AMERICAN GREETINGS PLANS TIERED PRICING

JOEL ELSON

CLEVELAND -- American Greetings announced it will roll out a tiered pricing and merchandising strategy for its card lines by early this summer.

The program, called Smart Pricing, provides retailers with the appropriate mix of value, core and premium priced birthday and everyday card and gift wrap products to match their store demographics.

American Greetings officials declined to be specific as to retail price ranges for the three categories, except to say that value-priced cards would be priced under $1.

Special signs, including locator cards placed right in card pockets, labels and logos will direct shoppers to the price tier they seek, noted Randy Mason, senior vice president and general sales manager for American Greetings.

Retailers can expect to get more details on the program at the Food Marketing Institute's annual convention in May.

However, when SN described the program to several buyers, their reaction was mixed as to the program's viability at supermarkets.

"A program like this will work better at discount and drug stores than at food stores," said Charles Yahn, vice president of general merchandise at Associated Wholesalers, York, Pa.

"People do their major shopping for cards and gift wrap at mass merchandisers and go to supermarkets to fill a last-minute need. Supermarkets need a little better quality with a little less emphasis on price."

Yahn also noted how space limitation often doesn't allow a store "to be everything to everybody.

"You've got to decide what image -- low-price or a first-class department -- you want to be. If you have the space for a larger mix that's fine, but most food stores have limited space for the variety."

Hy-Vee Food Stores, Chariton, Iowa, already uses some form of tiered pricing at some of its greeting card sections, noted John Susich, vice president of general merchandise.

"In our combination stores we feel we want to be a destination for greeting cards. We're putting in up to 200-foot card departments in those stores, where we hope to be able to satisfy any consumer, or at least 98% of them, and we're doing a pretty good job of that today."

Susich said the chain uses American Greetings as an "upscale item." He added that Hy-Vee uses tiered pricing in merchandising holiday boxed cards during Christmas and Valentine's Day.

Commenting on the effectiveness of tiered pricing, Jan Winn, director of health and beauty care and general merchandise at Big Y Foods, Springfield, Mass., said it depends on what the retailer wants to accomplish in the card department.

"Typically retailers with a lower-end card department line such as you find at discounters that cut their card retails 40% to 50% attract a price customer looking for a deal. I am not sure we are catering to that kind of a customer with our present card product lineup."

An American Greetings spokeswoman said, "Smart Pricing will allow a retailer to still offer a large selection of the core product, but on the other hand if they are in a market where more premium product is in demand this will satisfy that demand.