Florists' Transworld Delivery, Inc. History

Address:

3113 Woodcreek Drive
Downers Grove, Illinois 60515
U.S.A.

Telephone: (630) 719-7800
Toll Free: 800-SEND-FTD; (800) 736-3383
Fax: (630) 719-6170

Website: www.ftd.com

Private Company
Incorporated: 1910 as Florists' Telegraph Delivery
Employees: 430
Sales: $161.3 million (1998 est.)
NAIC: 561422 Floral Wire Services; 453110 Florists

Company Perspectives:

FTD will partner all of its resources--with the talents and commitments of FTD members&mdashø ensure the current and future success of independent FTD retail florists.

Company History:

Florists' Transworld Delivery, Inc., better known as FTD, is the world's largest flowers-by-wire company, linking approximately 20,000 retail florists in the United States and Canada, which then handle the orders of customers who want to send flowers to recipients in distant cities. Outside North America, FTD links another 32,000 independent florists in 140 countries across the globe. The company operates an 800 number, so that customers can call from home to order flowers, and also handles transactions through its member retail shops. Using an advanced computer network to link its affiliates, FTD handles more than 12 million orders annually, down from over 22 million in 1987, a slump largely attributed to intensifying competition. From its founding in 1910 until 1994, FTD operated as a nonprofit cooperative. A merger with Perry Capital in 1994 set FTD up as a for-profit private company with a highly recognizable branded product, the FTD bouquet.

Early Years

FTD was organized on August 18, 1910, as Florists' Telegraph Delivery, by a group of 15 retail florists who agreed to exchange their out-of-town orders, signalling the orders to each other by telegraph. Even during its early years, Florists' Telegraph Delivery, or FTD, effected highly successful national advertising campaigns. In 1914, a Boston advertising executive coined the phrase "Say It with Flowers" for the company, a tag line which stuck with FTD for virtually the rest of the century. Also in 1914, FTD began using the Mercury Man logo, comprised of the Greek god Mercury in a winged cap and winged sandals striding along with a bouquet of flowers held in his outstretched arm. The logo became prominent in FTD advertising and endured as one of the most recognizable logos in the United States.

FTD also began to use well-known personalities to advertise its services. In 1933 the company launched National Shut-In Day, a day to remember invalids, and hired to advertise the event actress Mary Pickford, gossip columnist and celebrity radio commentator Walter Winchell, and singer Kate Smith. Moreover, Winchell also added a routine to his radio show in which he presented "real orchids to real heroes." The orchids were provided by FTD, thus giving the florists' group prominent weekly exposure on a popular national broadcast.

Growth After World War II

FTD grew as a national retail member network, and after World War II it expanded abroad as well. On November 1, 1946, FTD established International Florists, Inc., to sell its flowers by wire all over the world. This allowed customers to send elaborate floral gifts across the ocean, and, in some cases, florists went to great lengths to keep up FTD's reputation for reliability. In one instance, a Spokane, Washington, businessman went on an around-the-world cruise, and his company ordered flowers sent to him at a dozen foreign ports of call. FTD handled the order with no problems, though it reported that its Kenyan member florist had to take a four-hour canoe trip downriver to make its delivery to the businessman's cruising steamer. The company was similarly proud of a British affiliate florist. Given the task of delivering a bouquet to a lighthouse keeper on a stormy day, the florist made four attempts by rowboat. Unable to land, the florist finally caught hold of a rope thrown out from the lighthouse and attached the box of flowers. The customer gratefully hauled it in.

Because of its growing international presence, Florists' Telegraph Delivery changed its name in 1965 to Florists' Transworld Delivery. The well-known initials stayed the same, and Transworld emphasized the company's expertise in delivering flowers across the globe. By 1969, FTD was processing more than 12 million orders annually. By 1974, the florists' cooperative had about 13,500 members. FTD's headquarters were in Southfield, Michigan, a suburb of Detroit, while its member retail florists were all across North America. Its international affiliates comprised approximately 40,000 florists in 130 countries, including countries behind the Iron Curtain.

With so many members to keep track of, FTD used computer tapes to handle records of its credits and debits, and such extensive computer files sometimes proved useful in unique applications. According to a 1974 article in Nation's Business, the FBI routinely paid visits to FTD's headquarters whenever a reputed mobster died. The FBI reportedly scanned FTD's records to keep tabs on who was sending flowers to the funeral. Because of the number of daily orders, and the importance of speed and accuracy to its business, FTD had to have the latest and best in computer equipment. From the computer tapes in use in 1974, the company finally launched its own computer network system in 1979, called the FTD Mercury Network. FTD delivered 6,500 computer consoles to member florists soon after adopting the system, allowing for faster and more reliable communication between retailers. In its first year of use, the FTD Mercury Network handled approximately 11,000 electronic orders every day.

Brand Development in the 1980s--90s

A prominent national advertiser since its inception, FTD employed the Detroit ad agency of D'Arcy Masius Benton & Bowles in the 1980s. This agency focused on strengthening the identity of FTD as a brand by inventing memorable names for particular flower arrangements, including the FTD Pick-Me-Up Bouquet and the FTD Tickler Bouquet. In 1983, FTD began using former NFL Hall of Fame football star, sports announcer, and actor Merlin Olsen as a spokesperson in its television ads.

By 1990, FTD was spending somewhere between $20--$25 million annually on advertising. The company ran ads on television and radio, as well as in newspapers and magazines, continuing to use its longtime spokesman, Merlin Olsen. The advertising campaigns emphasized sending gift bouquets as a "kind, convenient, and above all, fun" activity, according to a 1990 Advertising Age report, which added that FTD strove to make available "the perfect bouquet for all occasions." Ads were targeted toward different audiences at different times of year, aiming at men for Valentine's Day, and women for Thanksgiving and Christmas, for example. Beginning in 1990, FTD tried to reach a younger audience, too, placing ads in such magazines as Vogue, Rolling Stone, and Sports Illustrated.

The company also launched promotions centered on new floral arrangements that featured the products of partner companies. For example, in 1991 FTD ran a cooperative venture with Gerber Products Co., the renowned baby food and baby products manufacturer. The FTD Bundle of Joy bouquet came attached to an assortment of Gerber products, including a baby bottle and a toy. In other joint ventures, FTD sponsored an international sweepstakes with credit card company American Express in 1991 and conducted a similar contest with the Pontiac division of Detroit automaker General Motors.

The year 1993 saw the debut of the Chicken Soup Bouquet, a joint venture with Campbell's Soup Co. to combine a get-well floral bouquet with a Campbell's mug and a packet of instant chicken soup. Get-well bouquets already made up approximately 14 percent of FTD member florists' business, and the new product was intended to boost that already large segment of the market. All the advertising for these various new products was overseen by the advertising agency FTD had long been associated with, D'Arcy Masius Benton & Bowles.

Competition Intensifies in the 1990s

However, in spite of all the money FTD was spending on advertising, and the energy it was putting into creative marketing tie-ins with other companies, the company met with evidence of intensifying competition. Beginning in 1988, FTD experienced dropping market share and sales. From 1988 to 1994, FTD's share of floral orders fell from 80 percent to 58 percent, in part because of growing competition from cheaper flower outlets. Supermarket sales ate into the retail florists' market, and competing floral telephone order companies also stole some of FTD's traditional business.

One such competitor was 1-800-Flowers, a company that had been losing money in 1987 when it was bought by Jim McCann, a former social worker. By 1993 McCann had turned 1-800-Flowers around, and the company was reporting $100 million in annual sales. FTD launched its own toll-free number for use by the public in 1993: 1-800-Send-FTD. However, this move not only managed to take orders away from FTD member retail florists but also lost an estimated $13 million in the process.

In the flower market as a whole, flower-by-wire sales dropped more than 13 percent from 1990 to 1994, and non-florists accounted for almost half the flower sales in the United States. Consumers were also increasingly exposed to other flower venues, such as catalogs and online services. All this was bad news for FTD, made worse by the fact that FTD's advertising was clearly not getting its message across. The company conducted a focus group in 1992 in Atlanta, surveying 18-to-25-year-old women who had recently used a florist for their weddings. FTD's marketing department asked each of these women if the florist they had used was an FTD member. Not one of the women in the focus group either knew or cared. In response to this eye-opening news, FTD started a new advertising campaign. Instead of emphasizing a particular holiday or bouquet, the new ads sought to reinforce the image of FTD florists as high-quality and reliable vendors.

Still, advertising alone did not seem likely to turn the floral cooperative around, and in July 1994 FTD announced its interest in accepting a merger offer from a New York banking firm, Perry Capital Corp. Perry Capital was run by Richard Perry, formerly an executive with the investment firm Goldman Sachs & Co. Perry offered to buy FTD for $112 million, with the intention of converting it into a for-profit business.

FTD's cooperative structure was cited as one element in its failure to compete in the 1990s. With the company governed by a board and a series of committees, change took a lot of time to implement. For example, FTD had explored instituting a toll-free number in the early 1990s, but by the time the idea was approved and implemented, 1-800-Flowers and several other companies already had thriving businesses and significant market share.

Richard Perry brought in a marketing consultant, Jerry Siano, to help convince FTD members that the cooperative would do well to accept the merger. Siano had worked with N.W. Ayer, a New York advertising firm that had masterminded the "reach out and touch someone" campaign for AT&T. Perry used AT&T as a model for what he would like to do with FTD: emphasize the company's reliability and great service. The new company would "sell relationships, not just flowers" according to a September 26, 1994 report in Advertising Age.

FTD's board accepted Perry Capital's proposed merger, but only by a vote of ten to nine. While FTD members were mulling over the proposal, Roll International Corp., a privately held company that owned both commemorative platemaker Franklin Mint and the flower delivery service Teleflora, offered $140 million for the company. However, ultimately, FTD members opted for Perry Capital's deal. The new for-profit company, FTD Inc., organized in November 1994. At the same time, the company launched a nonprofit trade association called FTD Association.

One of the first things the new company did was to change its advertising agency, hiring Grey Advertising in 1995 to handle its account, worth an estimated $35 million. FTD also worked to improve its computer network. In 1996 FTD florists were relying on outdated monochrome PCs which simply listed the different kinds of bouquets available. The company upgraded to a faster network that was able to transmit visual images of floral arrangements. The new computers were also capable of running CD-ROM versions of books important to florists and their customers, such as Emily Post's Complete Guide to Weddings and a dictionary of flowers and plants. Though the new system was expensive, it seemed to significantly enhance the service that individual FTD florists could offer their customers.

Competition continued to be fierce in the floral market. In 1997 two of FTD's rivals, Teleflora Inc. and Redbook Florists Service, announced that they would merge. Moreover, FTD experienced some challenges in the marketing department, as the company's vice-president for advertising left in 1997 and his duties were given to an outside consultant. Just two years after switching its advertising account from D'Arcy Masius Benton & Bowles to Grey Advertising, the company switched again, selecting W.B. Doner & Co. of Southfield, Michigan. The company's advertising budget had gone up, from $12 million the year of its merger with Perry Capital to $35 million when Grey got the account, but ad spending had fallen to $16 million by 1996. The budget for new agency W.B. Doner was said to be in the broad range of between $20 million and $40 million.

The Late 1990s and Beyond

In 1997 FTD consolidated its corporate headquarters, combining the operations of its Michigan offices with its Boston offices at a centrally located office in Downers Grove, Illinois, a suburb of Chicago. At this time, the company was handling approximately 12 million orders a year, down from around 22 million orders ten years earlier. Still billing itself as the leader in the flowers-by-wire business, FTD strove to counter the changing business conditions and increased competition that had hurt sales and market share in the past.

As a private company, FTD showed signs of trying to adapt to a more competitive floral market, witnessed by new advertising campaigns and a better computer network. With regard to technology, FTD announced an agreement in 1998 with Dell Computer Corp. to buy more than 20,000 Dell desktop computers, workstations, and servers. That year FTD also announced it was upping its ad spending, planning to spend $30 million on a new campaign, likely influenced by Richard Perry, focused on "selling relationships, not just flowers." The new 1998--99 campaign theme stressed that FTD was "The place to find quality."

Florists' Transworld Delivery, Inc. History

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Company History:

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