Greeting Cards

Industry Snapshot

According to the Greeting Card Association, approximately 7 billion cards were sold annually in the United States in the late 2000s. The industry was dominated by two manufacturers: Hallmark Cards Inc., the largest privately owned manufacturer in the world, and American Greetings Corporation, the largest publicly owned greeting card manufacturer. Together, they controlled about 85 percent of the $7.5 billion U.S. greeting card market.

The Greeting Card Association classifies greeting cards as seasonal and everyday, with each category accounting for about half of total industry sales. In the late 2000s, Christmas continued a long-term trend as the number one seasonal occasion for sending cards, with almost two-thirds of this sector, and birthday cards held their position as the top individual everyday segment, accounting for 60 percent of that market. The average individual card price was between $2 and $4, although card prices ranged from less than 50 cents to $10 each. The typical American receives an average of 20 cards each year, and nine out of ten U.S. households spend money on products from this industry.

Organization and Structure

Greeting card companies run their establishments on two structural models. Larger establishments have in-house creative staff, including graphic artists, designers, creative consultants/directors, and writers. Smaller companies typically use freelancers to provide these services. Generally, printing is done in-house by large and small establishments; Hallmark Cards' use of an outside printer since the late 1940s is a notable exception. Common to both types of establishments is the emphasis on marketing. Leaders in this industry have highly developed distribution and marketing research and promotion systems.

Distribution.
Because greeting cards formerly appeared in drug and grocery stores in relatively small quantities, manufacturers relied heavily on small-package delivery services. Hallmark Cards Inc. used long-haul trucks and trains to ship cards from distribution centers in Liberty, Missouri, and Enfield, Connecticut, to regional offices throughout the country. From there, small courier services handled regional distribution. However, Material Handling Engineering reported that in 1995, Hallmark began handling all phases of its distribution from its Research Distribution Operations division in Kansas City, a 226,000-square-foot facility that used ergonomic operator workstations, high-tech carousels, and a state-of-the-art tracking system to triple its throughput.

Other manufacturers continued to rely heavily on relationships with couriers. Because of the seasonal nature of many greeting cards, companies require timely shipments and a courier that is able to handle the returned unsold cards at the end of a season. Moreover, throughout the year unsold cards need to be returned and replaced rapidly as part of this industry's marketing strategy.

Marketing Research and Promotion.
Manufacturers have structured their marketing divisions to engage in marketing research and promotion at two levels. One level addresses retailers and works with each store or regional chain to create a product mix and display specific to each retailer's sales record. The other level addresses customers directly by using consumer-specific research. The industry extensively uses demographic studies and surveys of consumer tastes and purchasing behaviors.

Background and Development

Louis Prang, a German-born immigrant who founded a lithography business in Boston, made the first commercially printed greeting cards in the United States during the Christmas season of 1874. His folded cards contained messages inside, copying the new tradition of Victorian English Christmas cards. Since Americans were not accustomed to purchasing greeting cards, Prang's first year of business went exclusively to England. He put his cards on the U.S. market the following year and soon added birthday and Easter cards to his product line. However, sales were slow, and by 1890 he stopped producing cards. In The Romance of Greeting Cards, Ernest Dudley Chase suggests that Prang's lack of success with the U.S. market was due in large part to the popularity of less expensive German-made greeting cards, which resembled postcards. Prang's cards costs more to produce due to their use of colors.

Joyce C. Hall, founder of Hallmark Cards, entered the greeting card industry in the early 1900s by producing postcards similar to the German-made cards. Hall predicted that the postcard craze would not last because he felt that postcards were an inadequate means of personal communication. Hall's prediction was realized at the onset of World War I. At this time greeting cards, as known from the Victorian era, were reintroduced to the U.S. consumer market because the war curtailed postcard shipments from European manufacturers. Greeting cards also filled a niche by providing sentiments and morale boosters sent to soldiers.

Another increase in card sales came during World War II as greetings were again sent to soldiers overseas. However, card sales continued to grow in the post-World War II United States as more people relocated across the country and corresponded more by mail. In addition, the industry grew with increased competition. At the end of the war, American Greeting Publishers (later named American Greetings Corp.) entered the market and by the mid-1950s proved to be a major competitor for Hallmark. The competition between these two industry leaders and the increase in television advertising evolved into the marketing-oriented greeting card industry of the late twentieth century.

Sales Trends.
From the 1970s to the early 1990s, major changes occurred within this industry. At the retail level, sales to chain variety stores and drug and grocery stores increased while sales to card shops decreased. This shift from card shops to departments of other retail stores resulted in large part from changes in consumer habits, as people wanted to purchase cards at the same store where they made other purchases. In the mid-1980s, this shift was fueled by a price war among industry leaders, which dramatically reduced prices for retailers while retaining the same preprinted prices for consumers.

Historically, marketing directed at consumers has been difficult for this industry. Studies have revealed that card shoppers, 80 percent of whom are female, do not tend to purchase cards on the basis of brand names. One approach to this marketing problem has been to attract customers through messages available in greeting cards, which reflect trends in consumer interests and lifestyles. Greeting-card vendors tend to be at the forefront when responding to shifts in consumer tastes and identifying the latest trends.

The 1980s marked a departure from tradition for card manufacturers, who responded to changes in consumer behavior with "alternative" or "non-occasion" cards. The demand for such cards emerged from changes in letter-writing habits and in personal relationships. Instead of spending time writing letters, consumers were apt to devote time to finding an appropriate greeting card. Alternative cards assist personal communications by dealing with such topics as drug and alcohol addiction. These cards also respond to changes in personal relationships with messages addressing topics such as coping with a divorce or living with a stepparent. Sales of alternative cards grew nearly 10 percent a year in their first few years of production.

As U.S. consumers became increasingly diverse, alternative cards remained very much in demand in the early 2000s. In Progressive Grocer, Hallmark Vice-President Wayne Strickland said: "Today's culture is a mix of ethnic groups, nontraditional and extended families, work relationships, and several generations--more than in the past due to increased longevity. Today's consumers feel the pressure of not enough time. They want the right card in a convenient setting, displayed informatively so that the perfect card is easy to find. For them, convenience equals time. They also want value, which includes price, convenience, quality, and brand."

Another notable shift in greeting card messages in greeting cards the substitution of traditional poetry to conversational verse and prose. Marketing research for alternative cards showed that consumers wanted straightforward messages written in a straightforward style. An exception to the trend for prose has been in religious cards. The industry leaders all produce a religious or inspirational line of cards, which experienced an increase in sales during the 1990s. Along with patriotic cards, religious and inspirational cards received a boost in popularity following the terrorist attacks on the United States on September 11, 2001. American Greetings marketed inspirational Chicken Soup for the Soul cards, as well as its Messages of Faith collection. Hallmark created its Liberty Collection line of cards and home decorations to honor those killed on September 11.

By the mid-1990s, the concept of market segmentation had evolved further. In 1996, Hallmark launched the Tree of Life line for Jewish customers as well as the Mahogany line for the African-American market. These categories remained strong into the next decade for major manufacturers like Hallmark and American Greetings, which marketed thousands of different cards for racial and ethnic groups, especially Hispanics and African Americans. For example, Hallmark sold cards under the label Hallmark En Espanol, and American Greetings' offerings included Momentos de Inspiracion and Spanish Soft Touch lines.

During the mid-1990s, drugstores and supermarkets were among the most important outlets for greeting cards. Since card suppliers maintained card displays, a store rarely carried more than one brand and often worked in tandem with the manufacturer to maximize its profits. By the early 2000s, supermarkets remained a key distribution channel for greeting card companies, providing access to large numbers of impulse buyers who were pressed for time. However, sales were flat compared to the growth of the 1990s. According to different estimates, by 2002 supermarkets accounted for 15 to 20 percent of greeting card sales, and many devoted considerable percentages of floor space to greeting card displays. In the early 2000s, the fastest-growing greeting card sales channels included mass merchandise stores and so-called "dollar stores."

Innovations and Developments.
Significant developments in the production and distribution of greeting cards took place throughout the mid-1980s and early 1990s. In the mid-1980s, an innovation in printing added to the many printing processes used by greeting card manufacturers. A process called Prismatic Imaging stamped a card with a silver dye and then printed on top of the stamping. By 1991, the House of Gold, New Jersey, which had exclusive license on the process, stamped 40 million cards annually for the greeting card industry.

In 1991, Gibson Greetings introduced a line of recyclable cards, and Hallmark Cards and American Greetings had started using recyclable paper in some of their products. Gibson Greetings also began using other environmentally sensitive materials in production, such as organic dyes, inks, and cleaning solutions.

A significant development in the distribution of greeting cards emerged with the use of electronic ordering and inventory control systems, known as electronic data interchange (EDI). EDI systems allow retailers to order cards through a computer linked directly to the manufacturers and independent distributors, bypassing the postal service. This arrangement facilitated rapid ordering and more accurate inventory controls.

In 1992 Hallmark and American Greetings introduced self-access personalized greeting cards, which enabled customers to create their own greeting cards at an in-store computer kiosk. A variety of designs, colors, and typefaces made it possible to buy on-demand cards, which were more original than mass-produced ones in that a personalized message could express the sender's personality. Although computer kiosks were potentially profitable, their path was not smooth. Several companies chose to introduce them almost simultaneously, causing controversy over patent rights. However, Kansas City Star noted that the kiosks did not fulfill their early promise. By June 1995, Hallmark planned to close 1,500 of its 2,700 kiosks based on a two-year survey of sales.

Electronic greeting cards grew in popularity during the 2000s. Both Hallmark and American Greetings offered thousands of cards online. However, e-cards did not displace the sale of traditional paper cards, which remained more appropriate for certain card-giving occasions. Another trend tied cards to the movies. As early as the 1990s, industry leaders like Hallmark engaged in licensing arrangements to produce theme cards based on popular movies with companies such as Disney and Warner Brothers.

In the mid-2000s the traditional greeting card industry strove to continually reinvent itself in order to remain attractive to consumers. In 2006, Hallmark Cards launched a line of audio cards that played recordings of original music, such as "Unchained Melody" by the Righteous Brothers, as well as clips from movies. The next year, the company introduced the Journeys line of encouragement cards that addressed such issues as illness, infertility, addiction recovery, coming out, and job loss. Meanwhile, American Greetings spent two years and $100 million to reinvent the company's products and marketing approach. In January 2007, the company unveiled its new merchandising platform, which is based on five "Marketing Windows" per year. The year's first window, "Love My Style," included Valentine's Day offerings. It was followed by "Shine," with themes of spring, Mother's Day, and Easter; "Funnier Than Fiction," which included humorous Father's Day and graduation cards and introduced an Ellen Degeneres line of everyday cards; "True Colors," for autumn holidays; and "beDazzled," featuring winter palettes.

Current Conditions

Despite fears that the Internet and free e-cards would diminish the industry, greeting cards sales actually increased in the 2000s. According to the Greeting Card Association (GCA), "Because e-cards and traditional cards are generally used in different ways and situations, the e-card seems to be expanding overall greeting card sending." The popularity of e-cards continued to grow. The GCA estimated e-card volume at 500 million per year in 2009. Studies showed that consumers sent such greetings in addition to, not instead of, traditional cards, which were perceived as preferable for important occasions or a true measure of feeling.

New innovations in the greeting card industry proliferated in the late 2000s. One of these was introduction of light technology into cards. Using small LED lights and circuit board technology, card creators designed cards that lit up when opened. In addition, "lenticular" cards--which used technology similar to holograms--incorporated images that appeared to "move." In 2009, American Greetings introduced envelopes with sound and music. Activated by a mechanism in the flap, the recorded piece would sound every time the envelope was opened. E-cards also saw new and improved features. For example, users could make talking e-cards or cards that featured avatars (cartoon images of themselves). M-cards could be ordered online and then delivered to a mobile phone.

Industry Leaders

Together, Hallmark Cards Inc. and American Greetings Corp. control 85 percent of the greeting card market in the United States. A private company, Hallmark is the top U.S. manufacturer of cards, while American Greetings is the largest public greeting card company in the world.

Founded in 1910 as Hall Brothers, Hallmark Cards Inc. produces 18,000 new and redesigned greeting cards per year, with approximately 65,000 products in its line at any given time. Greeting card brands include Hallmark, Shoebox, and Ambassador. Its products are published in 30 languages and are available in more than 100 countries. The company owns approximately 3,300 Gold Crown stores, with another 41,500 stores operated by independent owners. Hallmark also manufactures wrapping paper, Christmas tree ornaments, and other gift and novelty items. It owns crayon manufacturer Crayola LLC. In 2006, Hallmark Magazine was launched, although the publication was short-lived, ceasing publication in 2009. Crown Media Holdings Inc., the company's broadcast unit, owns and operates both the Hallmark Channel and the Hallmark Movie Channel. Hallmark's revenues reached $4.3 billion in 2008, and the company employed 14,600 people worldwide.

American Greetings (AG) Corp. was founded in 1905 by Polish immigrant Jacob Sapirstein, who launched his business by selling to local merchants the cards he had purchased from German manufacturers. A century later, the company manufactures greeting cards under the Carlton Cards, American Greetings, and Gibson brands. With about 500 stores in the United States and Canada, the Carlton Retail division is the largest owned and operated chain of card and gift shops in North America. American Greetings also distributes its products overseas, primarily to the United Kingdom, Australia, New Zealand, and South Africa. It owns DesignWare party goods, Plus Mark gift wrap, DateWorks calendars, and AG Interactive, the company's provider of such digital products as electronic greetings and telephone ringtones. In 2009 AG purchased Recycled Greetings Inc., a maker of humorous and alternative cards. Total company earnings for AG surpassed $1.6 billion in 2008.

Workforce

Approximately 120 greeting card publishers employed an estimated 12,400 workers in the United States in the mid-2000s, according to the U.S Census Bureau. Administrative and marketing staffs made up about 50 percent of workers. Additional marketing and public relations agencies frequently provided temporary personnel. Printers and production specialists made up nearly 40 percent of this workforce. Graphic artists and writers accounted for only 10 percent, but their numbers were expected to rise with increased production of alternative cards.

America and the World

According to the Greeting Card Association, this industry has virtually no competition from foreign manufacturers selling in the United States. As exporters of greeting cards, the U.S. industry has limited its business due to the high cost of small shipments. U.S. exporters primarily license foreign printers to print their cards. Historically, Canada and the United Kingdom have been the largest importers of U.S.-made greeting cards.