A Year in the Life of a Greeting CardBy Sean Gallagher | Posted 2003-03-01 Print
Every year, American Greetings churns out 20,000 new cards to meet every need of "social expression" it can imagine. But the life and death of each of those cards is hardly determined by the pen of an artist and the gut of a chief executive.
"It's his 60th," she says, referring to an older brother. "So this card has to be kind of special. But not 'too' nice, or mushy."
Travis is beginning the small ritual of finding just the right birthday wish. She's engaging in an American cultural traditionthe exchange of what the greeting-card industry calls "social expressions."
Her search is a process that has been studied and restudied for decades by the world's top two greeting-card makersHallmark and American Greetings. The companies control 45% and 40%, respectively, of the $7 billion-a-year greeting-card market. As such, they are the acknowledged experts of this creative, somewhat aloof, and pseudo-scientific industry.
With help from psychologists, marketing gurus, focus groups, test shoppers, artists, writers, editors, display experts and other creative thinkers, the card-makers have diagrammed, documented, dissected, categorized and analyzed all manner of consumer reaction to the designs and messages of their own cardsand those of their competitors.
Yet there is little sharing or sweetness in this allegedly social industry. Rollouts of new styles of cards are fiercely executed and inside information is closely guarded.
"It is pure cutthroat in the industry," says Jared Polis, the creator of BlueMountain.com, an electronic greetings Web site now owned by American Greetings. "People think because it involves artists and writers and produces things that are pretty to look at, that the greeting-card business is something other than what it really is. It is very competitive, very aggressive."
In fact, Polis' company, Blue Mountain Arts, sued Hallmark for copyright infringement in the late 1980s. The "alternative greetings" company claimed that a Hallmark line of cards known as Personal Touch had copied the "trade dress" and "look" of Blue Mountain's Airebrush and Water Color Feelings poetry cards. Hallmark took the case to the U.S. Supreme Court, but lost. It paid an undisclosed sum in 1988 to Blue Mountain and removed the cards from its stores.
But the competitive pressures are only intensifying. Sales are growing just 2% a year, about the rate of population growth. Fewer Americans, especially younger ones, buy greeting cards. Many now use computer programs to create, print and send their own cards, or go to an e-greeting site where they send personal expressions via e-mail.
To counter this, American Greetings spent $28 million in March 2001 to buy the Egreetings Network and $35 million in September 2001 to buy Blue Mountain Arts from the failing Excite@Home Web portal. In 2002, those sites were integrated into Americangreetings.com, which became one of the top 15 most-visited sites on the Web. Yet the site generated just $30.5 million in revenue last year and lost $2.1 million.
After 93 years of consecutive growth, American Greetings finally saw its sales drop in 2001 and has recorded two years in a row of losses. It has cut back its work force and restructured debtand increasingly turned to information technology to get the right cards, to the right card racks, at just the right time.
The company now uses information systems for everything from repositories of card designs and messages to storehouses of massive amounts of business intelligence data. The idea is to use the information to get cards to market more quickly; pull losers out faster; and pick up on new trends before rivals do. In Florida, for example, the company has found demand is high for "grandchild" birthday greetings.
The data, which comes from sales numbers, studies and behavioral observations, paint a clear portrait of buyersand retailersand provide useful clues on how to permanently boost sales. The challenge for companies such as American Greetings, after all, is to inspire repeat purchases of cards of all types.
"We are in the kind of a business, that, if I remember your important occasions in your life, and send you a card, whether it's on the Net, or a regular card, preprinted card, you are more apt to remember my important occasions," American Greetings chief executive Morry Weiss said in an interview on CNBC last year. "It's a business that builds on itself."
To that end, card designers now tap into American Greetings' archives of art and text to create new lines of cards that can spur buying "occasions." In its warehouses, the company has virtually automated the whole process of filling and refilling orders. That speeds the right cards to the right customers, and creates savings on the bottom line. Plus, the accuracy of shipments and reports on sales to retailers is fundamental to creating the trustand enthusiasmfor stocking more of its cards on their racks.
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