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Retailers might get a little nostalgic if they stop to think of all the traditional assets of a stellar greeting card selection -- namely built-in profitability and shopper loyalty. That sentiment could change to sheer joy, however, once they check out some of the latest high-quality yet affordable card designs and merchandising tools created to help supermarkets revitalize sales.
Greeting cards, which are largely seen as impulse buys, have been relatively mediocre performers in the food retail channel for the past few years. The latest industry estimates put the category, which is still dominated by market leaders Hallmark and American Greetings, at about $2.6 billion. Yet several card companies say their sales have been notably increasing in certain markets, thanks in part to store-specific efforts to meet retailers' needs.
"We've been able to find success in a variety of supermarket environments," says Randy Kleinrock, president of Sanford, Maine-based Renaissance Greeting Cards, Inc. One of the company's latest clients is New York-based Gristedes Foods, Inc., but its products can be found in most major U.S. markets. "One of our strategic directions is to develop a complete card department solution for retailers. If we can provide excellent product with great service, and provide profit margin for the retailer at the same time, we've got a win and they've got a win."
It seems that profitability is on the minds of many card makers nowadays as they look to help supermarkets ride out a competitive whirlwind. "Dollar stores are eating this category for lunch," observes Mark Deuschle, e.v.p. of Pawtucket, R.I.-based Premier Greetings. "And most manufacturers haven't done much new to excite the category, in part because Wal-Mart has taken up so much of their time." He notes that Wal-Mart carries a private label greeting card line made by the top two card companies.
Driving store brand
Premier Greetings, which is a division of Paramount Cards, Inc. -- now considered the No. 3 greeting card company -- is putting its focus on store branding, according to Deuschle. "Our job is to drive store brand, not our brand," he says. The company provides custom signage and offers a "menu of value options" so that retailers can charge prices that fit in with their overall strategy.
"The greeting card category has traditionally been seen as overpriced," Deuschle notes. "Every consumer, when surveyed, says cards are too expensive at full price." To counter that, Premier provides attractive, full-size cards that retail on average from $2.25 to $3.25, but gives retailers the option of discounting. Its newest offerings include the shiny Beautiful Acetate collection and Handmades, which feature intricate designs and decorative additions such as beads and glitter. About 40 percent of the company's cards are still sold at full price, he adds, noting, "Not all of our retail customers want to be value retailers."
99 cents and more
For those retailers that are looking to offer value, 99-cent card lines, such as the one made popular by Hallmark, have gained in popularity. But some vendors aren't convinced that people want to send what are visibly discount cards to those they care about. "Every once in a while we see stores that are switching to a 99-cent card line. We're finding that, in many cases, that isn't working out as well as the stores had hoped," notes Ken Catlin, Renaissance's director of marketing communications. "They aren't necessarily increasing traffic, and stores may ultimately end up losing money because they aren't getting the margin on the cards."
One of the ways Renaissance has moved into more supermarket aisles is by offering slightly smaller sections to stores that want to downsize their departments. "Our line is designed to be effective in that 40-foot to 50-foot range, including seasonal cards. A lot of times a bigger card company requires bigger space. Sometimes that's not how the store wants to invest its footage, though," Kleinrock notes.
At least one greeting card Goliath has taken notice of retailers' need to maximize space, however. This year American Greetings is kicking off a new program called "The American Greetings Marketing Makeover," according to Mike Colant, executive director of key accounts. "The program is designed to optimize product mix, maximize available space, and grow customers' business," he says. Among the new initiatives: a focus on new birthday and everyday card mixes, alternative card program placements, gift wrap revisions, small footage focus on "Best of the Best," party goods/candles/stationery revisions, and overall space reallocation. "This all means made-to-order 'door by door,' with the right product at the right price," Colant says.
Marc Woodward, v.p. of supermarket sales at Hallmark, notes that size and location are two big factors in driving greeting card sales. "The right department size in the right location is critical in building and maintaining strong sales of greeting cards. Our research indicates a typically higher percentage of store sales occur when greeting cards are located in center store placements," he adds, observing that many retailers are moving the sections to central locations as they enlarge or remodel their stores.
To cater to its retail customers, Renaissance has begun offering a complete merchandising package that complements its cards and creates a more inviting environment for shoppers, according to Catlin. The program includes colorful signage, more attractive card backers, and displays for impulse merchandising, including countertop settings for seasonal promotions. "The program has worked very well for us in terms of identifying stores as Renaissance retailers, guiding shoppers to the department, and making the section easier to shop," he says.
In addition, Renaissance has implemented what Kleinrock calls "some pretty slick inventory management systems." "We can identify areas that are hot, and areas that need some tweaking to create ongoing inventory turn improvement, so we aren't just dart-boarding what our customers need. It's customized to each store," he notes.
Another bonus for Renaissance's customers: The company has a distribution agreement with Penguin Putnam. "The book program is the perfect complement to the card program, because it features affordable gifts that cover a number of occasions," Kleinrock says.
As for new product development, card makers seem busier than ever keeping up with consumer trends and changing attitudes. Renaissance has several new lines coming out for the summer, including Summer Street Kids, which Kleinrock calls a "nifty nostalgic line." A percentage of profits from the line will be donated to charities that benefit children, he says. "We're excited about all the lines in our summer releases -- humor, traditional florals, brights, and laser die cuts. A lot of these stylings will feed into the regular department after the summer, as an update to the overall line."
Avanti Press, Inc., based in Detroit, has made a name for itself by offering quirky designs to such chains as Wegmans and Meijer. "We have new product coming into the market all the time, so the displays stay fresh. That's important, since most supermarkets have loyal customers who are in their stores repeatedly," says Deb Marxhausen, national account manager at Avanti. Some of the company's most recent innovations include the "Big Birthday" line, made up of larger-sized cards for milestone birthdays; Halloween cards that double as masks; and gift cards designed to hold plastic gift certificates.
Avanti's cards, which are priced at $2.25, fit in nicely as a complement to primary greeting card displays, Marxhausen says. "We're not out there trying to replace other suppliers. What we do is unique enough to stand on its own -- it doesn't really cannibalize the other card lines; it just gives the shopper one more option." The cards also do well when merchandised in unexpected places, she adds. "Our 160-pocket display only takes up four square feet, and it's on wheels so retailers can remerchandise it as needed. Sometimes we'll be in the pet aisle, sometimes the bakery aisle, which seems to sell really well."
Premier's Deuschle notes that while his company prefers to maintain exclusivity with its supermarket customers, there's room for specialty cards if they meet a unique need within the market. "In Utah, for instance, we allow a spinner rack of LDS cards, which are Mormon cards, in our department. That makes sense. Why wouldn't we?"
Yet, according to one smaller card company, Los Angeles-based Paradise Greetings, many grocery chains have "missed the boat" when it comes to specialty cards. "Some retailers have begun to realize it, and they're taking away some space when they renegotiate with vendors, to allocate more space to several specialty card companies," notes Fernando Pineda, the company's e.v.p.
Although Paradise's sales primarily come from English-language cards, the company also does a reasonable business selling Spanish-language cards, which are developed only by Hispanics, Pineda notes. But he says there have been several misconceptions among both retailers and larger greeting card companies as to how to service the growing Hispanic market. "It's a developing market, so supermarkets have to be willing to give it time. A retailer won't necessarily see blockbuster sales initially," he says. Also, the meanings and sentiments of English-language cards don't necessarily translate into Spanish, he notes.
Mother's Day and Christmas are the main holidays when Hispanics look to buy cards, Pineda observes. "Nostalgia is the primary emotion involved with Hispanic card buyers, so that kicks in during those times." One product that has done particularly well is Paradise's wooden Inspirational Scroll, which features sentimental messages written in Spanish. "We make one that says, 'To my children who are very far away.' That's a message that speaks directly to those Hispanic parents who come here to work to help their families back in their home countries," Pineda says.