Frank Koenen (FleuraMetz): ‘I don’t mind paying a grower a bit more’

FleuraMetz is growing rapidly. They will probably reach a 400 million euro turnover this year. Which will partially be realised through their new platform: Blueroots. “These kinds of initiatives arise when things don’t develop fast enough. We want to put the pressure on.” We interviewed CEO Frank Koenen.

By Cindy van der Zwet

“This document is sometimes called the FleuraMetz place mat.” Frank Koenen shows us the company’s strategy, which is summarised on one sheet of A4 paper. The front page has an overview of all the objectives for the coming years and the back shows a list of the markets where FleuraMetz is active. Quite an impressive list. Most of their activities take place in Germany, but cash-and-carry stores further afield are added to the list each year.

Does that mean there’s still potential for physical cash-and-carry stores?

“Yes, all in all, the number of cash-and-carry stores opened by FleuraMetz is still increasing. Growth has maybe come to a halt in Europe, but our numbers are rapidly going up in places like Australia and North America. Germany is our most important distribution market, but that number-one position could well be taken over by America soon. Having said that, our turnover in Germany is still increasing. Mainly as a result of consolidation. Smaller traders are disappearing and larger parties subsequently take over their activities. The larger cash-and-carry stores continue to exist and are turning into ‘experience centres’. Our customers often use a combination of offline and online.”

How much is ordered online these days?

“We receive around 80% of our orders online. There’s a strong focus on IT within our organisation. Nine so-called ‘agile product teams’ are constantly developing new applications. We invest heavily in online technology – an example is our ‘native app’. It provides our 40,000 customers with a convenient way to buy from central and local stock. Apps like that are completely new for us and very interesting. We’re still learning new things every day. We started a professional marketing department with the aim to inspire customers. There are now ten people working in that department. We’re not afraid to invest and our scale makes it justifiable and enables us to calculate things properly. In that respect, the gap between small and large is only getting bigger.”

You are also investing in Blueroots?

“We took that initiative, together with Dutch Flower Group, because we could see opportunities. There was a lack of consensus and there were too many inefficient processes. When certain segments of the auction subsidise other, more traditional segments, you just end up being too expensive. With Blueroots, we started from scratch and managed to launch an independent, cost-efficient platform.”

Why do you think this system will be successful?

“In order to be successful, you need volume, and that’s something we’ve got. The total turnover of all shareholders together is more than three billion euros. These parties are responsible for 50 to 60% of the total trade. I estimate that around 80% of all plant and flower sales that doesn’t go through the clock in the Netherlands, goes through us. That’s how we can make a difference. We’re going to try and get all those trade flows to go through the platform this year. From next year, we’ll be obliged to do so. Trading parties are really committing themselves to the platform.”

Competitors are going to collaborate… Sounds like a challenge, don’t you think?

“All shareholders are VGB members and participate in Floridata. These trading companies want to collaborate in order to strengthen the industry. We might be competitors on the global market, but by combining our volumes, we can build a strong, demand-driven platform. You could compare Blueroots with a growers’ association or a cooperative, which is also characterised by owners who collaborate to create a strong marketplace, even if they are competitors at the same time. Hence Blueroots’ motto: ‘Go faster alone, go further together’.”

Is Blueroots also going to work together with FloraHolland?

“We don’t want to be on bad terms with them and we’re open to the idea of collaborating with Floriday. But everyone will understand that these kinds of initiatives arise when things don’t develop fast enough. We want to put the pressure on. Let’s not forget that there have been many positive developments at FloraHolland the last couple of years. Their strategy makes sense and the entire organisation has seen plenty of change. The auction mustn’t sit back now, though.”

What are the priorities in your opinion?

“The ‘af-tuin veilen’ auctioning system. I strongly believe in it. There are far too many unnecessary transport movements. That puts a lot of pressure on logistics. The roads are getting clogged, customers are ordering smaller quantities and they wait longer before they put their orders in. ‘Af-tuin veilen’ allows us to start processing sooner and makes transport more sustainable. It requires a different mindset, both from growers and traders, but there’s no avoiding it. The lack of space is one of the major challenges we’ll be facing in the near future. We’re growing rapidly, but we simply can’t continue to build for ever.”

How do you deal with that?

“We’ve got to make better use of the available space. We’ve got to start thinking of working longer hours. We might have to consider delivery slots. And we’ve got to talk to FloraHolland about improving supply logistics. FloraHolland will continue to play a leading role with regards to supply distribution. We might be less dependent on them with regards to the commercial side of things, but not when it comes to logistics.”

Your main focus is on direct sales?

“Yes, that suits our processes. I don’t mind paying a grower a bit more, if that means that I can be sure I’ll have the flowers when I need them, even if that’s at four o’clock in the morning. It’s all about storage costs. At the moment we’re getting 50% of the plants and flowers through our preferred suppliers. That really works and our aim for next year is to increase that percentage to 70%. Our preferred suppliers are our customers, just as much as our end customers. We work closely together; growers have real time information about our stock situation and they can regulate their production accordingly. We actively promote our regular suppliers to our end customers. We can help each other to get further and grow.”

All in all, your story sounds like a very positive one…

“It does, doesn’t it? We’re growing, we’re pioneering in certain markets and we’re making a bit of money, too. Not without any effort, though. We’re happy with a 3 to 4% margin, but we don’t get that if we waste a percent here or there. We really need to organise our processes efficiently and that’s what we’re trying to do every day.”

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FleuraMetz is a bigger company than many others. However there’s one problem of being a big company. To survive you need many more different functions in your company than smaller companies. E.g. for commercial activities, investments and more. And not being arrogant while your company is a bigger company then others are.
This makes it why FleuraMetz is far much too expensive for its clients in Germany. Many other companies like Heyl or Minicuci are far more cheaper with their prices for as well cutflowers as potplants then FleuraMetz.
Today (13.09.2018) the Bloemenkrant wrote about the export of flowers and potplants in which you can read that the export to Germany didn’t grow over the last period. This could be a good challenge for FleuraMetz by lowering their prices to increase their volumes in Germany. It would also be good for their clients if they can have the flowers for a lower price. As FleuraMetz uses to say ”succesfull together” could be realized by cheaper flowers and plants.