VALUE IN THE CARDS

Christine Blank

Facing stiff competition from discount card outlets and other channels, supermarkets are turning more to value-priced cards.

Overall, the greeting card category is increasingly challenging, retailers said.

"It is flat in dollars, and declining slightly in units. There is more competition getting into the value card lineup," said Tony Pooler, director of general merchandise/health and beauty care, Save Mart Supermarkets, Modesto, Calif.

"Mass, drug and supermarket channels have all seen the rise of the factory card outlet. There are significant differences in price, so they're pulling in some of the heavy users," said Jim Wisner, president of Wisner Marketing Group, Libertyville, Ill. The factory card outlet shopper is "pretty religious" about buying cards, so they may stock for six months at a time, he added.

"The trend is stagnant or declining greeting card sections in supermarkets. Brand name still holds up well ... but the value [of brand] continues to drop, especially with the advent of dollar stores," said Jeff Manning, president, F&M Merchant Group, Lewisville, Texas.

In response to the value card trend, some supermarkets are increasing their focus on value card lines and sections, while working to maintain profits.

Bashas', Chandler, Ariz., will have value card sections in all of its stores by this summer, said Bryon Roberts, vice president, general merchandise. Working with American Greetings' value card line, a handful of Bashas' stores already feature the sections.

"We're looking at how to compete with alternative channels, the 99-cent and dollar stores. We're looking at different options," Roberts said.

Although Bashas' has always carried "bits and pieces" of value cards, it is creating sections of value cards to "make a statement that we're into that business," Roberts said. "So we can at least let the people who have started to go to those alternative stores know they have that option here, and that they can trade up to a nicer card."

Another grocery chain making a similar, but more drastic, move is K-VA-T Food Stores, Abingdon, Va. It's transitioning all its cards from one of the two major card manufacturers to Premier Greeting Cards, the value division of Paramount Cards, Pawtucket, R.I.

Although Premier is not a discount line, K-VA-T is taking money it would have used marketing the major greeting card brand name to push the Food City name, and offering customers a 40% discount on all cards.

"We're putting the marketing money into the cost of goods, and it has energized our greeting card sales," said Richard Gunn, vice president of merchandising and marketing for K-VA-T.

Since K-VA-T rolled out the program in December -- it's still in transition: 90% of its cards are currently the Premier line -- greeting card sales have jumped 30%.

"With the ongoing growth of the dollar channel, the concept of 'value' is becoming increasingly important," said Marc Woodward, vice president of supermarket sales, Hallmark Cards, Kansas City, Mo. "What we've learned is that value is not simply price, but the combination of price and value." In other words, "Is it worth the money?" he said. While the current trend is an increase in value card sales, there will always be a place for high-quality cards, particularly for special occasions, retailers said.

Research from Hallmark suggests the need for consumers to connect is on the rise, Woodward said. "In addition, we know the supermarket channel is uniquely positioned to take advantage of this need."

A well-placed and merchandised card program can help supermarkets take advantage of consumers' predisposition against giving "cheap" cards for special occasions. This "helps the card business stay robust," Pooler said.

"There is somewhat of a stigma by offering a cheap card for a significant sentimental occasion, such as if a husband, fiance or boyfriend gives a 99-cent card for Valentine's Day," Pooler said.

While some grocers are effectively competing in the value card and ethnic arenas, industry experts said both manufacturers and retailers need to re-energize the category in several ways, including getting back to traditional promotional efforts and cross-merchandising techniques.

"The card departments are so well thought-out, sometimes you lose sight of the things you do with traditional merchandising," Wisner said.

"They are all competing on price, not promotion," Manning said. Cross merchandising with bakery, floral and other departments is an effective promotion that can be utilized more often by retailers, Manning and others said. "Promote on other things in the store, rather than on price, such as 'buy a birthday card, get a free cake,"' Manning said.

What is going to energize the category is a national campaign that sells the importance of getting back to card giving, Wisner said. "We haven't seen the level of national advertising from greeting card companies [that we used to]," Wisner pointed out.

At the same time, many merchandisers are realizing the value of promoting greeting cards. "We've increased our promotions from four a year to about eight," Roberts said.

In promotions this year, Bashas' is urging shoppers to buy three cards, then get three dollars off. "We're definitely going to do more promoting this year to try to create some multiple-purchase sells," Roberts said.

Some retailers have renewed their focus on seasonal promotions. "We're doing more seasonal things with cards, such as carrying voice-chip cards, jumbo cards and other specialty cards. They're doing quite well," Roberts stated.

"One of our prime objectives in the coming year is a seasonal best-practices area that would have greeting cards and gift adjacency, a whole destination center," said Bill Mansfield, vice president, GM and HBC, Retail Food Division, Pueblo International, San Juan, Puerto Rico.

The location of the greeting card sections will change in some of Pueblo's stores. While the cards are currently located around the periphery of the store, they will be repositioned "more in-line, with greater visibility and connection with the seasonal area", Mansfield said.

Grocery executives agreed that greeting cards deserve effort and promotion because they are still a profit center.

"Greeting cards is usually our No. 1 or No. 2 category. We emphasize it pretty heavily and give it adequate space. Our average is 80 feet," Pooler said.

"Greeting cards have the tendency to slow customers down in their shopping trip. The longer we can keep them in the store, the longer we can sell to them," Mansfield said.

To that end, greeting card suppliers are working closely with retailers on merchandising and product mix to boost sales.

"The card companies are becoming much more sophisticated in working their mix by demographics and by performance in certain stores. They're trying to customize the mix, and that seems to be paying off," Pooler said.

Multilingual Greetings

Some supermarket chains are competing in the greeting card market by offering Hispanic or other ethnic lines, and by carrying specialty lines from small card companies in addition to their American Greetings or Hallmark sections.

"We do work with some specialty card suppliers," said Bryon Roberts, vice president, general merchandise, Bashas'. "In our stores up north, we work with some companies that give us more of an outdoor-looking type of card."

Spanish card sections can be very successful because Hispanics give cards for more occasions, said Jim Wisner, president, Wisner Marketing Group, Libertyville, Ill. "Expressing sentiment is more important, and the social and family ties are more important," he said. They generally give cards that say "I love you" or "I am thinking about you" more often than other cultures, he said.

In addition, many Hispanic Americans have family members living in other countries, so greeting cards are a way to stay in touch.

At Pueblo International in San Juan, Puerto Rico, stores have become the "destination" for greeting cards in Puerto Rico, featuring sections from 48 feet to 200 feet, said Bill Mansfield, vice president of general merchandise and HBC, Retail Food Division.

Pueblo's primary card supplier carries a "nice selection" of Spanish-language cards. The chain heavily promotes during holidays celebrated in Puerto Rico, such as Three Kings Day on Jan. 6, Mansfield said, a holiday that also helps extend the Christmas selling season.