Cutting the CardsBy 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.
The changes are producing results. The automation of filling orders meant the company could cut hundreds of workers who had filled orders out by hand. Indeed, two years ago, at the depth of its red ink, it cut 1,500 employees, or 13% of its work force.
Over the course of the last decade, the company has reduced the time it takes to create, develop and market a card from three years, to one. In some cases, with topical or timely cards, the process winnows to a matter of a few months, say former company insiders. The push to trim time has been driven, in part, by card-buyers' demands for evermore topical humor.
Today, information technology affects every stage of a card's life. So-called "expert systems" software optimizes manufacturing operations. Handheld computers speed the collection of sales data from the field. Retail planning and forecasting software helps the company analyze the success of its designs. Perhaps most important, a digital asset management system accelerates new product development.
Yet it's not accurate to say American Greetings is on the cutting edge of technology.
Sure, the company's digital repositories help artists and writers access some 200,000 images and a like number of text messages, all of which can be modified and reused in new cards. And the No. 2 card maker is now putting cards on consignment in the outlets of big-box retailers such as Target, which can scan bar codes as the cards go across its checkout lines and pay American Greetings only for those exact cards that sell.
But, in the main, industry experts say American Greetings has remained relatively low-tech.
Indeed, as the company struggled to regain profitability, one of the projects it ditched, according to outside software consultants and freelance developers who've worked at American Greetings, was a planned SAP enterprise resource planning system after almost a year of preparations. SAP says it has no engagement at American Greetings at present.
"American Greetings is a very traditional company, and it does not like to spend money it doesn't have to, which is why it does not invest a lot in technology," says BlueMountain.com founder Polis. "You can understand why they would not want to invest more money. When you know that sales are flat and are likely to continue that way, and that costs are going to outweigh the immediate benefits, you stay cautious. American has taken a cautious approachvery cautiousand that is because the old systems still work."
Officials at American Greetings and Hallmarkciting their intense competitionresist talking about how they use information systems to manage the introduction, sale, and withdrawal of their top- performing cards, even birthday greetings.
But interviews with technology vendors, consultants, industry experts and some former American Greetings executivescombined with information from the companies' financial filings and other public recordsgive a clear picture of how information drives the birth and death of every new greeting card that emerges from the drawing board of an artist and winds up on the shelves in a town like Evergreen.
Statistics, for instance, tell American Greetings that women between the ages of 35 and 55 purchase 92% of all greetings cards. Patterns created by marketing observations and case studies show that, on average, a buyer like Janice Travis will look at and reject a half-dozen cards before she finds one that appeals to her. It will be the design, not the message, that draws her to the card. But it will be the message that makes the sale.
"If you're a woman, you might look at four, five, six cards before you choose the right one. With a man, it's generallyit doesn't go past the first, or maybe the second,'' says American Greetings CEO Weiss. The art may attract the eye, but "there's no question that it's the copy" that sells it.
Back at the Albertson's in Evergreen, Colo., Travis finally finds a card she likes: American Greetings card number 18100-83962. "This is definitely it," she says. "He's a computer guy." Printed on the card's cover is a cartoon drawing of a computer monitor; strung across the screen is: "http://www.yourbirthday.com."
Travis opens the card and reads aloud: "Twenty-five files found: age old, aged, ancient, antique, antiquated, archaic, bygone, dated, dowdy, enduring, experienced, former, hoary, molds, old, old-fashioned, olden, outdated, outmoded, passé, perennial, seasoned, timeworn, venerable, vintage.
"That should cover a 60-year-old guy pretty well, don't you think?" she says, laughing. She puts the card in her basket, and is on her way.
Travis picked the seventh card she looked at, just a little higher than Weiss' expectations.
But, as American Greetings struggles to stay profitable, it will need more buyers like Janice Travis. For the first nine months of its 2003 fiscal year the company has crawled back into the black, recording net income of $128 million on revenue of $1.47 billion.
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