HALLMARK RESTRUCTURES, ADDS TWO CHANNEL TEAMS

JAMES TENSER

KANSAS CITY, Mo. -- Hallmark Cards has begun a sweeping rehab of its brands and go-to-market structure.

With the creation of two additional "retail focus teams" this month, the company begins what will be about 18 months of re-engineering, said Bob Firnhaber, a 36-year Hallmark veteran who has been named vice president of retail development.

Among the main goals of the process is the elimination of "redundancies" now present between the company's Hallmark and Ambassador card businesses, which up to now have operated with separate sales forces, separate presidents and some parallel business functions, he said.

Hallmark and Ambassdor also will share a "geographically consolidated" field sales force covering all of the United States and Canada, a centralized Retail Support Center and a new logistics organization, Firnhaber added.

The new teams, one serving Hallmark's card store channel and another serving its drug store customers, join previously existing retail focus teams created by Ambassador to interface with the supermarkets and general merchandise stores. A fifth team -- the company's only account-specific team so far -- focuses exclusively on Wal-Mart.

"The new structure will enhance this company's service to all our retail accounts," said Firnhaber.

Work on the two new teams -- aimed at card shops and drug stores -- already has begun. They are expected to take shape within the first quarter of this year, he said. The next step is to meld the two brands' product development organizations into one, which will happen over the

next few months.

The unification of the field sales force won't begin until the third and fourth quarters of 1995, Firnhaber said.

"Each of our brand organizations already has particularly exciting and compelling marketing programs under way for 1995. We do not want to break the rhythm on those programs," he explained.

In addition, he said,"The time to begin selling in our Christmas program is in March. So March/April may be a big month for planning with retailers for Christmas 1995. We want the sales professionals from last year's Christmas to be the same ones that plan next year's Christmas."

Two senior Hallmark executives were named last month to help lead the new structure. Steve Paoletti has been named vice president, mass channel retail teams. Al Summy has been named division vice president of sales execution. The current president of the Ambassador Brand, Lanny Julian, had previously announced his intention to leave the company March 31 to form a marketing firm called Donlan Group.

"There has been somewhat of an assumption that this [change] really had to do with focusing more on the mass channels. That is really only part of the story," Firnhaber said.

"It is also about creating a team structure that focuses on the card shops even better. Hallmark Card shops had very good growth in the second half of 1994. We think that there is a great opportunity to grow in 1995."

The Hallmark brand is sold under license by nearly 8,000 independently owned card shops nationwide, including some 5,000 Hallmark Gold Crown stores plus 3,000 small specialty/card stores, he said. The company owns about 200 of the card shops outright, he said. Right now it is working to help owners wire their shops with point-of-sale registers so that sales data can be rapidly captured.

"Card shops are a huge channel for Hallmark. The focus team will function almost like the headquarters of a specialty store company, providing cross-functional support," he said.

"It is the power of the brand equity of the Hallmark name which allows us to build a destination outlet for the consumer," Firnhaber said, adding, "The fact that the shopper thinks of Hallmark that way also allows the mass channel retailer some opportunities."

Hallmark also has about 3,500 departments within six drug store chains nationally, while Ambassador is the leader in the supermarket and general merchandise store segment.

About two years ago, Ambassador created a separate team for Wal-Mart because it was moving so fast in terms of its electronic interface and policies with suppliers. "We felt this would be a template for future work with other accounts," he said.

"We have learned a lot from that, but we do not see a need right now for entire teams for other customers." Individuals within the retail focus teams will handle key accounts, however. "Over time, two to three years depending on the growth level, there will be some downsizing. We very carefully announced to our people that there are not going to be layoffs. There will be some efficiencies put in place, and mainly through attrition there will be some reductions. But we have not set a benchmark goal for reduction [because] it is not a number that we are after."

Firnhaber said the company has committed to a "substantial" training program, slated to begin by midyear 1995. "We're going to add a heavy dose of technology. That's a key enabler for our sales force."