Cards substitute for gifts, rack up solid '91

Drug Store News, April 20, 1992

The recession hasn't hurt the greeting card category; in fact, it may be helping. While a squeeze on their budgets may force consumers to reconsider gift buying, cards remain a relatively inexpensive impulse purchase.

That may have contributed to the growth of the category. U.S. retail sales of greeting cards totalled $5 billion in 1991, according to the Greeting Card Association. That represents a growth of 8 percent over 1990's annual sales of about $4.6 billion.

Drug stores hold the No. 2 spot among distribution channels in terms of greeting card purchases, just behind card and gift shops. The category has one of the highest profit margins per square foot--about 55 percent.

Discount prices

Retailers are aggressively marketing the cards. Some, like Phar-Mor and Drug Emporium, are offering everyday discount prices on cards. The promotions are made possible by upfront cash discounts offered to high volume retailers by manufacturers such as American Greetings.

Not only are manufacturers offering incentives to retailers to gain a greater market share, but also some, such as Gibson and Ambassador, are tightening up display racks so that they can market more product in smaller spaces.

For retailers with selling space less than 60 feet, Ambassadors's Strike Zone program integrates traditional and alternative cards in to one rack. The best-selling cards are merchandised at eye level. The Strike Zone program, which organizes cards into clearly-defined sending occasions and uses ColorCue popout signage to identify the categories, has enabled retailers to drive up their unit and dollar sales volume. In test sites, sales jumped 21 percent when the merchandising strategy was employed.

American Greetings has a similar Supertray program, which merchandises balanced product assortments in bestselling themes. The Super-trays, available in 2-, 3-, and 4-foot assortments, can be placed on feature ends or gondolas, or they can be used in other locations throughout the store.

That's important since, by some accounts, greeting cards are becoming a destination item, while other retailers remain unconvinced and are placing cards in high traffic areas in the hopes of sparking additional impulse buys.

American Greetings introduced a similar concept in gift wrap. The manufacturer's Gift Wrap Express concept integrates all wrap products in boutiques by occasion in a wave concept.

Themed promotions

One of the most exciting trends in the category is a move to create traffic-stopping decor throughout the store using themed promotions.

American Greetings' haunted castle, complete with eerie music and billowing curtains, helped PayLess Drug Stores make a big Halloween splash and establish the chain as a seasonal destination. American Greetings developed floor-to-ceiling Christmas decor, creating the effect of an arched entranceway, for promotional and seasonal aisles at 208 Perry Drug Stores. Both chains are working with the vendor on Easter promotions.

American Greetings has also been successful with its "American Greetings to the World" pen-pal programl.

In addition, 1991 was a year of more card choices than ever before for the consumer. Alternative cards are growing at a rate of 10 to 15 percent; the sub-category now represents about 25 percent of business at American Greetings. The humorous off-beat cards are appealing to more men; American Greetings estimates that men now account for 12 percent of purchases. That number is up from 8 percent two years ago.

In addition, manufacturers have introduced other lines directed at specific audiences in the hopes of grabbing an even greater market share.

* American Greetings introduced a line of greeting cards for the visually impaired.

* Hallmark plans to introduce a line of cards for people in recovery from addiction this month and a line of Nurses' Day cards in May. Hallmark expects 500,000 cards to be exchanged on the first annual day of recognition for the dispensers of TLC.

* Friends of the Family, a division of Recycled Paper Products, introduced a Spanish language line--the first Spanish alternative line.

     Top greeting card holidays
     Cards sold in 1991
Christmas          2.3 billion
Valentine's Day    1.0 billion
Easter            171 million
Mother's Day      150 million
Father's Day      101 million
  Source: Greeting Card Association.