Internet to greeting cards: Sorry for your sales loss
The greeting card business may be in need of a get-better-soon card.
In the Internet age, with electronic greetings of all kinds now available, sales of traditional greeting cards have been on a long, gradual decline. In 1995, the national Greeting Card Assn. boasted that 2.7 billion Christmas holiday cards would be sold that year. This year, that number has dropped to 1.5 billion cards.
Even so, greeting card makers say don’t count them out. The industry estimates overall sales of 7 billion greeting cards this year. New lines of cards and new products are being introduced every year, and the industry’s second-largest card publisher, American Greetings Corp., has turned around sales in the last two quarters after a long decline. (Industry leader Hallmark Cards Inc. does not make its sales and profit public.)
“Even with the boom of social media, the death of the traditional greeting card has been vastly exaggerated,” said Susan January, president of the Greeting Card Assn.
Consumers themselves are split. Five years ago, Sharon Matthew stopped sending the 25 holiday cards she sent out every winter and switched to sending Christmas messages by email.
“It’s just better,” said Matthew, 38, who was shopping at the Grove shopping center in the Fairfax district of Los Angeles. “My friends are all over the world. It’s easier to send them this way — you can attach more than one photo, give a little update on what’s going on.”
“It’s more convenient; we’re always on our computer anyway,” Matthew said. “How often do you actually fill out a card, put on a stamp and go to the post office?”
But not everyone feels that way. Elizabeth Escamilla, 45, still sends about 100 cards every Christmas. “It’s that one time of the year to write something personal, extra meaningful.”
“I still like receiving cards, so I like sending them,” said Carrie Rollings, 45, a real estate agent from Santa Monica. “It’s becoming more unusual, so it’s now more unique. It’s nice to open something in the mail that’s not a bill.”
Christmas leads the list in terms of card popularity with nearly 1.5 billion expected to be sold industrywide, according to Hallmark Cards. That is followed by Valentine’s Day with 144 million cards, Mother’s Day with 133 million and Father’s Day with 94 million.
Experts attribute the card sales decline to increasing competition from e-cards and custom card services, as well as more modern, and time-efficient, ways of communication.
“The industry’s been really, really suffering from social media and email and the whole ability of their customers to connect with people they typically connect with by sending greeting cards,” said Kathleen Ripley, industry analyst at IBISWorld Inc.
Retail greeting cards is a $7.5-billion business these days, the Greeting Card Assn. estimated. There are more than 3,000 greeting card publishers in the U.S., with the two largest companies — Hallmark and American Greetings — holding 82% of the market share, according to IBISWorld.
Like other nonessential consumer products, greeting cards felt the effect of the recession, but January of the greeting card association said that the industry is fairly recession-proof.
“Because our products have such a low price threshold,” she said, “we didn’t experience the total sales crash and burn other luxury items may have had.”
The U.S. has also seen a decrease in the number of bricks-and-mortar greeting card stores. Citing the shifting real estate market and high overhead costs as challenges, Jacyln Twidwell, spokeswoman for Hallmark, based in Kansas City, Mo., said there were about 3,700 Hallmark Gold Crown card and gift stores five years ago. That number has dropped to 3,000. Twidwell also noted that Hallmark products are sold in about 40,000 stores in the U.S, and that number has remained stable for the last five years.
“The biggest change we’ve noticed is that more people are now willing to buy a $3 to $5 paper product online,” January said. “For a long time, greeting cards were considered a personal tangible experience — people felt like it was a product you had to hold and choose in person. You actually had to feel the card.”
Greeting card prices range from 49 cents to $10.
“As better products have become available,” January said, “people are more aware how certain embellishments, like gold foil and embroidery, increase the perceived value of the card and the perceived value of their relationship.”
“There has not been any shift away from ink-on-paper greeting cards,” Twidwell said, “just an overall broadening of the greeting card portfolio we offer to our customers.”
Twidwell noted that Hallmark’s research found that more than 20 paper cards are still sent for every e-card.
“Our observation is that electronic communication is better for sharing information,” she said, “but greeting cards are better for sharing emotion.”
Hallmark has expanded its card selection and features, adding niche cards in categories that include godchildren, school bus drivers and hairdressers. It’s all about staying relevant, Twidwell said. The company also has new 3-D cards, more cards with sound and even holiday cards with lights that pulse to the beat of the music.
American Greetings is taking on similar challenges in an ever-changing marketplace. The Cleveland company last quarter reported profit, including a one-time gain, of $14.5 million, or 35 cents a share, up 71% from a year earlier. Sales rose 7% to $369 million.
On Wednesday, the company’s shares fell 44 cents to $16.18. The stock is down 27% year to date.
“While there are more communications options today than ever before,” said Christy Kaprosy, vice president of marketing at American Greetings, “we have found that consumers still deeply value our category because it does the very best job of helping them connect in a way that is creative yet still authentic and meaningful.”
The company is reaching out to younger customers. (The median age of American Greetings consumers is 46, according to IBISWorld.) It said it is keeping up with multimedia features, updating its holiday digital slide show cards — paper cards holding LCD screens that display personal photos uploaded by the sender. And it launched its justWink line in June. These cards come with codes that, scanned by a smartphone, lead to an online app that enables customers to create virtual greeting cards.
“It’s unique,” American Greetings spokesman Frank Cirillo said. “It meets a need that we saw in the consumers that shop our categories. It’s a new way to make meaningful and fun connections.”
The company expects more card exchanges this season with justWink’s more mature and humorous holiday greetings — “Baked. Stuffed. Blitzed… How will you be celebrating this year?” one Thanksgiving card said.
“You look at the advent of our category, the goal has always been to help consumers looking to connect every way they can connect,” Cirillo said. “There’s still really a desire to send a greeting card that really sends their sentiments that’s creative and authentic. People still want to make that connection.”
Just in time for the holidays and his older sister’s birthday, Paul Dimalanta checked out different cards that played music as he worked his way along the card aisle of the Walgreens in downtown Los Angeles.
“I’m looking at these sound cards because I know her daughter will play with it for hours,” the 28-year-old photographer said. His family doesn’t usually exchange gifts, so Dimalanta said he always sends a card. “When I receive a card, it means more,” he said. “It’s more tactile, a nice personal gesture that’s still valuable.”
Ken Cook, 63, of Glendora, agreed. Browsing the aisles of Carol’s Hallmark Shop at Macy’s Plaza in downtown Los Angeles, he was searching for a Thanksgiving card for his niece.
“For her, I do all the holidays,” he said. “I haven’t really gotten into email cards. I still like always writing something in the card.”
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