a storefront, that advertising has more relevance. More customers will . . . click on the site because they see the brand more frequently."

So far, three Long Island florists already have converted, in Commack, Lindenhurst and Holbrook, Pititto said. Five more shops are scheduled to become franchisees in the next two months, and more than 20 additional independent local florists are in the pipeline, Pititto said.

This nationwide push will allow 1-800-Flowers.com to differentiate itself from main competitors Teleflora and FTD without the large expense of opening new stores, said Janet Shim, a retail industry analyst with IBISWorld, a market research firm in Los Angeles.

The company said it will let its lease expire on the Bethpage facility and close it by the end of the year, using franchisees to fill orders and working to place all of the facility's approximately 45 employees either within the company or in its network of franchisees and vendors.

The company's consumer floral business performed well in the third quarter, showing a 5.2 percent revenue increase over the same period last year, Shim noted. Overall, the retailer's net-income loss improved to $2.7 million, from a loss of $7.3 million in the prior year's third quarter.

Participating florists will carry both the 1-800-Flowers brand and their own name on their signs, incorporate the company's signature purple in their stores, benefit from company advertising and be able to sell the retailer's products. "The franchisee gets an established name, the visibility of the chain and often a high degree of assistance," said Barry Berman, Hofstra University business professor.

Franchisee Charlie Moran, 58, saw sales for Mother's Day almost double from last year's revenues at his Lindenhurst shop, now called 1-800-Flowers Evergreen. "I now have 200 to 300 people behind me growing my business," he said.