In the spotlight: Roses Only
“I’ve been in flowers since I was five-years-old,” says James Stevens. From the 1960s onward, his parents owned a little flower shop – a stall, to be exact – at Sydneys Town Hall Station. Having grown up with flowers, it came as no surprise when, upon graduating from university in 1988, Stevens established Roses Only. He and his father now hold equal shares in what has blossomed into a significant privately-owned business, employing 80 people and indirectly providing work to another 300.
Just how much Roses Only has grown since the seeds were planted is unclear. Stevens is cagey about the company’s financials and will only talk in terms of the thousands of orders placed each week. He has resisted the temptation of being ranked in BRW’s various league tables, and has subsequently never laid claim to a ‘fastest growing’ title, or been crowned head of one of Australia’s ‘top private companies’.
“It’s not something that I care to do. I don’t particularly want to disclose our figures because we’re a family business. We keep it pretty close to our chests, though if we contemplate listing in a few years’ time we’ll release some results, I suppose,” says Stevens.
An initial public offering is likely to be the preferred option for the raising of capital for further expansion into international markets. “I feel that the real value will only come to us in an IPO (as opposed to a private-type sale or an investor coming in) because our business and brand is loved enough, and trusted enough, that people will pay what we would regard as a fair price for equity in our brand.”
Many aspects of the Roses Only business have evolved over the years, but the biggest change has been to its sales channel. Originally Roses Only operated out of an upmarket shop in Sydneys glamorous Chifley Tower, alongside Tiffany and various European designers of haute couture. Phone sales were simultaneously managed through a call centre. The advent of e-commerce and widespread acceptance of the use of credit cards, however, transformed the retailer into an online business, and eventually led to the closure of all but one retail outlet.
Within a relatively short period of time, the online boom fuelled a dramatic domestic market expansion and prompted Stevens to export the Roses Only brand overseas.
“We’ve gone from a single-city (Sydney) market to a business that now has distribution in 35 cities and towns around Australia, as well as Auckland, Christchurch and Wellington, New Zealand. Our signature product (the distinctly recognisable boxed roses) is available throughout London and we distribute flowers in a different form of packaging throughout the rest of the UK,” he notes.
Stevens explains how the companys evolution online was at the same time as the explosion of web portals such as Yahoo!, OzEmail, Optus Net and BigPond. “We realised the new technology gave us an opportunity to stand out. We wanted to dominate the new sales channel. Prior to that, we were part of a massively fragmented flower industry.”
While the vision was boldly stated, Roses Only has been relatively conservative in its selection of new markets. That English be the main speaking language is non-negotiable so, having expanded into the UK and New Zealand a few years ago, Singapore and Hong Kong are next on the radar. The US is the last frontier.
“Size could scare me,” Stevens admits, when questioned about the opportunity presented by the US. “The size of the US market – both its geographic spread and population – is a bit daunting. I’d like to think I’m not stupid or arrogant enough to just take that on.”
He cites time and a preparedness to outlay the capital necessary to build brand awareness as the biggest challenges in entering new markets. Certainly, he could not be accused of under-investing in his brand. Almost from the outset, his above the line spend was in excess of $1 million and he has steadily, if not aggressively, used radio and print advertising to build brand awareness.
A target rich environment
When Roses Only was established in the mid 1990s, Stevens target market was men in suits with a credit card – the investment bankers and corporate lawyers who make truckloads of money, read the financial press, work late, and might not have had a meal at home for six weeks. His vision was to make it easy for men to send roses (almost certainly red or pink), using a credit card, originally over the phone and then online.
Martin Place suits are still priority targets, but these days 55 percent of Roses Only customers are women – typically, women who have received the product and liked it enough to send it to their friends.
On average, females send flowers three to four times per year. In comparison, the average male sends flowers only 1.5 times per year (birthday and anniversary only).
Stevens says men will only do what has to be done. “That’s just the way it is,” he reveals. “Men are ‘have-to-do-only’. Of course, we’re trying to break the back of that by telling men there are those ‘just because’ occasions.”
When asked how much the flower business can grow, Stevens unveils his ambitious nature. “Our business has still got a massive amount of growth potential. I believe we’re only at about one-third of the saturation point of Sydney; that we can grow 20-fold in Melbourne,” he states.
Anniversaries are the occasion that is synonymous with the giving of roses. Stevens estimates there are five million relationships in Australia. His, not unrealistic, target is to get 10 percent of that market to give one dozen (Roses Only) roses once a year.
Half a million boxes of one dozen roses, multiplied by $80 or so, adds up to some very good reasons to make it easy for the men of Australia to express their romantic side. They do not even need to remember their anniversary – Roses Only will remind them.
Roses Only roses are not Australian-only roses, though the company’s first approach is to source locally in every market – even down to the city that the flowers are being delivered from. This preference is for commercial reasons, but also because the company feels an obligation to support the communities in which it is doing business.
Growers in and around Melbourne, Sydney, Brisbane, Adelaide and Perth supply product. If the climate is not conducive to growing roses, as is the case north of Brisbane, they are sourced from interstate. The last resort is to import from overseas.
Being a natural product, the challenge is to maintain quality, despite variable weather patterns. The assurance of quality is particularly important as customers order flowers without seeing them first-hand. “We adhere to strict quality criteria when it comes to bud size, stem thickness, foliage quality, petal quality, petal count (the volume of petals within a bud), so it’s a nice, thick bud and has longevity,” says Stevens. “We scrutinise every variety that actually comes through the door and we’re always looking at varieties, and looking at the farms that they’re coming from.”
As many of the roses are grown hydroponically, the business has not been affected by the drought. Economies of scale have also allowed it to absorb the rising price of fuel. Most of the farms deliver directly to fulfilment or production houses, be they florists or distribution centres and the distribution outlets in Sydney and Melbourne are wholly owned by the Stevens family; the remainder are independents that have long-term relationships with the company.
Imported flowers are currently re-routed from Sydney, though that is likely to change in the near-term. When that does happen, the company prepares the product for sale – cutting stems and rehydrating the flowers with water and nutrients to save time at the other end of the supply chain.
Stevens reflects on the unusual way the company has grown. Every one of its distributors has come via word of mouth, creating a closed network of ‘flower people’ who are “as fastidious and anal about the product quality and the brand as we are”.
Common sense marketing
Stevens majored in accounting and finance at university and, though he employs a marketing manager, has been heavily involved “since day dot” in marketing the business. “I call myself common sense (hopefully) marketing and the ROI man. I think I’m pretty good at seeing if something’s going to yield or not and we’ve done enough to know what will work. A lot of it is gut feel and I think I’ve got a pretty good gut.”
Over the years, he has enjoyed being first in his category to try new things, either above or below the line. One example was the viral campaign, ‘Have you ever been in love?’ – which was inspired by the infamous Carlton Draught ‘Big Ad’.
As it transpired, the campaign, though beautiful to watch, did not achieve the desired results. “I think we were chasing a bit too much – expecting it to generate a call to action as well as branding. I don’t think you can do both – that was a lesson we learned.”
Stevens also admits that at two minutes’ running time, the viral was too long. “It’s the sort of piece you watch yourself, and enjoy, but it didn’t really have the humour or shock value to prompt people to send it on,” he explains.
The campaign has not been shelved altogether and may well reappear in a different format – as a cinema trailer perhaps – sometime down the track.
Across the Tasman, Roses Only has developed creative campaigns including one pre-Valentine’s Day sponsorship that involved boxes of roses being given away to Air New Zealand passengers.
Stevens considers the media buy that has been most effective is the Australian Financial Review. “Running an ad (albeit a very small ad in an unusual shape) in the Financial Review day in, day out for the better part of almost five years is probably about the best bit of advertising that seeded our brand in Australia. Following that, I would say commercial radio – good old Alan Jones.”
Right now, Roses Only is trialling a new television commercial in the regional markets of Canberra, Newcastle and on the Gold and Sunshine Coasts. Search engine marketing on Google, Overture, ninemsn and other portals continues to form a part of the media mix.
Direct marketing is the jewel in the Roses Only crown. Over time it has built a huge database of consumers (and businesses, to a lesser degree), who have opted in to receive the brand’s fortnightly newsletter. Around two percent of recipients make a purchase from each issue. Members who are repeat online customers are afforded loyalty discounts. Customers are also prompted to purchase when they register for the important dates reminder service.
“We have a conversion rate of about 10 percent when people come to our site. We also have a very, very high brand awareness because 60 percent of people who go to Google actually type our name into the search engine. We’re very lucky we’re not paying for a whole heap of search engine advertising – people are just looking for our website with a view to buying from us. Of those searches, we probably have a conversion rate in the order of 20 to 30 percent.”
In recent years, Stevens’ pursuit of the lucrative business-to-business market has driven him to consider brand extensions. Fruit Only was launched in late 2005. Hampers Only is scheduled to go live later this year.
Stevens is confident his Roses Only customers will follow to the other ranges of delivered gifts. Corporate clients are anticipated to generate a large proportion of sales – for every occasion when it may not be appropriate to say it with flowers.