YA GOTTA HAVE HEART

Greeting cards have become the heart and, in some cases, the soul of supermarkets' nonfood departments.As suppliers introduce new strategies -- Hallmark's Expressions, Gibson Greetings' theme park and American Greetings' All New American Way -- retailers are devoting more space and generally re-evaluating their approach to social expressions in an effort to squeeze even more profit out of a high-return

Greeting cards have become the heart and, in some cases, the soul of supermarkets' nonfood departments.

As suppliers introduce new strategies -- Hallmark's Expressions, Gibson Greetings' theme park and American Greetings' All New American Way -- retailers are devoting more space and generally re-evaluating their approach to social expressions in an effort to squeeze even more profit out of a high-return business.

"Greeting cards are a high priority for us," said Rod Boni, grocery merchandiser for Pay Less Supermarkets, Anderson, Ind. "This year we'll try to create more awareness for customers. The idea is to keep the department top of mind and boost traffic down that aisle."

Assessing the category's future, retailers and wholesalers indicated that the ever expanding selection of social expression-related products -- cards, partyware, licensed products, toys and candles -- greatly enhances the store's nonfood image by solidifying customer relationships at important occasions.

While greeting-card sections have grown into full-blown destination departments to draw the one-stop shopper, the trend these days is to create signature departments so food chains can distinguish themselves from such departments in other mass-market accounts.

One-stop shopping convenience is driving greeting-card display expansion for retailers serviced by Associated Grocers, Baton Rouge, La., said Sonny Ellis, Associated's director of health and beauty care and general merchandise.

Retailers are adding 4 to 8 feet of additional space to their Gibson, American Greetings or Ambassador card departments. "Consumers find buying cards while food shopping is a great convenience, and retailers are giving the category increased emphasis," said Ellis.

Store enlargements have included reconfigured greeting-card departments with placement near floral. Ellis said greeting-card sections "should be updated every two to three years with new fixturing to avoid staleness.

"Retailers cannot afford to assume customers will go to the card area simply because of its presence in the store. Awareness of the department needs to be raised."

He plans to emphasize the need for Associated members to promote the card department more aggressively this year. "It's a department with a 50% profit margin and no store labor

involved. Merchandise is all direct-store delivery," he said.

To maximize profits in its greeting cards, Carr Gottstein Foods, Anchorage, Alaska, is working on tighter controls to reduce investment in backup inventory, said Gary Schloss, vice president of general merchandise.

The retailer has taken a hard look at the card, partyware and candle inventory and found it's not necessary to stock as much related merchandise in stores to sell the same amount of greeting cards, Schloss pointed out.

The chain, working with American Greetings, started trimming inventories in its 80- to 148-foot card departments with a goal of turning merchandise without warehousing products.

"Our supplier agreed we could do just as many sales with less dollar investment," said the retailer. With seasonal cards, for example, Schloss said, even though unsold stock can be returned, the initial upfront investment can be reduced. "We're making sure we are not over-invested in a bunch of inventory that just sits [in storage drawers]," he said.

Schloss estimated Carr has so far lowered its investment in card-section backup merchandise by "several hundred thousand dollars." Storage space normally allocated for backup inventory is now used for stockpiling bows and ribbons that don't fit well on the shelf.

Supermarket card sections need to offer more than just basic selections, according to

Schloss. "The upscale, trendy [alternative] cards are also needed." Last year the chain grew its greeting cards sales 6% to 8%.

At Consumers Food & Drug, Springfield, Mo., departments have been reset to maximize profit per square foot. This either increased or decreased some greeting-card sets, said Jay Larson, director of general merchandise.

The chain allocated shelf space based upon weekly sales. Stores that didn't produce the percentage of business needed to justify display space lost 4 to 8 feet of card racking, while better- performing departments gained between 8 and 16 additional feet.

Consumers completed resets at 28 Ambassador Cards departments last year. Resets are planned for 15 other units this year, said Larson.

Product variety, location and traffic flow are key to successful card departments, said Larson. "As stores are remodeled, the card-department aisle is being widened about 2 feet to allow for better traffic flow and less crowding for shoppers."

Placement of card sections is moving to the middle. "Locating the department toward the middle can maximize sales," Larson added.

Card departments at Pay Less Supermarkets are being expanded and refixtured during store remodels, Boni reported.

"You want more cards exposed on fixturing at point of sale, and have less backstop inventory in the drawers," he added.

The retailer doubled the size of its Ambassador Cards departments to 110 feet at three stores during the past two years. Other departments have grown to 120 feet.

Pay Less card departments are positioned at a high-traffic perimeter aisle near floral. The object of expanding selling space is tied closely to the section's return on investment, Boni stressed.

John Stahl, director of nonfood category management at Genuardi's Family Markets, Norristown, Pa., said the chain plans to enlarge its card sections 20% over the next few years. This will bring department sizes to about 120 feet long. Card sections are now about 100 feet.

Card assortments have also been reconfigured with an emphasis on freestanding sections near floral, and away from being merchandised on wall fixtures.

Two newer stores have instituted this format. This layout will be applied to five planned new units and five remodels this year.

"We've put in a little larger seasonal-card variety and expanded everyday sets quite a bit, and gotten away from some ancillary items like stickers and invitations," said Stahl.

Genuardi's discounts its Ambassador cards 20%. Stahl reported total card sales last year rose 14%, following the chainwide revamping of the card departments. "This was really great because we opened only one new store in that time," he said.

Genuardi's plays up its card sections aggressively, especially during high-profile months. "We hit the category hard during all the major holidays with a front-page feature in our ad. At the very minimum we announce that we're 20% off on that holiday's cards as well as other cards and accessories in the department," Stahl said.

For major holidays like Mother's Day and Christmas, Genuardi's will run a more substantial discount, such as 50% off on all cards and wraps for the month of December.