Prospects are bright as consumers return to basics

Chain Drug Review, Feb 2, 2009

NEW YORK -- Both greeting card supplier executives and chain drug retailers are aware that not only have greeting cards historically proved recession-resistant, but they have often actually benefited from a slow economy.

This is due to the fact that when disposable income falls, consumers often replace expensive gifts with greeting cards, and with that in mind, both American Greetings Corp. and Hallmark Cards Inc. are offering numerous cards that have the feel of gifts.

Knowing that margins on greeting cards can run as high as 50%, chain drug retailers are more than willing to provide the space necessary to present and promote these new offerings.

Walgreen Co., CVS Caremark Co. and other leading drug chains know that a steady pipeline of new cards and other dynamic social expressions items drives consumers into their stores, and believe that the generous space they allocate to greeting cards is well earned. Meanwhile, the leading suppliers are working diligently to maintain that retail loyalty.

"Throughout 2009 we are launching a dynamic pipeline of new product innovations that will drive excitement and productivity for our retail partners," says Steve Laserson, vice president of greeting cards at American Greetings.

Three years ago, according to Laserson, the company set out to reinvent the category with in-depth research, creating product specificity to address distinct lifestyles and then delivering the products in new merchandising formats.

"When it comes to innovation, we know that product rules--the card must first deliver the key emotional benefits that bring people to our aisle," Laserson stresses. "We realize that when consumers choose to buy new products, the sentiment matters first, above all the other features and benefits."

At the same time, more consumers than ever are also flipping the card over to check the pace.

"In tough economic times, consumers return to basics and depend on emotional comfort to help see them through," says Barbara Van Hare, Hallmark's national accounts sales director of the Walgreens customer team. "Greeting cards have long been used as an alternative for gift giving because of their emotional connection, and these connections are now needed more than ever."

While technology has given people a multitude of ways to connect, greeting cards will always be with us because of the unique emotional comfort they provide, believes Van Howe.

She recounts a conversation with someone who works with military families, who said, "You can't put an e-mail under your pillow."

"Our research indicates that, industrywide, more than 20 paper cards are sent for every e-card," notes Van Howe.

And more of these cards carry very reasonable pace tags.

Hallmark is currently increasing the visibility of its 99-cent cards.

"At the same time, we are continually broadening our offering with innovative Hallmark Cards with Sound, and the recently launched Recordable Cards with Music," notes Steve Cashman, Hallmark's national accounts sales director of the CVS Caremark customer team.

The emotional connection of music and the ability to "sign a card with your voice" are viewed as added value by consumers, according to Cashman.

Humor is a also a vital component of card giving, playing a particularly important role in lifting spirits in tough economic times, and both American Greetings and Hallmark are offering more humor-related cards than ever before.

In addition, the increasing consumer interest in environmental sustainability has led Hallmark to broaden the scope of greeting cards produced on paper stock with recycled content beyond its humor lines.