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Nonfood

Opportunities Are in the Cards

Greeting cards offer a high-margin revenue stream for grocery retailers

In June 2016, the IBISWorld report Greeting Cards & Other Publishing in the U.S. painted a rather uninspiring picture of the greeting cards category in today’s digital age.

“Over the past five years, the proliferation of paperless substitutes has dampened revenue for the greeting cards and other publishing [industries]. … Moreover, as many downstream markets have consolidated, such as brick-and-mortar book store retailers, the industry has grappled with fewer retailers including industry products on their retail shelves.”

Does that signal a death knell for the greeting card market? Not so fast, industry experts say.

Mark Twain’s comment when the New York Journal ran his obituary prematurely is applicable to the greeting card category today: “The reports of my death are greatly exaggerated.”

Stable Market, Room for Growth

According to Peter Doherty, executive director of the Greeting Card Association, the greeting card category remains relatively stable across all age groups; even members of Gen Y are active card senders, Doherty says. “Greeting cards continue to be a really meaningful way for people of all ages to connect. At the GCA, we continue to see new members—many small, niche publishers—join the association, so we continue to be very positive about the category,” he says.

Manufacturers are similarly optimistic. Stacey Howe, VP/GM of national accounts for Hallmark Cards, describes the category as “a stable, yet vibrant business with opportunities for growth.”

Citing GCA research, Howe points to the 6.5 billion cards American purchase annually, or nearly 18 million cards a day.

Supporting the findings is Hallmark research showing millennials “are growing their spending in this category faster than any other generation,” as proof of the category’s potential.

“Contrary to popular belief, the surge in social media is actually supporting our business,” Howe says. “What we’re finding is in this increasingly digital world, consumers crave the tactile experience that greeting cards provide. Sending a friend a greeting card on her birthday breaks through the clutter and makes a bigger impact than a simple [happy birthday] sent through text or Facebook.”

In fact, the silver lining in the IBISWorld report is the prediction that a rise in consumer spending “may lead to more consumers purchasing high-cost greeting cards, such as interactive greeting cards.”

That is just what some manufacturers are already finding.

“While greeting card sales as a category have not grown in unit sales for many years, the category has grown due to higher end product, continued growth in the humor category, and more specialized sentiments that appeal to a wider range of senders,” says Paul Griffler, director of sales and marketing for Sellers Publishing, manufacturer of the RSVP greeting card line.

Great for Grocers

The fact that many card-focused stores are no longer part of the retail landscape has created a stellar opportunity for grocery retailers to compete in the category.

“There is a channel shift from card stores—places like Borders Books are not around anymore—and mass merchandisers have benefited,” says Marc Trobman, VP of development at Avanti Press, makers of the humor-based greeting card brands Avanti, A*Press and America.

As Doherty notes, the category’s profit potential is a big draw because greeting cards are high-margin items. It can also be a relatively “hassle-free” category, according to Griffler.

“Many supermarkets are using scan-based trading to avoid carrying the inventory on their books, plus it’s a fully vendor-serviced category,” he says.

Basket-building potential is another plus. “Cards are often impulse buys, so if someone sees them in a grocery store they’ll think, ‘I need a card for …’” Trobman says.

Innovation Drives Sales

The fact that old and young shoppers alike continue to embrace printed greetings doesn’t mean card companies are relying on old formats to drive sales. Creativity and innovation, in both design and display, are keeping products fresh and relevant.

In the past 18 months, RSVP has introduced two new brands of cards to complement its core line: Wicked Funny, which “leverages some of the strongest humor talent in the industry,” and High Note, “a beautiful, sophisticated, design-driven line that blends a variety of well-known artists into an appealing presentation,” Griffler says.

Avanti introduced the America line, featuring what Trobman describes as “iconic images” of the United States.

Finding the Right Words

Cardthartic—a company that does especially well in the condolence category—has seen card sales continue to rise, especially in the grocery channel, according to Marguerite Rawdin, the company’s customer care manager.

“People always tell us, ‘You always have the right words when words are hardest to come by,’” Rawdin says. “In 2017—for independents as well as leading regional chains—our cards generated same-store sales increases of between 4% and 10%. Notably, product turns, and is reordered, at the average rate of seven times a year in groceries, while in card and gift shops it’s three to four times a year.”

And in 2017, Hallmark launched grocery check stand displays to great success, Howe says.

“By placing a curated selection of greeting cards at the grocery check stand, we are leveraging a part of the store that has a captive audience, reminding them of their greeting card needs and driving impulse purchases,” she says.

Make Cards a Competitive Advantage

There isn’t one sure-fire approach that will make a store a destination for greeting card shoppers. It likely will take a combination of merchandising and marketing tactics—some in-store, some in print and some online—to build cards into a profitable category, industry experts say. Tactics to consider:

  • Make greeting cards part of a store’s pre-shop marketing vehicles. According to Hubert, research shows that consumers include greeting cards on their shopping lists. That’s why she says grocers should include greeting cards in weekly print and digital circular advertising, email and mobile advertising, digital
    coupons offered through their shopping app and targeted direct mail pieces.
  • Take advantage of cross-merchandising opportunities. Because cards are typically impulse purchases, where they’re merchandised can significantly affect sales. “To capitalize on the impulse nature of the category, cross-merchandise everyday occasions like birthdays in the bakery, or outpost displays beyond the card aisle for key holidays—greeting cards in the floral department for Mother’s Day, for example,” Hubert says.
  • Make sure employees understand the importance of the category. Cardthartic sales rep Martha Norfolk suggests having dedicated associates for a card section. “At least make sure it is on all the associates’ radar,” Norfolk says. “Cards may not be the main reason most shoppers come in, but the profit margins on cards are so phenomenal compared to food items that this category deserves the focus of your associates.”
  • Use pop-up displays if space is limited. The GCA’s Doherty stresses that cards make sense for any size store. “Even smaller or discount grocers, and those with limited display space, can benefit by adding greeting cards,” he says. “Pop-up point-of-purchase displays at registers and inexpensive spinner racks offer attractive opportunities [for stores] to offer consumers convenience, products that play to local and regional trends, and a high-margin product.”
  • Employ a multiple vendor strategy. “You don’t rely on a single vendor in other categories, so don’t do it with greeting cards,” Avanti’s Trobman says. “According to the Greeting Card Association, 90% of households in North America still buy paper cards, and they’ll go elsewhere if they can’t find them in your supermarket.”

 

Perhaps RSVP’s Griffler sums up the best approach to greeting card merchandising in grocery retail: “Well-stocked, well-lit, well-signed card departments lead to a great shopping experience, but keeping the department stocked with new cards wins the day.”

 

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