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At 1-800-FLOWERS.COM, Inc., Business Blooms Through Innovation

By embracing technology and keeping a customer-focused business model, 1-800-FLOWERS.COM, Inc. grew from a single floral shop to a leading e-commerce and multi-channel retailer delivering gifts for all celebratory occasions.
March 19, 2018

Few things embody beauty like a humble flower. Today, Mother Nature gets a boost from the innovative application of emerging technologies, allowing millions of people around the country to send and receive fresh floral arrangements through 1-800-FLOWERS.COM, Inc.

In 1976, founder Jim McCann started the business as a single brick-and-mortar store on First Avenue in New York City; it has since grown into a multi-brand gift retailer worth more than $1 billion. The story of 1-800-FLOWERS.COM, Inc. holds important lessons for transforming with technology and the value of a customer-focused business model, as well as the strategic guidance and financing solutions that JPMorgan Chase offers.

Jim McCann describes the company’s history as having five waves. The brick-and-mortar stores in New York City constituted the first wave. The second wave was the integration of sales via its 800 phone number, prompting the business to start using its iconic name: 1-800-Flowers. The third wave was the emergence of e-commerce, and the fourth was the steady consumer shift to mobile and social engaging and shopping.

“Today, we’re out on the front of what we think is the fifth wave of change for us, and that’s called conversational commerce,” said President and CEO Chris McCann (younger brother to Jim). “That is a confluence of technologies—a combination of big data, analytics, artificial intelligence, and then layer on top of that the user interface of the future, voice.”

Jim McCann put it this way: “It’s become part of our DNA to look at what’s next.”

Strategic Guidance Through Bad Times and Good

As a part of the company’s “what’s next” philosophy, 1-800-FLOWERS.COM, Inc. has focused on delivering not just high-quality floral arrangements, but also expanding to other gift options for its customers. In catering to consumer demands and shopping behaviors, the company acquired and grew brands that allowed them to offer gift baskets, gourmet foods including baked goods, popcorn, chocolate and other products. However, acquisitions and strategic brand development are complex endeavors that often require specialized guidance, services and financing.

“As we’ve grown our business, we’ve built what we call the celebratory ecosystem where we have this all-star lineup of brands,” Chris McCann explained. “All along the way, the J.P. Morgan team was right there with us.” He went on to say that J.P. Morgan was with them for the long haul, making sure 1-800-FLOWERS.COM, Inc. had the lending capabilities and flexibility to grow and innovate.

As it did to many companies, the 2008 recession threatened to disrupt the company’s stellar growth and frustrate its brand expansion and implementation of new technologies. Jim McCann said that during the company’s most challenging years, J.P. Morgan’s support was instrumental in its continued success.

“We went to JPMorgan Chase early [during the recession],” said Jim McCann. “We said ‘we’re concerned with how things are going. What’s your advice?’ That was critical in those couple years that we had to go through the recession.”

Jim McCann said the recession was the biggest challenge they faced as a company, but that having the J.P. Morgan team at their side helped them survive and prosper at the end of it.

That same assistance was essential when the company acquired the gourmet gift company Harry & David The deep understanding of the 1-800-FLOWERS.COM, Inc. business and competitive landscape allowed J.P. Morgan to not only offer strategic and financial advice, but to do so in a way that aligned with the company’s vision. While private equity groups and others advised 1-800-FLOWERS.COM, Inc. to minimize capital requirements by selling the agricultural component of Harry & David, that was not in line with what Jim and Chris McCann envisioned.

“J.P. Morgan Chase listened to us when we said, ‘The agriculture is an important part of the authenticity of the brand, Harry & David. We believe it needs to stay a part of the company,’ ” said Chris McCann. “Their response was, ‘If you believe that, we believe it. We’ll finance it.’ ”

Delivering Smiles in the Years Ahead

In addition to its core business model, 1-800-FLOWERS.COM, Inc. is also deeply committed to the community and is working on advancing the nonprofit organization the McCann family founded in 2015, Smile Farms, Inc. Through partnerships with other organizations, Smile Farms creates meaningful agricultural work opportunities for people with developmental disabilities.

“It’s more than I could have dreamed of,” Jim McCann said. “And yet, our dreams are growing every day of what it can be and how many lives we can impact with Smile Farms.” The operating ethos at 1-800-FLOWERS.COM, Inc. remains one of constant re-invention and enhancement. Looking for opportunities in the fifth wave of conversational commerce while also expanding produce innovation and contributing to Smile Farms, the company’s continued success will rely on the relationships it cultivates with its customers and partners.

“We have a mantra in our business,” Chris McCann said. “If you want to really impact someone, you build a relationship first; you do business second. I think we have such a good relationship with JPMorgan Chase because they embrace that same value.”

 

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