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Insights from Laurie Nesbitt, Florists Supply President
Happy New Year to all! 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 our Cut Flower departments.
Plant growth and home deliveries slowed compared to the lockdown phases of the pandemic. House plants and containers needed for pick-up or delivery orders fell off.
In our Supplies department, we saw an obvious uptick in wedding, graduation, and event items. In contrast, there was a slowdown in container categories such as ceramics, baskets, and metal containers.
Recently during the holidays, we saw more consumers return 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, I feel like 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.
One product line that is still currently unavailable are Design Master Spray Paints, now owned by Smithers-Oasis. Communication on product availability in Canada has been unconventionally silent, and an estimated timeline could not be provided. They are releasing limited top-selling products to key accounts in the USA; the Canadian market is further down their priority list.
Ocean Shipping Rates
Good news on Ocean shipping container rates — 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 us adjust 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 labour 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 for us 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%. What is your sales outlook?
Wage Pressures
Wage increases are at the forefront of most businesses as employees face higher inflation for 2023. Minimum wage increases this year include:
- Manitoba: $14.15 from $13.60 on April 1st, and again $15.00 from $14.15 on October 1st.
- Saskatchewan: increase to $14.00 from $13.00 on October 1st.
- Prince Edward Island: $14.50 from $13.70 on January 1st, and again on October 1st from $14.50 to $15.00
- Newfoundland and Labrador, and Nova Scotia: both amidst plans to increase their minimum wage to $15.00 by April 1st, 2024.
Minimum wage rates for other provinces (with no current published changes) include Alberta at $15.00, BC at $15.65, Ontario $15.50, and New Brunswick at $13.75. Yukon is at $15.70, Northwest Territories $15.20 and Nunavut $16.00.
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% percent (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. As a small example, in our Winnipeg operation we have a new employee Denys who has recently immigrated from Ukraine.
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. Again, in our Winnipeg operation, I can cite three part-time employees that were all retired at one point and now provide valuable part-time contributions. Businesses should also try to accommodate senior full-time skilled workers wanting to move to part-time as they begin to transition to retirement.
Gratitude and New Year Wish
2023 marks the 28th year in the floral industry for me. I often describe our industry as resilient and full of sincere, hardworking, and empathetic people. That resiliency and work effort has never been as evident as over the past three years, at both personal and professional levels.
I am grateful my career path led me to the floral industry and for all the relationships I have made along the way. Thank you to our customers, employees, vendors, social media followers, and advisors who support us. A wish to you all for a tremendous 2023 full of happiness and good health.
Sincerely,
Laurie Nesbitt CPA, CA
President and COO