The online gifting retailer recently sold its Chicago-native chocolate brand Fannie May Confections to Ferrero for $115m. The deal was sealed at the end of May 2017.
Steve Druckman, president of the Midwest Gourmet Food Group (which owns all 1-800-Flowers brands, except Harry & David) told this site that e-commerce is always a challenge for the company as online retail giant Amazon continues to expand its footprint.
Amazon announced its plan to acquire Whole Foods earlier this year.
“We’re looking to figure out how to replace Fannie May,” Druckman said. “We still have a commercial relationship with Fannie May, so we’re able to continue to sell its products across our sites as well as the Ferrero products such as Nutella, Tic Tac and [Ferrero] Rocher.
“But whatever we do, it will be in a gifting way,” he added.
Strategy to compete with Amazon
The key to competing with Amazon is to buy and build brands that are unique to 1-800-Flowers, Druckman said.
“For example, you can only find Cheryl’s Cookies on our website, and [other companies] have wanted to knock it out for years.”
However, some of the company’s brands are sold on Amazon, such as Popcorn Factor and Harry & David. “For me, it’s all about a tailored set of products that are made for that channel,” he said.
The company has to make sure its products do not not compete with those available on Amazon or its own website.
1-800-Flowers recently launched Passport, which allows its online consumers to pay an annual fee to get free shipping when purchasing any of the company’s brands.
Partnership with Nestlé
1-800-Flowers purchased popcorn brand Harry & David two and half years ago, and the brand has experienced 5% sales growth during the spring season for the first time since 2012.
Harry & David’s president, Steven Lightman, said the brand has been around for 15 years, but was never marketed outside of the major holiday seasons. The spring sales growth was mainly driven by 1-800-Flowers repositioning it as an everyday brand, he added.
In addition to targeting new snacking occasions, Harry & David has partnered with several confectionery companies to come up with cobranding products for brick-and-mortar retail.
The latest partnership with Nestlé, for example, helped Harry & David develop Moose Munch with Buncha Crunch and Moose Munch with Butterfinger: both were showcased recently at the Summer Fancy Food Show in New York. These products will also roll out to major US retailers including 7-Eleven, Walgreens and Walmart later this year.
1-800-Flowers said it will continue to innovate flavors and packaging across its confectionery and snack portfolio and aims for high single-digit growth by the end of 2017.