Value, premium card segments open to growth

The pervasiveness of Facebook and Twitter has not killed the greeting card and gift wrap category. "Managers are telling us that the category continues to hold its own and, in some cases, is growing nicely," said Mark Deuschle, VP business development and chief marketing officer at the Global Marketing Development Center. "Greeting cards remain not only a top trip driver, but also one of the most profitable categories in the drug store environment," said Sabrina Wiewel, VP of Hallmark's chain drug team. "Once a shopper is in our department, she leaves with a card 8-out-of-10 times."

A tight economy has shifted some market share in the category to the dollar channel, but more consumer interest in the value segment isn't necessarily bad news for drug retailers. "Our data suggests that card sending seems to be a healthy trend with unit sales trending up, but there has been a shift to less expensive cards," Deuschle said. "At the same time, we're also seeing growth in the premium segment."

Steven Gimbelman, president of Designer Greeting said that greeting cards are one of the most profitable categories in drug stores — third only after candy and gum, and prescriptions. In a tight economy, more focus on value greeting card programs can benefit the channel, according to Gimbelman. "These programs have resuscitated many drug stores that had been losing greeting card sales due to full price programs and limited title selection," he said. "We create high-turning planograms based on a retailer's market demographics. We expertly tailor our controls to succeed for our accounts."

In the premium segment, innovation continues to drive category sales. Cards with sound, motion and even LCD screens give consumers a reason to shop the category. "Special treatments, such as foil stamping, faux gems, die-cutting, glitter and attachments, are more popular than ever," said Kathy Krassner, a spokeswoman for the Greeting Card Association.

Krassner said she sees a trend toward cards with a handcrafted feel, many of which use premium papers and rich textures. Cards with embellishments and attachments that can be removed and reused have done well for Hallmark. Designer Greetings is bringing embellishment to the value tier with the Designer Boutique upscale, handmade line that includes ribbon, gems and tip-ons, but it is still offered at value pricing.

The gift bag segment also has continued to grow at the expense of traditional wrap. "The real growth in wrap is in bags in new designs and materials," Deuschle said. "Consumers love the convenience of bags." Hallmark's top-selling format in drug stores is a gift-bag-to-go concept, a gift bag that is already prefilled with tissue and has a gift tag attached. Solid-colored gift bags that are easy to coordinate with any gift and for any occasion also are seeing strong sales.

Retailers who adjust their mix to reflect the changes in the market have shown the best performance overall. Manufacturers are offering retailers more flexible fixtures to display the best mix of cards in departments that are easy to navigate and can integrate cards with other products.