What Growers Up North Can Expect From the Floral Industry in 2023
January 19, 2023 Note: In this article, Laurie Nesbitt, President and COO of Florists Supply, one of western Canada’s premier wholesalers of unique fresh flowers and floral supplies, offers an overview of what the Canadian floral industry can expect in 2023. Many of these issues, concerns, and opportunities will ring familiar to producers in the U.S.
2022 has come and gone, and it is safe to say the year was a good one for the floral industry. Pandemic measures were still in existence in some form early in 2022. With many of these lifted for most of the year, events-related business flourished, causing a strong demand in cut flower departments.
Plant growth and home deliveries slowed compared to the lockdown phases of the pandemic. Houseplants and containers needed for pick-up or delivery orders fell off.
During the holidays, more consumers returned to shopping in-person. Commercial businesses also increased their budgets and resumed decorating. These shifts helped holiday sales return in giftware, display items, and company parties. Offsetting that was a downtrend in the number of total home deliveries. Families were able to celebrate together in larger groups, versus multiple smaller gatherings. This led to the demand for some design components and containers to lessen compared to last year. Consumers have also resumed travelling for brief holidays or snow-birding for longer periods. Their absence from the country reduces demand, especially noticeable during the holidays.
What is next for the Canadian floral industry in 2023? Here are a few personal observations and comments:
Industry Inventory Levels: In general, the floral industry has caught up on stock for most products. This includes manufacturing, wholesale, and retail levels. Pandemic restrictions lifting resulted in a shift in the demand for certain products, leading to some overstocked categories. We may see the return of sale items, as the different industry levels work through excess inventory this year. During the height of the pandemic, there were no deals to be had as many products were scarce.
Ocean Shipping Rates: The good news on ocean shipping container rates is the demand for containers has dropped off significantly. Container rates have fallen back closer to pre-pandemic levels, while diesel fuel surcharges remain high. While this does not help for adjusting pricing on existing products in stock, it should mean that imported supply products from Asia will return to stable pricing. This would occur even if factory pricing increases to cover labor and material costs. While purchasing holiday items for 2023, we noticed some larger items, such as permanent garlands, can be offered at a lower price compared to 2022.
Sales Outlook: 2023 was a tough year to budget for. While there is still demand in the events channel, inflationary pressures may lead to smaller event sizes and/or budgets. The first quarter of 2023 will also be free of any pandemic restrictions compared to 2022. We settled on a conservative sales budget increase of 3%.
Wage Pressures: Wage increases are at the forefront of most businesses as employees face higher inflation for 2023. According to various online sources, 2022 wage increases to all employees in Canada averaged 3.8% to 4.0% and are expected to increase another average of 4% in 2023. It is an interesting and difficult balance for businesses as they may be facing a drop-off in sales, due to reduced consumer spending in the face of inflation and rising interest rates, while also wanting to pay staff fairly and keep key employees. And of course, the higher the wages paid, the higher prices are for goods and services, and the inflationary cycle pressure continues.
Finding Enough Staff: Finding skilled and experienced employees seems more challenging as we head into 2023. Unemployment in Canada was 5.70% in December 2019 compared to 5.10% in November 2022. While it does not feel like that much of a difference compared to pre-pandemic levels, the pandemic has led to a mass exodus of workers over the age of 55 years who decided to retire or retire earlier than expected. Statistics show Canada needs immigration to provide enough workers for its businesses to thrive. The situation is only going to get more challenging as baby boomers (born 1946 to 1964) continue to retire in upcoming years.
It is essential for businesses struggling to find enough workers to consider new Canadians and part-time retirees. Currently 23% (8.3 million) of the Canadian population were or had been landed immigrants or permanent residents. New immigrants accounted for 71.1% of Canada’s 5.4% population growth from 2016 to 2021.The federal government has set newcomer permanent residents targets of 465,000 in 2023, 485,000 in 2024, and 500,000 in 2025.The pool of new Canadians as potential employees is only going to grow.
Canada’s aging population means that the worker-to-retiree ratio is expected to shift from 7-to-1 50 years ago to 2-to-1 by 2035. Businesses should take note of the increased percentage of retirees in our population and be open to hiring retirees looking to supplement income. Retirees are facing cost of living inflation and escalating health costs. They may also be looking for social connection and familiar purpose in their retired lives. Businesses should also try to accommodate senior full-time skilled workers wanting to move to part-time as they begin to transition to retirement.
Continue reading at FloristsSupply.com.
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