The Sentiment Factory

Paramount traces its history to a card and novelty company started in 1906, four years before the birth of Hallmark. Its headquarters occupies a former thread mill, built in 1872, in the Providence suburb of Pawtucket.

When Davison's father, Charles, bought the company in 1983, Paramount was primarily selling acetate cards, where artwork is printed on a translucent cover attached to the paper card.

But in the 1980s, acetate cards fell out of fashion. At the same time, Hallmark began to squeeze all but its own cards out of its franchised retail stores. That shut off Paramount's primary sales channel.

"The company, by all rights, should have become extinct," Davison says.

Paramount instead diversified its product line and sales channels, selling into food, discount and, ultimately, its own franchised stores.

And if the company were to survive, it would also have to become more efficient. When director of information systems and technologies Paul Choquette joined the company in the early 1990s, "just to fill out an order would take a week," he recalls. Now orders that come in by 2 p.m. are shipped out the same day.

Paramount also offers its retail customers the chance to lower their inventory cost through "scan-based trading," a relationship in which the card maker retains ownership of cards on the store shelves, automatically restocks them and only gets paid when the cards actually sell.

"We try to find market niches where we can rewrite the rules and be dominant"

But that only works if the retailer's point-of-sale system can capture a 5-digit "sidebar" bar code on the back of each card, in addition to the standard 12-digit Universal Product Code. While the 12 digits provide everything needed for a scanning cash register to ring up the proper price, the sidebar tells the store's inventory system exactly which card has just disappeared off the shelf. So a store that only scans the UPC must go through a less automated process of recording which specific cards are selling and need to be reordered. A store with a more sophisticated point-of-sale system automatically detects when there is only one card of a given design left on the rack, triggering an automatic reorder for a new pack of six.