IT'S IN THE CARDS 2006

AMY SUNG / Additional reporting by Dan Alaimo

Although greeting card sales appear to be holding steady, supermarket retailers are continuously looking for more effective ways to play their cards against competing channels.

With greeting cards often being impulse purchases, adjacencies have proved to increase related sales, retailers told SN. For example, Giant Eagle, Pittsburgh; Bashas', Chandler, Ariz.; and Price Chopper Supermarkets, Schenectady, N.Y., are among a growing number that feature greeting card sections often located next to a seasonal, floral or party supply area.

Retailers also told SN that e-cards have had little or no impact on their sales, which they are bolstering with value-priced and multicultural cards.

"When you think about how customers shop, oftentimes they are going to need floral, balloons and greeting cards in conjunction with their party planning efforts," said Giant Eagle spokesman Rob Borella.

"What we did in about 40 of our higher-volume supermarkets, where space permitted, was bring an enhanced offering, which we call Card Party," he said. "That is inclusive of not just greeting cards, but all sorts of party supplies. Oftentimes we tie in floral and balloons." Some of the retailer's stores even have Teddy Bear Stuffer stations near the greeting cards.

"Greeting cards need to be as close to the floral department as possible. It all runs together," said a nonfood executive with a Texas retailer.

Bryon Roberts, vice president of GM, Bashas', agreed.

"It is always nice to be able to display near categories that naturally relate to the giving of a card. We try to locate near floral, party supplies or high-traffic areas," he said.

By creating adjacencies to appropriate departments,

retailers not only present the convenience of offering related merchandise close by, but also increase traffic.

"We have a party supply section in about half of our stores," said Jack Serota, vice president, GM and HBC, Price Chopper. This is usually adjacent to floral or seasonal products, he said.

Meanwhile, Serota is looking forward to a new supplier program about which he could not disclose details. "We're always looking at changing, revitalizing and staying one step ahead of the market," he said.

"Greeting cards are a high-margin area, but they're not necessarily a high-traffic area, except around certain holidays and seasonal trends," said Neil Stern, senior partner, McMillan Doolittle, Chicago. "So you want to increase traffic into the aisle by creating these adjacencies, and more critically, you want to increase basket size with the card purchase. If you can get the customer to purchase a card, party goods and flowers, you have a much more attractive transaction than just selling a card."

Key placement

"Bakery, floral and gift areas can help build greeting card sales," said John McNiell, manager of trade marketing, American Greetings, Cleveland. "Our two big strategies are that the product really needs to be relevant to today's shopper and that we've got to make it easy for her to find or she'll walk out of the store."

Positioning is key, said Scott Bauer, product manager, Hallmark Greetings, Kansas City, Mo. "Of critical importance is where the greeting card department is displayed within the store. High-traffic, high-visibility areas such as Center Store and front-of-aisle placement can boost the greeting card department's productivity," he said.

Many retailers, like Giant Eagle, are taking adjacencies a step further by cross-merchandising greeting cards with other departments.

"Cross-merchandising items like flowers, balloons and gifts with greeting cards not only helps Giant Eagle provide a convenient, one-stop shop for customers, but it is also a great opportunity to showcase the many unique and special items we carry for holidays and special occasions," said Giant Eagle spokesman Dan Donovan.

Beyond floral and party items, many retailers, like K-VA-T Food Stores, Abingdon, Va., are merchandising pet cards in pet aisles, thank-you cards for baby showers in baby aisles, and invitations in the bakery.

"Wherever you have a more motivated or creative retailer, they understand the effectiveness of cross-merchandising because the gross margins of greeting cards are so high - they want to put those products in those places," Mark Deuschle, executive vice president, Premier Greetings, Pawtucket, R.I., told SN. Premier supplies K-VA-T. "I'd say about 70% of our retailers are doing some kind of program like that."

Cross-promotions can also be effective and especially handy for supermarkets given the scope of products available to consumers.

Price promotions, such as buy one card, get one free, do not necessarily drive traffic, Stern noted. However, cross-promotions - like buy a greeting card and save a dollar in floral - "can be very effective," he said.

TRADITIONAL SENTIMENTS

Despite the availability of Internet greetings, retailers told SN that while electronic cards impact the category, the effect on sales has been minimal.

"We didn't notice a thing, not a change at all in greeting card sales relating to e-cards. We're very happy with our greeting card sales. They've shown growth," Serota said.

For Schnuck Markets, St. Louis, greeting card sales have, for the most part, remained steady for the past few years, Lori Willis, director of communications, told SN. "Located near seasonal merchandise, the cards are easily accessible," she said.

"We are among those that believe nothing can really replace the thoughtfulness behind the giving of an actual, hard-copy greeting card," Willis added. "It says you thought enough of that person to take the time to go to the store and browse through the cards to find the exact one. That's the real sentiment you want to convey with every card you send and we help make that possible."

Supermarkets accounted for approximately $1.39 billion in sales, or 18.6% of greeting card sales in 2002, according to Mintel Group, Chicago. The supermarket share grew 1.2% by 2004, generating about $1.41 billion in sales.

"E-cards have approximately a 2%-3% share of the greeting market and has been generally flat over the past five to six years. As for the impact on grocery and other channels, the consumer is still seeking a greeting card that is relevant to them, their recipient and the occasion for which it is sent. When shopping for a child's birthday, the consumer wants a card to go with the gift," Bauer of Hallmark told SN.

Many retailers and industry experts said they believe that e-cards haven't significantly impacted the category because they are not an adequate substitute for greeting cards. The tradition of giving a greeting card translates into sentiment, they said.

"I feel greeting cards will continue to grow. They're much more personal than e-cards," Roberts said.

According to research from the Greeting Card Association, Washington, the frequency of contact is directly proportionate to intimacy of relationship. "Technology helps people manage their lives, but not necessarily their relationships," Bauer said.

Multicultural Greetings

Multicultural greeting cards provide an opportunity to capture some additional sales in the greeting card category, according to Roy White, New York-based vice president of education, GMDC, Colorado Springs. With the expected growth rates of Hispanics, Asians and African Americans, and the additional holidays within each culture, it's a segment that could offer a boost in greeting card sales.

"I still think that there's a lot of potential for additional greeting card sales and the key that I see is making sure you have the product available for customers, that you're hitting the demographic base that you have coming into your store," said Jack Serota, vice president GM and HBC, Price Chopper Supermarkets, Schenectady, N.Y. "So, if you have a large Hispanic population that you are addressing, you should have Hispanic cards.

"You have to make sure that you are addressing your customers' needs, no matter what they are or where they're from."

Knowing the customer and tailoring to the demographic of the store is key when thinking about offering multicultural greetings. Bashas', Chandler, Ariz., and Giant Eagle, Pittsburgh, carry some multicultural cards, depending on the location of the store.

"It's certainly growing, but it's very much a regional and local item. It's an example of how you need to tailor based on local store demographics," said Neil Stern, senior partner, McMillan Doolittle, Chicago.