Licenses are a part of the integral weave of the social-expressions mix. However, retailers caution that sales success can be a crap shoot.
Greeting-card companies are investing in licenses that go beyond the latest hot movie hit. While classic properties from Disney, Warner Bros. and other popular children's stories remain evergreen, it's the niche licenses tied to artists, poets, photographers and best-selling authors that add versatility and provide a special cachet to the greeting-card aisles. Nonfood buyers said this specialty segment offers solid sales potential and added value for consumers.
The licensed segment "is the fastest growth area with strong potential," said Mike Meyer, director of general merchandise and health and beauty care at Homeland Stores, Oklahoma City.
Last month Homeland replanogrammed its card departments. The retailer devoted one-third of department space to licensed and alternative products. Homeland's card departments average 120 feet, and run up to 200 feet.
The chain projects card sales will jump 20% overall. "We increased space for alternative and specialty cards 15% in our average 120-foot sections to target the baby boomers who want cards with more humor and fun stuff," said Meyer.
While Homeland endorses licensed properties, some chains have scaled back display space for licenses to make room for more everyday cards. The short life expectancy of some licenses can clog displays and slow sales. General-merchandise executives said that not all "hot" children's movie themes are able to hold consumer interest for extended periods.
George White, general manager of Gibson Greetings' Bullseye Productions division, Cincinnati, said, "New [children-oriented] movies often do not do as well for greeting cards. They are not hot for that long. But on the adult side, book licenses are generally more effective than a hot property. We look for licenses with staying power."
Camelia Food Stores, Norfolk, Va., stocks a limited assortment of licensed items with its traditional everyday cards, said Judy Lane, nonfood buyer. "We aren't overstocked with licensed cards. Those designed around hot movie themes may do well [initially]," she said. However, licensed cards' life cycle is short, and usually based upon the degree of hype backing the property, she pointed out.
The higher price tags for licensed goods also can seem out of line, especially after all the hype and interest begins to wane, Lane said.
Vendors often are reluctant to pull slow movers off the rack because of their investment in licenses. "They want to keep their product up too, which is also a problem," Lane commented.
Retailers at Associated Wholesalers, York, Pa., have reduced the number of licensed assortments due to slow sales. "Licensed cards aren't doing well. We no longer have many in the mix," said Charles Yahn, the wholesaler's vice president of general merchandise. "Cards that retail for $3.75 to $4.75 tend to be too pricey," he said.
According to Yahn, racks have been increasingly cut back for more alternative cards and traditional products. Customers are drawn more to lower-tagged card pockets, "especially with manufacturers down-pricing a lot of their regular cards," he added.
As of this week, Hallmark, Kansas City, Mo., begins selling its Warm Wishes, a line of 99-cent cards, through all its retail channels. Hallmark research indicates that consumers will buy premium-priced cards for special occasions like Mother's Day, but they seek other options for informal sending. The card company hopes to boost the number and frequency of cards sent through its lower-priced offering.
Some slower-selling licensed products can wither on the vine as suppliers fail to remove them soon enough, Yahn said. "Manufacturers trying to protect their investment may keep a line out longer despite slower turns," he added.
A top nonfood executive for a major East Coast food chain, who asked not to be named, said licensed cards are crucial to a supermarket card mix. "Good card suppliers continue to strive for trendy licenses that are on the upswing, while they move you out of the products on the downswing."
Due to limited selling space, supermarkets are under pressure to "constantly review the productivity of card sets, and if they fail to maintain and grow, they'll be cut back." The policy at the East Coast chain is to monitor greeting-card performance and squeeze the most volume from the card racks. "It's our space. If the card company leaves slow-selling licensed cards up, then the section is not productive and we aren't doing our job," the nonfood executive said. He admitted the price of some licensed characters turns some shoppers off as it does with licensed apparel and other products.
Licensed products with recognizable artwork and authors are more likely to stop shoppers in the greeting-card aisle, explained White. An endcap of Gibson's Chicken Soup for the Soul alternative cards positioned in front of the card area grabs shoppers' attention, he said.
Last October Gibson expanded its Woof.Meow.Whatever. pet line with the comic strip character Mutts. The company also added baby photographer Valerie Tabor-Smith to its Artists' Corner line.
Gibson also plans to cross license with toys to complement its Baby Looney Tunes and Sesame Street social-expression items. These licenses have been in the children's birthday section and its Kids Corner. "Both are popular with kids and also particularly good for people buying greeting cards for children that may not be their own," he said.
White acknowledges that licensed properties can retail higher than everyday cards. However, he said, licensed adult cards like Gibson's Helen Steiner Rice line "aren't as expensive as the 'hot' ones."
Hallmark Cards approaches licensed items with the philosophy of going with proven winners like Disney, Warner Bros. and some Nickelodeon. "We stick with longer-term, well-known, high-profile properties," said an official for the company. Hallmark expects Star Wars to be its biggest seller this year. The property licensed in cards, giftware and partyware will be available May 1.
Star Wars is a cross-generation product that falls in both adult and children's card categories. Scooby Doo, another line of cards, gift wraps and related items, also does well, the official said.
This summer Hallmark will launch licensed Tarzan cards through its Ambassador brand during the time Disney will be heavily promoting the film.
Other Hallmark licenses include Blues Clues from Nickelodeon. "It's very popular with preschoolers. In addition to the greeting cards, the various props that the main characters use in TV programs will also be turned into themed gift items," said the official.
The National Association for Stock Car Auto Racing, another Ambassador property, is a more adult-oriented card among the "big ones," stressed the manufacturer.
While some nonfood executives maintain that licensed-card prices are too high and turn some shoppers off, manufacturers disagreed.
Perceived value has more to do with picking out a licensed card than its retail price, said Betsy Novack, director of licensing at American Greetings, Cleveland.
"People feel property products, whether cards or otherwise, have more value. Everybody looks for entertainment in their everyday life, and a child will recognize that character on Sesame Street or Teletubbies. It will have play value for them," Novack emphasized.
She also said price of a licensed or special-feature card isn't that much of an issue.
"If your child likes Rugrats you'll buy that card if it's 25 cents or 50 cents higher, rather than stop, or look for a $1.99 card. And sending a card with Marilyn Monroe on it to a friend who loved her sends the message that 'I knew you loved her and I found a card with her on it.' It almost becomes a gift item, and now has an even more special value," she said.
Even though the greeting-card suppliers offer value-priced cards, Novack doesn't see them overtaking the greeting-card aisle. American Greetings' children and adult property cards on average are priced at $1.99, going up to $3.50 for a jumbo die-cut version of a character, or a standup card, or one with stickers.
"An upcharge for an Elvis card to a collector would not be an issue for the incremental value it contains," Novack said.
In juvenile cards, American Greetings' licenses include Rugrats, Teletubbies, Sesame Street, Curious George, Pokemon and Bear in the Big Blue House.
Other property cards range from Christian Riese Lassen, artist of the sea, to new Soul Kidz cards for African-American children, featuring photos by African-American photographer Marden Smith. American Greetings introduced the line last month.
This year the company will launch a new collection of World Wrestling Federation calendars, stickers and gift wraps and bags. The WWF cards will be marketed electronically over the Internet. The popular 1960's artist Peter Max will be featured in a new line of licensed cards, wraps and partyware.
Addressing the issue of slow-moving licensed cards left too long on display racks, Novack said the manufacturer concentrates "more on evergreen licenses that tend to be less risky and tend not to be movie-driven.