WHAT PEOPLE BUY: GREETING CARDS AND PERSONAL STATIONERY

Greeting cards and personal stationery are the most widely purchased home products. More than 80 percent (83 percent) of American households purchased greeting cards and personal stationery in 2003. This represents a significant increase over the 72 percent purchase incidence found in 2001. Today paper products are really hot with dynamic growth in the purchase of specialty luxury papers for writing and crafts. The burgeoning scrapbooking hobby is also drawing more people to a passion for paper.

The new connecting trend is the primary driver in growth in the stationery market. Connecting relates to consumers' need to establish connections with others through all forms and methods of personal communications. The stationery and greeting cards market is benefiting, as consumers embrace the handwritten note as the ultimate in luxury communications.

Industry Snapshot

Total industry sales of greeting cards and stationery were $14.2 billion, up a modest 3.4 percent over 2000 sales of $13.8 (see Figure 8.14). But the story in this category is mixed. Sales of greeting cards, the industry's mainstay, have been flat for the past several years. Greeting card companies' top line sales are being negatively impacted by rampant discounting and deflationary pressures, as mass merchants and discounters now capture a growing share of the greeting card market with discount and off-priced cards and stationery items.

	2000	2002	% CHG '00-'02
Total Personal Consumption in millions	$13,771	$14,240	3.4
Greeting cards	7,161	7,195	0.5
Scrapbooks	n.a.	1,175
Social stationery	996	1,064	6.9
Gift bags and wrapping paper	1,253	1,149	-8.3
Books and albums	689	720	4.6
Calendars	689	656	-4.8
Custom imprints	n.a.	386
Party goods and other supplies	2,995	1,894	-36.8
Source: Unity Marketing

Figure 8.14: Greeting Card and Stationery Industry Snapshot

Industry giant Hallmark is beginning to feel the pinch. In its U.S. greeting card and stationery business, Hallmark reports its 2002 sales were down approximately 1 percent from the previous year. Narrowing of its distribution is partly to blame. Since 2000, the number of Hallmark Gold Crown Stores, its flagship outlets, dropped from 4,800 to 4,300 and other specialty retail outlets featuring Hallmark cards declined from 47,000 to 42,000 stores. The company claims to hold a 56 percent share of the greeting card retail market.

Also negatively impacting the traditional greeting card market is the computer revolution. The ready availability of e-mail, as well as the continuing decline of long-distance telephone rates and increase in postage fees, predisposes consumers to use more technologically advanced personal communication methods instead of old-fashioned "snail-mail" letters and greeting cards. Today, sending Christmas cards through the mail is rapidly becoming an anachronism even in business circles that were slower to abandon the practice than holiday-stressed consumers.

On the positive side, stationery suppliers have expanded their offerings to include cards and preprinted stationery suited to use in computer printers. As paper crafting and stationery continues to merge, more high-end paper suppliers are finding an eager market for their very specialized, expensive—at least by paper's standards—goods. Whether for writing, gift wrap, or crafts, luxury paper has special appeal.

Retail Overview

Today, with all the major greeting card brands, like Hallmark and American Greetings, firmly entrenched in discount channels featuring greeting cards in the 99¢-or-less price range, the mass retail market has sunk to the bottom of the pricing barrel. Mass marketers will see little revenue growth in the future if prices remain so low.

But the luxury realm of specialty paper, including handmade paper and cards, specialty stationery, and books and journals, along with luxury writing implements, is a significant growth opportunity for the future. As our world becomes more digital, with technology dominating our communications at both work and home, consumers crave to be grounded in the real world of sight, sound, emotion, and sensation. The return to handwritten notes on exquisite stationery carries the ambiance of an earlier time. Writing and receiving a beautiful handwritten note is the ultimate expression of luxury communications, when so many technology-enhanced options are readily available to us.

Through the marketing efforts of such specialty paper retailers as Papyrus, with 125 mall-based stores, and Crane & Co, both a major paper supplier and growing retailer with 20 company stores, consumers are becoming more aware of the special features and appeals of luxury paper. But if you really want to find out what's hot in the stationery business, a trip to New York-based Kate's Paperie is required. With three New York City locations in addition to the flagship store at 140 W. 57th Street, and one store in Greenwich, Connecticut, Kate's Paperie is featured in all the tourist guide books to the "Big Apple" as a must-see shopping destination. The store offers a selection of over 4,000 luxury paper products and perfectly reflects the trend toward luxury stationery and personal connecting in the market today.

Founded in 1987, Kate's Paperie reaches consumers near and far through its Web site (http://www.katespaperie.com). Beside selling a full selection of paper-related goods, from traditional stationery, such as Crane's and William Arthur, and other stationery sold by the pound, to letter press cards and unusual handmade wrapping papers, it also offers photo albums, journals, fancy ribbons, art supplies, toys, books, beautiful containers, writing implements, and everything needed to wrap and package a gift to make it really special. Its party goods selection is enough to inspire the most party-shy consumer to throw a shindig.

Custom printing, notably wedding stationery, is a specialty of the house. Kate's will custom design a wax seal or rubber stamp for invitations to add sophistication and old-world charm. How-to demonstrations and classes are an important part of marketing luxury stationery, because all but Martha Stewart really know how to wrap that special gift. Afternoon and evening how-to demonstrations are offered Tuesday, Wednesday, and Thursday on topics including Japanese pleats, party garlands, shirt wrap for dad's gift, Kimono cards, and Victorian photo holders. Consumer education is even a revenue generator for Kate's with two-hour sit-down classes offered for $55 on scrapbooking basics, decoupage picture framing, and make-your-own stationery and cards.

As paper goes up market, luxury writing instruments, too, are enjoying a renaissance. High-end writing instruments manufacturers, such as Cartier, Parker, and montegrappa, say that sales of their "fancy" pens are up some 20 percent. Part of the growth in the luxury writing category is due to the shift from fountain pens, which used to dominate high-end pens, to writer-friendly rollerball pens. For example, Colorado Pen Direct, a leading pen catalog, reports that half of its sales of pens was rollerballs, compared to only 20 percent in 1999, according to a recent story in the Wall Street Journal.

Purchase Drivers

Greeting cards are an essential accompaniment to a gift. In a recent Unity Marketing survey on gifting, over 60 percent of gift givers agreed with the statement: "I typically buy a greeting card to accompany a gift to give."

Greeting cards can also substitute for a gift and fulfill the need to connect with family and friends near and far.

The industry has carefully honed its image with consumers through media advertisements. The industry positions a greeting card as a more thoughtful expression of feelings than a simple note. With illustrations and ready-made poetic sentiments, greeting cards help consumers convey emotions that they might otherwise find difficult to express. Recipients frequently keep greeting cards as reminders of the sender's sentiment. With these advantages, the industry positions its greeting cards as a far better way for consumers to connect emotionally with others. For the consumer, greeting cards offer real advantages, not the least of which are saving time and effort, since expressing deep emotion is difficult for many.

Demographic Variables

The greeting card and stationery product category is a female-oriented category, with more women (90 percent) than men reporting a household purchase of greeting cards in the past year. However, men are hardly slackers when it comes to stationery purchases, as nearly three-fourths of men (74 percent) also reported buying in the category in the past year. Purchase incidence of cards and stationery cuts across all ethnicities and age ranges, but the highest overall purchase incidence is among consumers aged 45 to 54.

While the most affluent, those with household income of $75,000 or more, have the highest purchase incidence of stationery, more than 80 percent of all households of all income levels report buying stationery in the past year. Purchase incidence is linked to household size, with larger households of two or more individuals buying more stationery than those with one person.

This category is positively linked to educational level, with the more educated households buying stationery products at a higher rate than the less educated ones.

Key Demographics of Buyers of Greeting Cards and Stationery.

• This is a female-dominated category, but men are active too.

• All ages purchase, but ages 45 to 54 have the highest incidence.

• Middle-to-upper-income households buy more.

• Larger households buy more.

• Higher educational achievement leads to higher incidence.