Card industry in a slump

Greetings: Higher paper costs and home computers are among the phenomena confronting the greeting-card industry.

May 08, 2004|By James Gallo | James Gallo,SUN STAFF

Whenever Kathy Kelley goes shopping for greeting cards, the Parkville woman knows that costs can add up quickly.

"Price is never the bottom line, but sometimes I just spend so much on greeting cards that I decide to cut back a little," Kelley says from the card aisle at Greetings & Readings in Towson. "And I start buying more of the 99-cent cards."

The greeting card industry is fighting its way out of a long-term slump as card makers compete with deep discounts and a variety of new competitors. Major card makers have been forced to begin selling inexpensive lines in recent years as consumers began turning their backs on $4 cards.

Over the past five years, sales of cards in dollar stores and various discount centers such as Wal-Mart and Target have kept prices stable, experts said. And the industry continues to expand to convenience stores and other venues, said Mila Albertson of the Greeting Card Association in Washington.

Some shoppers also are using other means: Many create their own birthday or other greetings on home computers or use e-mail and the telephone more to keep in touch. And e-cards, which emerged for free on the Internet about 1996, gave the industry another scare.

"With the added competition, traditional retailers had to reduce pricing," said Jeff Stein, an analyst with McDonald Investments who studies the industry.

Consumers spend $7.5 billion on greeting cards every year, with Christmas, Valentine's Day and Mother's Day the biggest seasons for sales. Sixty-one percent of all greeting cards are purchased during the Christmas season, 25 percent for Valentine's Day and 4 percent for Mother's Day.

"Since people don't need greeting cards to communicate as often with cell phones and long distance being so cheap and e-mail being so widely used, there was a downward trend," Stein said. "Right now, [the business is] looking pretty flat."

The price of cards has increased in part because of the higher costs of paper and labor. Also, greeting cards have become more intricate during the past few years, Albertson said. Things such as specialty papers and computer chips have been employed by many card makers to enhance sales.

In 1999 Hallmark released its Warm Wishes line of cards, which sell for 99 cents. American Greetings soon followed with similar prices. Still, according to Hallmark, the less-expensive cards are not the biggest sellers.

"We did extensive research to find out what customers wanted, and we found that while customers wanted low-priced cards to be an option, they did not want the other cards to disappear," said Rachel Bolton of Hallmark.

Hallmark and American Greetings - the two companies sell 85 percent of the nation's greeting cards - recently launched advertising campaigns in newspapers and on television to lure customers to their retail stores.

Experts said most consumers don't value-shop during holidays such as Christmas, Valentine's Day and Mother's Day.

That's the case with Marcy Emberger of Baltimore who said the message is more important to her than the price.

"I look for something simple that matches my sentiment," Emberger said.

Price-conscious parents often find themselves shopping for more inexpensive cards or making their own for children who attend several different birthday parties a month

Software programs and plain construction paper often help parents save money on such materials.

Claire Mathews-McGinnis of Baltimore said she sometimes can spend up to $100 in two months on birthday gifts among the friends of her two small children.

"After you spend that much on gifts, you hate to have to turn around and spend a lot on a card," Mathews-McGinnis said. "We sometimes just make the cards by hand."

Some discount stores decided to capitalize on the rising card prices a few years ago, though their strategy didn't work at first.

"When we first introduced greeting cards three or four years ago, we had them set at a dollar each, and we found that wasn't enough of a value because other stores were already selling them for a dollar," said Adam Bergman of Dollar Tree Stores. "Once we made them two for a dollar, it was like someone turned the light on. Customer response was instantaneous."

Industry experts promise the traditional card business is here to stay, noting that consumers always will spend a few dollars to pass along the right sentiment to a friend or loved one. Albertson of the Greeting Card Association said consumers can expect to see even more card displays at the checkout lines of convenience stores, supermarkets and gasoline stations as the industry tries to capitalize on impulse buys.

And despite the growing competition, etiquette experts said, electronic mail, telephone calls and e-cards do not convey the same meaning as the old-fashioned card.

"A greeting card is something you can touch and look at and cherish," said Dorothea Johnson, founder and director of the Protocol School of Washington.

She said that while a phone call is nice to accompany a note, a greeting card goes further.

"It's not improper not to send a card, but it is certainly a very sweet thing to do," Johnson said. "It shows you care."

Greeting card facts

Consumers buy about 7 billion cards a year, spending $7.5 billion.

Christmas and Valentine's Day are the two biggest card seasons - Mother's Day is a distant third.

Birthday cards are the most popular everyday greetings; anniversaries and get-well cards are a distant second and third.

Average cards cost between $2 and $4. Prices range from 38 cents to as high as $10.

More than 90 percent of U.S. households purchase at least one greeting card a year. An average household buys 35 cards a year.

There are almost 2,000 greeting card publishers in the United States.

Source: Greeting Card Association

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