Building a business model

About 16 years ago, Chris Rea came up with a simple premise to start a florist company - open shops at busy intersections to attract impulse buyers.

Although building a business around the impulse buyer seems risky, it was a successful strategy, and today, Thrifty Florist is one of the largest florists in Michigan.

About 80 percent of Rea's customers are impulse buyers people passing by who see the store, decide to stop in and buy flowers on a whim. The other 20 percent place orders via phone, catalog or the Internet.

"Most florists are the opposite," says Rea. "They only receive 20 percent impulse buyers."

Rea's business model differs from that of his competitors in more ways than just his clientele. When he opened his first three stores, he was able to bring in flowers by the truckload and cut out the middleman.

Growers ship flowers directly to his distribution facility and the flowers are transported to Thrifty Florist shops that same day or, at the latest, the following day. That guarantees the flowers are fresh, and without a middleman, lowers the cost to the consumers.

As Thrifty Florist grows - the company employs more than 150 people at 14 locations - Rea is proving his business model works just as well for a larger company as it did when Thrifty Florist was smaller.

Smart Business spoke with Rea about his unique business model and how he has made Thrifty Florist a success.

Q: Now does your business model differ from that of your competitors?

We are located on major intersections throughout the city in freestanding buildings. We attract a substantial amount of impulse buyers.

Eighty percent of our business is walkin, which is not typical of traditional retail florists. We also spend a tremendous amount of time on merchandising.

Q: How do you attract impulse buyers?

Through our locations and displays. Our retail locations allow customers to come in and look, as opposed to shop through a catalog. We do have catalogs, but people generally like to come in and look.

Q: Why don't you hire people with industry experience?

We've always been more successful when we hire people who have experience outside the industry because we do a lot of things that differ from typical florists.

We work in a fast-paced environment. In that sense, it is a little bit of a culture shock for people who have been in the industry for a while and worked for other florists, although we do have some employees who have owned shops before and have industry experience that are successful employees in our shops.

We train people on how to use our POS system, which we run our business on. There's also specific software we use that helps us track our orders and sales, as well as monitor our customers.

We also give our employees telephone training, which helps them to take sales orders over the phone. We give employees an overview of how the store operates, with guidelines on the merchandising look and feel for the store.

Once an employee has been with us, we also offer design classes on how to make arrangements, corsages, wedding arrangements, etc. Over time, they receive fairly extensive training on running a flower shop.

Q: How has that helped you to better run your business?

Training is a key part of our business because we do things a little bit differently than other florists. In terms of providing our customers with great service, it's critical that our employees understand how our business works and our merchandise.

It is also critical that they have enough knowledge to have the ability to offer our clients expert advice. Customers appreciate that. I think a critical component of a company's success is spending substantial time and effort on training.

Q: How are you able to keep prices lower than your competitors?

Fifteen years ago, I made a better effort to understand the business and where these flowers come from. Over the years, I have established many relationships with different growers.

Flowers are shipped directly to us from whatever part of the world they are grown - they are not going through a middleman or sitting in a wholesale house facility. The flowers are actually grown and cut specifically for us.

From the distribution standpoint, we can cut anywhere from two to four days.

Q: As you continue to grow and open new stores, is it still feasible for you to cut out the middleman?

The key to that is having a significant volume. When you are buying direct from growers, it is a lot more difficult to buy direct if you don't have a large volume.

Actually, the more stores we have, (the more that) enhances our ability to outsource products.

Q: How do you cater to your customers in a way that makes you stand out from the competition?

The key to our business is we provide a tremendous amount of convenience for our customers. They can get in and out of our stores within a few minutes. They don't have to park in a big parking lot and walk a couple hundred yards to get into our store.

Identities and prices for all products are clearly displayed on each item. Our staff has decades of experience in the floral industry. All of our Thrifty Florist representatives can provide knowledgeable information about all of our products.

We also provide a wide range of services at reasonable prices. We do weddings and parties and events. Many of our customers shop at our store a couple times a week.

HOW TO REACH: Thrifty Florist, www.thriftyflorist.com or (888) THRIFTY