Juno 2012 Annual Report Download - page 7

Table of Contents
•Traditional retail florists have become increasingly dependent on floral network services to provide incoming order volume to offset
business lost to the Internet, supermarket and mass merchant channels; and
•Traditional retail florists and floral mass marketers have expanded their product offerings to include a larger selection of gift items.
Floral mass marketers, such as FTD and Interflora British Unit ("Interflora"), generate floral orders from consumers via the Internet and telephone.
Floral mass marketers typically partner with third parties, including retail florists and direct ship merchants, to fulfill and deliver the marketers' floral
product orders. The floral mass marketers' share of retail floral purchases has expanded due to shifting consumer preferences towards purchasing floral
products online and the emergence of prominent brands with national or international exposure. Growing consumer interest in floral arrangements
shipped directly to the consumer via common carrier has also benefited floral mass marketers in recent years.
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There were approximately 16,200 retail florists in the U.S. in 2010, according to the U.S. Census Bureau. The total number of retail florists has
declined over the past decade, primarily due to floral products becoming increasingly available for purchase on the Internet and in other retail channels,
as well as recent economic challenges, among other factors. Supermarkets, mass merchants and other retailers have established or increased their
presence in the floral products retail market in recent years by adding a variety of floral and related products to their merchandise assortments. The
emergence of supermarkets and mass merchants as increasingly important distribution channels within the floral products retail market has led many
traditional retail florists to expand their merchandise offerings to include giftware, outdoor nursery stock and seasonal decorations, among other items.
Floral wire services, which we also refer to as floral network services, utilize proprietary network communications systems to facilitate the
transmission and fulfillment of orders among their floral network members. Services provided by floral wire services typically include order
transmission, clearinghouse services, marketing, and other services in support of the floral network. Order clearinghouse services play an important role
by ensuring the flow of payment between a floral network member sending an order received from a consumer and the member receiving and fulfilling
the order, thereby eliminating counterparty credit risk for the floral network members. The growth of floral mass marketers and the Internet channel has
led traditional retail florists to increasingly rely on floral networks to augment their order volumes. Access to incremental consumer orders for
fulfillment is one of the various benefits a member receives from membership in a floral network.
Providers of floral network services typically offer a broad range of services that are designed to promote revenue growth and facilitate the efficient
operation of a retail florist's business, including the ability to send, receive and deliver floral orders. Additional products and services offered by
providers of floral network services include point-of-sale and related technology systems and services, credit card processing services, e-commerce
website services, online advertising tools, clearinghouse services, order transmission, and after-hours telephone answering and order taking services, as
well as floral-related products, such as fresh flowers and containers. Certain providers of floral network services have recently broadened their focus
and developed new product and service offerings to appeal to supermarkets and mass merchants.
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The Internet continues to evolve and grow as a platform to enable, among other things, social interaction, consumer engagement, the sale of goods
and services, and advertising. We believe that as people age, many develop a strong interest in reconnecting with people and events from their past.
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