Gift, Novelty, and Souvenir Shops

SIC 5947

Industry report:

This industry consists of establishments primarily engaged in the retail sale of combined lines of gifts and novelty merchandise, souvenirs, greeting cards, holiday decorations, and miscellaneous small art goods.

The gift, novelty, and souvenir stores industry was highly fragmented, and characterized more by the diversity of products sold than by similarities between individual industry leaders. According to the Small Business Development Center National Information Clearinghouse (SBDCNET), over 300,000 people were employed in the industry's 85,700 establishments in the mid-2000s, when the industry generated over $21 billion in sales.

The industry reported an estimated 72,490 establishments primarily engaged in the retail sale of combined lines of gifts and novelty merchandise, souvenirs, greeting cards, holiday decorations, and miscellaneous small art goods with combined sales that totaled about $13 billion in 2009, well below the more than $21 billion in the mid-2000s. While highly fragmented, some 50 companies accounted for 30 percent of the industry total, according to The Small Business Development Center National Information Clearinghouse (SBDCNET). On average, a gift store designated about 1,500 square feet of space for its merchandise, with the average gift store annual sales under $250,000. A few of the more popular gift items included jewelry, photo frames, and holiday d�cor.

The largest category, gift shops was responsible for the bulk of industry sales totaling $7.2 billion in 2009 as well as 49.8 percent of market share. The second largest category was gift, novelty, and souvenir shops with more than 22 percent in market share and sales of $2.3 billion. Greeting card retailers added another $1.1 billion to the industry's bottom line. Other retailers specializing in gifts and novelties generated $894 million; party favors with $360 million; gift basket retailers with $268 million; artcraft and carvings had $156 million; trading card shops, including baseball or other sports, entertainment, etc. sold $191 million; souvenir shops revenue of $116 million; and balloon shops added $73 million to the industry total.

Charles Gordon, writing in the Canadian newsmagazine Maclean's, stated "We live in a souvenir society, a world in which everything we do, everywhere we go, has to be commemorated." This attitude has encouraged the growth of gift, novelty, and souvenir shops, which have expanded from limited operations in airports and near tourist destinations into a multimillion dollar industry of its own, with specialty stores opening up in shopping malls and retail centers around the country. Many different kinds of stores, including discounters, drug stores, and supermarkets sold gifts and novelties. However, specialty retail shops marketing exclusively in gifts, novelty items, greeting cards, holiday decorations, and souvenirs had become a distinct industry by the mid-1990s. According to the SBDCNET, over three-quarters of these shops employ four or fewer employees and have annual sales under $200,000. In the mid-2000s, major companies in the industry included the Yankee Candle Company, Party City Corporation, Kirkland's, Inc., and Luxotica Group S.P.A.

In the late 1990s, the Walt Disney Company was a leader in the field of specialty shops. Consumer product revenues were $3 billion in 1999, a 5 percent drop from 1998, due to declines in worldwide merchandise licensing and sales from the Disney Stores. Declines were partially offset by increases at Disney Interactive, which comprises Disney's software and publishing operations. While this downward trend reflects a move toward online merchandising, Disney pledged in 2000 to invest up to $750,000 to revamp its 715 retail stores worldwide in an effort to reverse the profit slump. In 2004, retailer The Children's Place bought Disney's retail division.

Other leaders in this field included Spencer Gifts Inc., Cracker Barrel, Marriott Hotel Shops, Matthews Inc., Spains Gifts, Museum Shop, and South of the Border Shops. These stores were located in shopping centers, near tourist destinations such as monuments or resorts, and in museums, zoos, restaurants, hotels, and airports. According to Ward's Business Directory of U.S. Private and Public Companies, other industry leaders were Miami, Florida-based Arango Inc.; Quincy, Illinois-based Kirlins, Inc.; the Enesco Group Inc. of Itasca, Illinois; and the Discovery Channel Retail Division, based in Berkeley, California.

According to SBDCNET, companies both large and small in this industry are trending towards distinct identities and unique products that capture customer loyalty. Companies who utilized computerized systems for management of financial data and inventory have discovered a distinct advantage, with over 75 percent of these stores maintaining and online presence.

Seasonal and temporary carts, kiosks, and stores gained prominence in the novelty shop industry, beginning in the late 1990s. Virtually every enclosed mall had a temporary retail program, which allowed major retailers to explore new concepts, artists to peddle handmade items, and entrepreneurs to capitalize on hot trends.

Retail outlets that specialize in the sale of greeting cards are also classified in this industry. Not classified with other stationery products, greeting cards are a cornerstone of the gift and souvenir shop retail industry. The greeting card industry diversified considerably since its beginnings in the nineteenth century. Mass-produced Christmas cards were first sold in England by Sir Henry Cole in the 1840s, and Louis Prang introduced such cards to the United States not long afterwards. Some of these lines of cards were sold through stationery stores, but other lines were a better match for contemporary gift and novelty shops. Souvenir stores in tourist destinations often carried greeting cards that targeted travelers.

Greeting cards are commonly purchased for a variety of special events, from birthdays to weddings to holidays. The perennial popularity of such items provided retail outlets with a steady source of income throughout the year, regardless of economic factors that might have devastating effects on other industries. In fact, nearly 7 billion greeting cards are purchased each year by U.S. consumers, producing nearly $7.5 billion in retail sales in the mid-2000s.

One of the leaders, greeting card giant Hallmark Cards, Inc., reported 2006 sales of $4.1 billion, a position that has remained relatively flat over the past 3 years. The long-time card manufacturer opened the first of its many retail outlets in the 1950s, establishing a dominant position in the industry. By the mid-2000s, Hallmark products were sold in 43,000 places across the country, including 3,700 Hallmark stores. The mid-2000s have seen Hallmark focus on new product development. In 2006, it launched musical greeting cards and saw its traditional card sales increase nearly 10 percent. In addition to the greeting cards which made the company famous, Hallmark owns the Crayola crayon company Binney & Smith as well as photography studio The Picture People.

The other two market-share leaders were American Greetings and Gibson Greetings. American Greetings, the largest publicly held greeting card company, acquired Gibson Greetings in early 2000 to become second in the industry, with $1.7 billion in 2007 sales. Like Hallmark, sales at American Greetings have remained stagnant in recent years. In addition to cards, the company sells candles, gift wrap, stationery, and party goods. Its products are carried in 125,000 retail stores worldwide.

Hallmark and American Greetings were in steep competition with some relative newcomers to the industry, as gift and souvenir shops that specialized in the sale of greeting cards faced a vastly changing market. Distributors of gifts and novelties increasingly utilize large warehouse clubs and superstores that carried many product lines at reduced prices. Also, many card manufacturers sell their products through discount stores and grocery stores such as Wal-Mart and Kmart. In some cases, smaller gift and novelty stores were forced to restructure their businesses radically to compete. Buying patterns shifted in the 1970s and 1980s as the card market began moving away from card shops toward one-stop shopping establishments, including discounters, grocery stores, and drugstores. While half of all cards purchased 30 years ago were sold at specialty shops, that figure shrank rapidly through the 1990s.

Hallmark and American Greetings market and sell e-greeting cards via the Internet. Their sites allow customers either to design and personalize their own cards or to order traditional cards, all from their home computer. Customers could also send electronic greetings as e-mail messages. This online trend saw tremendous growth in the late 1990s. The number of Hallmark e-cards sent on a daily basis in November 1999 increased more than 600 percent over November 1998. By the mid 2000s, approximately 500 million e-greeting cards were sent worldwide each year. Companies such as Blue Mountain Arts and Egreetings.com became very popular card sites on the Internet, offering free electronic greetings with animation and sound.

About nine out of 10 households purchase about 30 cards annually with 80 percent of the total purchased by women in one of the 100,000 retail outlets. There are more than 3,000 U.S. greeting card publishers varying in size in which the Greeting Card Association is responsible for almost 95 percent of sales.

According to the Greeting Card Association, consumers purchase seven billion cards annually, however, send only 500 million e-cards during the same time as of May of 2010. While the majors offer their own e-cards keeping rivals at bay, new introductions could cut into profits. For instance, American Greetings launched a new card with an LCD screen capable of viewing up to 50 photographs as a slideshow with music to compliment the overall experience. However, George van Horn of IbisWorld, a research group warned these new introductions may hinder profits since they are costly to create and may spur unwanted replicas from their competition.

"There's a new breed of multimedia electronic cards coming on market that more closely re-semble something you'd find in a BestBuy store than at Hallmark," Richard Mullins noted in the Chicago Tribune in July 2010, adding that "�multimedia greeting cards are selling fast, and they're well on the way to becoming standard, and expected." Hallmark and American Greetings were looking for any avenue even if it meant becoming a little tech savvy to out due one another or simply survive in the economic downturn that has been negatively effecting their bottom lines.

Hallmark Cards, Inc. reported revenues of $4 billion in 2009 with 13,400 employees. American Greetings Corporation's revenues fell slightly to $1.69 billion in 2009 and $1.63 billion in 2010 with greeting cards constituting 70 percent of sales with 26,000 employees.

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News and information about Gift, Novelty, and Souvenir Shops

WINTER HOLIDAYS IN INDIANA IN 2010: FESTIVE FUN FACTS FROM THE INDIANA BUSINESS RESEARCH CENTER.
States News Service; December 15, 2010; 700+ words
...destinations likely include the following: 1,620 clothing stores 1,069 electronics and appliance stores 548 gift, novelty and souvenir shops 452 sporting goods stores 447 jewelry stores 234 book stores 185 hobby, toy and game stores 127 discount...
WINTER HOLIDAYS IN INDIANA IN 2010: FESTIVE FUN FACTS FROM THE INDIANA BUSINESS RESEARCH CENTER
US Fed News Service, Including US State News; December 15, 2010; 700+ words
...likely include the following: * 1,620 clothing stores * 1,069 electronics and appliance stores * 548 gift, novelty and souvenir shops * 452 sporting goods stores * 447 jewelry stores * 234 book stores * 185 hobby, toy and game stores * 127...
NEW TAX HELPS RESORT TOWNS WITH EXPENSES FOR LAKE DELTON, IT HAS MEANT ABOUT $825,000 FOR POLICE AND FIRE PROTECTION AND INFRASTRUCTURE.(LOCAL/WISCONSIN)
The Wisconsin State Journal (Madison, WI); May 27, 2002; 700+ words
...Department of Revenue. Others include such businesses as hotels and motels, sporting and recreational camps, gift, novelty and souvenir shops and public golf courses and, of course, amusement and recreational services, she said. "The tax is not...
U.S. Census Bureau Facts for Features: The 2007 Holiday Season.
US Newswire; November 7, 2007; 700+ words
...and clothing accessories stores; 9,589 department stores; 9,612 hobby, toy and game shops; 33,238 gift, novelty and souvenir shops; 23,195 sporting goods stores; 29,624 jewelry stores; and 11,077 book stores across the nation...
SUCCESS OF OCEANFRONT SHOPS HANGS ON T-SHIRTS.(BUSINESS)
The Virginian-Pilot (Norfolk, VA); August 3, 2002; 652 words
...Jerry Hallal. According to the latest economic census reports, released in 1997, Virginia Beach has 96 gift, novelty and souvenir shops, which generated about $32,476,000 in sales from 1992 to 1997. Joe Noga, manager at the Dept Store...
U.S. Census Bureau News -- Facts for Features: The Holiday Season.
US Newswire; November 16, 2006; 700+ words
...clothing accessories stores; 9,360 department stores; 10,345 hobby, toy and game shops; 33,956 gift, novelty and souvenir shops; 22,902 sporting goods stores; 28,772 jewelry stores; and 11,218 book stores across the nation...
Virginia Beach, Va., Shops Reply on T-Shirts to Draw Business.
Knight Ridder/Tribune Business News; August 3, 2002; 684 words
...Jerry Hallal. According to the latest economic census reports, released in 1997, Virginia Beach has 96 gift, novelty and souvenir shops, which generated about $32,476,000 in sales from 1992 to 1997. Joe Noga, manager at the Dept Store...
THE 2008 HOLIDAY SEASON
US Fed News Service, Including US State News; October 30, 2008; 700+ words
...and clothing accessories stores; 9,969 department stores; 9,522 hobby, toy and game shops; 31,813 gift, novelty and souvenir shops; 23,270 sporting goods stores; 28,300 jewelry stores; and 10,989 book stores across the nation...

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