Case Name :      KaBloom Explodes on the Scene

Authors :           Gina Vega, David Hartstein, Beverly Kahn, Jafar Mana, Gail Sergenian, Dumas Colette

Source :             North American Case Research Association (NACRA)

Case ID :            NA0064

Discipline :        Strategy

Case Length :    17 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

David Hartstein founded KaBloom in 1998 with the financial backing and encouragement of his partner, Thomas Stemberg, chairman and CEO of Staples, Inc. They wanted to increase flower purchases in the U.S. by changing the way Americans thought about buying flowers, and they sought to encourage U.S. shoppers to buy flowers not only on special occasions but as often as they bought bread and milk. In 1999 Inc Magazine named KaBloom a “Hot Start-Up.” However, nearly three years and one recession later, KaBloom failed to live up to its forecast of grossing $15 million in 2000. KaBloom’s early growth came to an end in 2001, with 34 shops. A dozen of the company-owned stores were not performing well, and their failure was eating into the profits of the other 22 stores. Hartstein chose franchising to better connect the stores to their respective neighborhoods and to reduce the high turnover of personnel at the store level, but new problems arose. He had to make a series of operational and structural decisions in 2005 after facing additional business challenges.