MORE BELLS & WHISTLES

Relevance is everything when it comes to growing the greeting card category. One example of how the social expression industry is staying connected in a digital, wireless world can be seen in supermarket card aisles this Mother's Day, May 11, when Hallmark rolls out its $5.99 Mother's Day cards with a recordable voice feature. A computer chip embedded in the card will allow the sender to record a

Relevance is everything when it comes to growing the greeting card category.

One example of how the social expression industry is staying connected in a digital, wireless world can be seen in supermarket card aisles this Mother's Day, May 11, when Hallmark rolls out its $5.99 Mother's Day cards with a recordable voice feature. A computer chip embedded in the card will allow the sender to record a 10-second greeting, followed by a 15-second musical clip.

Earlier this year, the company debuted Valentine's Day cards with animated motion. Graphics of people's heads, feet and hands moved through hand-activated gears on the cards.

Sales of greeting cards and related social expression products continue to grow because of such innovations. Cards now have the capability to light up, sound off and move. Recycled cards and digital photo cards also are hot sellers.

According to Nick Barainca, director of nonfood for Scolari's Food & Drug, Sparks, Nev., the No. 1 item dominating his card sales are sound cards. “Finally, there is something new and creative in a category that had been relying on catchy phrases,” he said. The 17-store chain recently added a 4-foot section of cards with sounds to all its greeting card departments.

Mike Isom, director of general merchandise, Bashas', Chandler, Ariz., confirmed the demand for cards with new bells and whistles. “This year, the innovation is all about sight and sound,” he said. Bashas' is integrating cards with music into its regular greeting card sets as a complement to its standard card offering.

Chicago-based Mintel International Group's latest study on the U.S. greeting card and e-card market indicates that cards with value-added features are price-resistant.

“Gone are the days of greeting cards playing simple, monophonic melodies. In 2006, Hallmark introduced cards with enhanced sound, featuring TV theme songs, clips of popular and nostalgic sounds, and love songs,” stated the report, titled “Greeting Cards and eCards in the U.S.” Cards with music, produced by the major manufacturers, are being carried over to other social expression merchandise as well, such as gift card boxes and gift bags.

Aided by technical innovation, as well as by cards tailored to Hispanics and African Americans, greeting card sales jumped 41.5% from 2005 to 2007 in supermarkets and independent food retailers and warehouse clubs, according to Mintel.

“Retail sales have experienced healthy growth from 2004 to 2007 thanks to specialized and more expensive cards, Spanish-language cards, and an increased interest in Halloween and Easter cards,” the report stated. However, sales grew at a slightly slower rate in 2007 because of an influx of value-priced cards.

The report said greeting card sales rose 21% in drug chains. These stores were successful because they “recently defined themselves as the go-to place for small gifts and cards, which consumers can shop for while waiting for a prescription.” Still, gift shops and novelty and souvenir stores are the preferred retail outlet for cards, accounting for about 31% of greeting card sales.


Recycled Cards

Meanwhile, supermarkets are seeing demand for recycled or “green” greeting cards as well.

“Our biggest sales gain has been in green cards. The more green the U.S. becomes, the more people are educating themselves and are looking for the recycled emblem,” Barainca said.

Wal-Mart Stores, Bentonville, Ark., recently added “earth-friendly” greeting cards from Hallmark in 3,600 of its stores. The new cards, under the Connections from Hallmark brand, are printed on stock containing 50% sugarcane pulp and 50% recycled paper.

“Throughout the month of April, we will be unveiling new product initiatives like the new Hallmark cards that are friendly both to the environment and to the family budget,” said Carol Johnston, Wal-Mart vice president and regional general manager. The cards retail for 94 cents each.

Scolari's offers recycled cards from Hallmark, Kansas City, Mo.; and Recycled Paper Greetings, Chicago; as well as Leanin' Tree cards, which feature artists' original artwork, from Trumble Greetings, Boulder, Colo.

After adding freestanding displays of Recycled Paper Greetings and Leanin' Tree cards in Scolari's stores, Barainca was surprised that the new offerings did not cannibalize sales in the chain's mainline greeting card department. “Having the outposts as well as the greeting card section has actually improved overall category sales,” he said.

Economic Impact

While the greeting card category continues to expand, retailers have some concerns about how the depressed economy will impact card sales.

Barainca does expect consumer resistance to higher-priced cards. “People aren't going to be able to afford them [traditional cards]. We will see more emphasis on less expensive prices while still having a decent card — something that is not $6 for a card,” he said.

Mintel forecasts the greeting card market will grow at a slower pace of 6%-8% a year in 2008-2010 than it did in 2004-2006. The market has grown 34% since 2004, Mintel said.

Big demand will come from the Baby Boomers who will purchase greeting cards in the next few years. Consumers 45 years of age and older say they are more likely to buy cards at dollar stores or discount department stores than their younger counterparts, according to Mintel's report. This is “most likely because of habit or budget constraints,” the report stated.

It would appear the country's economic problems would lead consumers to send free e-cards online. However, e-cards have not overtaken traditional greeting cards because of the sentimentality and tangible quality of greeting cards, retailers said.

“Seventy to 80% of our shoppers are women. They are not going to look at an e-card as meaningful as a greeting card,” Barainca noted.


While e-greetings drive greater awareness of the category, they lack the keepsake value of traditional cards, the Mintel report concurred. “Despite the growing popularity of e-cards, traditional methods of acknowledgement, such as paper greeting cards, are still the preferred way to mark truly special occasions,” the report said.

Surprisingly, shoppers 18-24 years old were the most likely to say that e-cards are too impersonal, the report said, “suggesting that they want to make more of an effort to communicate with someone during an important life event.”

Traditional greeting cards remain a huge market, worth $10.8 billion in 2007 in the U.S., according to Mintel.

Supermarket executives plan to keep greeting card sales strong by capitalizing on cross-merchandising opportunities with flowers, gift cards and other products, and by offering digital photo cards and gifts.

While sales of gift cards continue to boom, supermarkets are expanding gift card selections and related items within their greeting card departments.

Barainca said one of the best places to merchandise gift cards is by targeting the person who has just come in to buy greeting cards. Scolari's has had success with clip-stripping gift cards from other retailers like Starbucks and Lowe's, which don't take sales away from the food retailer.

Bashas' recently added American Greetings' gift card holders and boxes to its gift card selections. “Sometimes people might wonder whether a gift card is really that personal. Once you put it in a nice gift card or gift box, it takes on a whole different meaning,” Isom said.

During certain holidays, Bashas' expands the holders to include plush animal gift card holders. “There are some really good synergies going forward in gift cards and greeting cards. It is a great way to present an entire gift,” Isom added.

Cross-Merchandising

In addition, supermarkets continue to have success with a variety of card promotions and effective cross-merchandising techniques.

Leading up to Valentine's Day, Mother's Day and other holidays, Scolari's places greeting card outposts in its floral departments. For Mother's Day, “we're looking for a bigger bang for our buck: getting a greeting card in their hands, as well as flowers,” Barainca explained.

Bashas' has also had success with cross-merchandising slant-backed displays of Mother's Day greeting cards in floral departments. “We try to make it so it is not obtrusive; rather, it is complementary,” Isom said.

In addition, Bashas' has improved greeting card presentation, merchandising and promotion by doing revampings of its departments, which were rolled out in about 15 stores a year since 2006. The revampings included optimization of card selections by region and neighborhood.

As sections are revamped, Bashas' sends out a direct mail piece to its top loyalty card shoppers near those stores, offering $3 off their next card purchase.

“It has been quite well received, and is a great way to reward your shoppers,” Isom said. In addition, Bashas' greeting card suppliers often provide “greeters” to talk with customers and hand out coupons.