Social expressions gains momentum

Chain Drug Review, March 13, 2000

NEW YORK -- The social expressions category, which has been generating steady if unspectacular, sales gains over the past decade, is primed for a growth spurt driven by such forces as the Internet, according to industry participants.

In 1999 sales in the category -- which includes not only greeting cards but also gift wrap, party goods, candles and other items -- grew 4.8% to $2.64 billion in the drug channel. Leading the way were the alternative and seasonal card segments, which posted increases of 5.6% and 6.7%, respectively.

While consumers making their own greeting cards on home computers initially seemed a threat to traditional products, the leading suppliers in the category are turning it into an opportunity.

"We are very optimistic about the influence of the Internet," comments George White, general manager of Gibson Greetings, which is being purchased by American Greetings Corp. "On-line greeting card services will get young people accustomed to using editorial and visuals provided by someone else to help them communicate."

Gibson's pending acquisition by American Greetings will bring together the No.3 and No. 2 players in the social expressions category, respectively, with a combined volume of $2.4 billion.

American Greetings' on-line business will get a boost from Gibson's substantial investment on the Internet. Gibson cards are available on the World Wide Web from Sparks.com, and it owns a share of the privately held Egreetings network as well.

In addition, AmericanGreetings.com and iWon.com, a CBS-backed Internet portal, recently launched a free on-line greetings service. The iWon Greeting Cards site will be exclusively created and managed by American Greetings.com. It will feature more than 500 free electronic greetings, links to which can be initially found in the "iWon Features" area on the home page, and later throughout iWon.com.

The launch of iWon Greeting Cards is the largest partnership to date for American Greetings.com in its business-to-business strategy to provide greetings and related functions to noncompetitive web sites looking to offer visitors the latest in online communications and social expressions tools.

Category-leading Hallmark Cards Inc. has also made a strong commitment to the Internet, teaming up with Microsoft Corp. to develop card design software.

In addition to becoming major players on the web, both Hallmark and American Greetings are pursuing innovative marketing strategies.

"We are trying some unique things with Hallmark and are evaluating the positioning of the cards within the store," comments Vern Brunner, Walgreen Co.'s executive vice president of marketing.

Instead of having the company's popular Shoebox line in a stand-alone department, Walgreens is experimenting with integrating it in the general card presentation, with favorable initial results.

Hallmark is firmly committed to ensuring the strength of the social expressions category and offering profitable card departments to chain drug retailers, according to Ken Cook, the supplier's vice president of mass market sales.

The company's business research groups continually monitor consumer needs and preferences, as well as changing social trends via focus groups, sales analysis, market testing, segment studies and more, he says.

"We will fully leverage all our tools through tailored actions and tactics that focus on category management as a means of improving productivity in the greeting cards category," notes Cook. "Greeting cards have been a solid sales and profit producer in chain drug stores' front-of-store business -- and will remain so in the future."

Hallmark recently introduced "Ties That Bind," billed as the industry's first complete line of cards for nontraditional, nonnuclear families. It includes more than 100 cards for stepfamily members, adoptive families, single-parent families, extended and combined families. Ties That Bind has been endorsed by the Stepfamily Association of America.

The supplier is also planning to roll out an alternative card line this summer targeted to savvy 18- to 39-year-old consumers. The Fresh Ink line will hit store shelves this June.

"Fresh Ink is more than a demographic -- it's an attitude," Cook remarks. "The line is hip, timely, simple, sincere -- a card for every moment, every attitude. For consumers Fresh Ink is a way to express personal style. For drug stores it means stronger sales and, more important, a way to meet consumer needs. Fresh Ink is an opportunity to increase card use, category growth and growth of the greeting cards industry."

                         Social expressions: 1999
                         % of total     1999
                           social    chain drug
                         expressions   sales    % change
Category                    sales      (000)    from 1998
Total                      100.0%    $2,636,165    4.8%
Greeting cards              78.5%     2,069,390    5.3%
 Everyday cards             45.2%     1,191,547    4.3%
  Traditional cards         31.3%       825,120    3.8%
  Alternative cards         13.9%       366,427    5.6%
 Seasonal cards             33.3%       877,843    6.7%
Gift wrap, ribbons, bows    12.0%       316,340    3.1%
Party supplies               9.5%       250,435    2.6%
Source: Racher Press research