Although feeling competitive pressure from the Internet, where free electronic cards are available, and other low-priced channels, supermarkets are moving forward with plans to take greater advantage of their greeting card offerings.
Long cross-merchandised with party goods, retailers are starting to look beyond the department's boundaries. Bakery, floral and candy are seen as the most viable areas for greeting card tie-ins, with prepaid gift cards considered the newest opportunity, sources told SN.
In addition, especially in stores where the desired adjacencies do not exist, retailers will put outposts of greeting cards with the related products, sometimes with signs pointing out the greeting card aisle. A few forward-looking retailers are building comprehensive gift sections around the cards. Promotional giveaways also boost card sales.
Regardless of the competition, greeting cards are here to stay in supermarkets, said Nick Barainca, director of nonfoods, Scolari's Food & Drug Co., Reno, Nev. “You just have to keep looking at it, doing your best to tie it in to other products, and keep promoting it.”
Offers like buy three cards and get a plush free “tend to drive the category,” and specialty cards, like those printed on recycled paper, are generating the biggest increases in the category, he noted.
Scolari's has put outpost displays of cards close to its bakery-deli department. “When the customers come in for their Mother's Day or Father's Day cakes or other items, the cards are nearby, and people who weren't thinking about it might pick up a card,” Barainca said.
Bashas', Chandler, Ariz., also is “using more outpost displays of greeting cards in affinity categories,” said Bryon Roberts, vice president/general manager of non-perishables. Floral and bakery are natural tie-ins for greeting cards, but gift cards have captured the retailer's attention.
“We merchandise gift card envelopes on our gift card display, and we are planning to put gift card outpost displays near greeting cards this holiday season,” he said.
In addition, Bashas' is cutting back on the number of individual cards to better display the ones it carries. In the past, the retailer would have 12 rows of cards, with only the top portion visible. “We have found that it is better to have fewer rows of cards — eight or nine — allowing the primary rows to be at least 75% visible to the consumer,” Roberts said.
“The business for our trade class is on the rebound. We lost a lot to dollar stores a few years ago, but the category has been on a good growth path for about nine months now,” he said.
Mintel International Group, Chicago, has reported that supermarkets had 16% of the category, which it valued at about $7.5 billion in 2006, or $1.2 billion for the supermarket channel. Among other channels, specialty card stores had 24% of adults ages 18 and over, drug stores had 19%, mass merchandisers 13% and dollar stores 11%, the Mintel report said.
OPPORTUNITIES FOR CARDS
One demographic opportunity for supermarkets might be male shoppers' desire to find gift cards and other presents in one convenient location. Of the shoppers in its study, Mintel found that 19% of men made supermarkets their most frequent destination for greeting cards, as opposed to 14% of women, one of the larger gender disparities in the report.
“There are a lot of opportunities in greeting cards,” said Jack Serota, vice president, GM and HBC, Price Chopper Supermarkets, Schenectady, N.Y. “Merchandising unique offerings on endcaps can attract shoppers to the department, which needs to look fresh and inviting.”
This means regular rotation of product and neatness — especially during holidays that create significant demand for cards — are very important to shoppers in this category, Serota said. “Just because the category is serviced does not mean it is on automatic pilot. You get out of it what you put in,” he said.
At Brookshire Brothers, Lufkin, Texas, card business is down and the retailer is looking for ways to recapture the sales, said Doug Barnett, director of GM/HBC. This is due to electronic cards and people using home computers to make their own, he said.
Promotions involving giveaways with the purchase of multiple cards are one strategy to build the business, but Brookshire Brothers has other plans Barnett could not disclose. “We are looking at sprucing up our departments and seeing if we can't get some customers back in,” he said.
“I think it is really tough for retailers to counteract the Internet greeting cards that are available, especially the ones that are free,” said consultant Dan Raftery, president, Raftery Resource Network, Antioch, Ill. “The Internet is taking over.”
Jim Wisner, president of the Wisner Marketing Group consultancy in Libertyville, Ill., agreed. “Electronic cards are growing dramatically, particularly among younger shoppers. Long term, this presents a great risk to the retail component of the card business,” he said.
Cross-merchandising with categories like floral, produce for fruit baskets, and wine is one way to build sales, and there is continued growth in ethnic greeting cards, Wisner said.
“E-greeting cards will continue to grow in popularity because of their value — for a fixed price, you can send as many as you want — their convenience and their ease of use,” said Patricia Pao, president, Pao Principle, New York, a specialty retail consultant. One way for retailers to compete is by cross-merchandising increasingly popular gift cards with greeting cards designed to hold them, she said.
Some retailers, like Giant Eagle, Pittsburgh, have put greeting cards together with gift products such as those found in specialty card shops in its newer and remodeled stores, also locating them near floral, produce and wine when possible. Among the offerings in some stores are Teddy Bear Stuffers, which allow shoppers to customize plush animals with clothing items and accessories, even controlling how much stuffing goes into the item.
“Greeting cards need to deflect a direct frontal assault from electronic media into a glancing blow by creating gift occasions, gift sections and grab-and-go solutions for supermarket shoppers,” said Don Stuart, managing director, Cannondale Associates, a consultancy based in Wilton, Conn.
In most supermarkets, the space for the greeting cards themselves is “typically paid for,” he noted. “The opportunity in light of electronic cards and electronic messaging is how can we capture more of an impulse occasion.”
To do that, retailers need to put greeting cards together with “other giftables that are always in grocery stores, and probably need to grow in presence,” he said. These include flowers, candy and wine, but store layout and inter-departmental barriers can impede this. Stuart said retailers need to get out of the “holiday box” of just selling greeting cards and the other products for certain occasions, like Valentine's Day, birthdays and anniversaries.
The big card companies should get behind this “because a lot of their traditional bread and butter is under an electronic microscope,” Stuart said. “They could just get beamed to bits by Internet alternatives. I think a giftable section or center, with a communication vehicle the shopper can personalize, as well as a product, is something that grocery stores can offer.”
Merchandising greeting cards in other departments of the store is an easy approach to this, “but I don't think it addresses the bigger giftable solution.” Locating a gifting center close to the front of the store is the way to go, he said. “It's in and out. It's something the customer can grab, and the retailer will probably get good margin off the products because people aren't trying to save a buck. They are trying to get something quick — grab and go — and get to their party or event. They just need to check it off and move on,” Stuart said.
Supermarkets and drug stores have an advantage over the mass merchandisers in doing this because “you can't go into a supercenter for five minutes. You can't even get into the parking lot in that time,” he said.
Retailers can go beyond gifts in building up greeting cards, said David McConnell, president and chief executive officer, GMDC, Colorado Springs. “I see greeting cards as one of those general merchandise categories that is a logical extension into the wellness area. The social expressions business is part of wellness. Gifts, candles, bath and body are part of it. There are absolutely a lot of tie-ins that can take place,” he said.
For most retailers, movable racks of cards are the best way to build sales, said consultant Robert Passikoff, founder and president of Brand Keys, New York. “In supermarkets, people follow known patterns. They learn patterns in terms of how they are going to shop, and you don't want to create barriers. You don't want to disrupt flow. So there are lots of ways to be creative, but you are not creative for creativity's sake. You do it to be able to engender large degrees of engagement, higher per-ticket sales and, ultimately, profitability,” he said.
Overall, Passikoff sees a healthy greeting card category. “For all of the wonder and technology of email, people still send cards. It is a way of physically bonding with people that email and e-cards haven't figured out quite how to do yet,” he said.
Linking Gift and Greeting Cards
The rapid growth of prepaid gift cards has created a need for customers: how to present them so the value they contain is more fully appreciated.
Greeting cards designed to hold gift cards are one way to address this challenge. In turn, this presents a cross-merchandising opportunity for retailers. Other related items, like a jack-in-a-box type item with a spring-loaded gift card holder, from JFL Enterprises, Cleveland, is another answer for retailers.
“A lot of companies are trying to come up with ways to make the gift card more of a gift,” said Nick Barainca, director of nonfoods, Scolari's Food & Drug Co., Reno, Nev. Scolari's is going to try the jack-in-a-box item in the fourth-quarter holiday season, he said.
“There are many different vehicles that allow cross-merchandising between gift cards and greeting cards. The small spinner rack has been very effective,” said Jack Serota, vice president, GM and HBC, Price Chopper Supermarkets, Schenectady, N.Y.
“You can't just give a gift card by itself, so the greeting card manufacturers are providing vehicles that could be card and boxes, an all-in-one present,” said Patricia Pao, president, Pao Principle, New York, a specialty retail consultant. For example, greeting cards with a slot to hold the gift card, or a gift card box, enable the customer to give a complete present, she added.
Pao describes the pop-up box as “a birthday gift in a box, and that's a way for supermarkets to provide everything the customer needs for a gift at once. They can buy everything in five minutes,” she said.
“Gift cards have been growing exponentially for the past five years, and there have been small attempts at packaging the gift card so it looks like a greeting card,” noted consultant Robert Passikoff, founder and president, Brand Keys, New York.
“A gift card when paired with a gift is an annuity,” said Don Stuart, managing director of the Cannondale Associates consultancy in Wilton, Conn. “There's an endless supply of gifting occasions most consumers will face in the course of a year — dinners, parties, thank-yous, you name it. The challenge is, how do you pair the two?”