Greeting Cards

A great thing about card sales in newsagencies is the regularity of seasons. Easter is generating good interest as is, surprisingly, St Patrick’s Day. Based on a couple of customers I spoke with on the weekend newsagents seem to be top of mind with these seasons.

These seasonal promotions fit in with habit based products that I have discussed here before. It’s why I like them. The more newsagents embrace and promote even small seasons like St Patrick’s Day the more they are known as the place for these. It worked for us last month with Chinese New Year.

The best move we ever made was moving our greeting card space to the front of our newsagency.

How early should seasonal displays for Easter, Valentines Day, Mothers Day, Fathers Day etc go out? It’s a question newsagents ask often as we bounce from season to season in the first half of the year, especially in the greeting card space.

My view is that the season ought to go out as early as possible, especially if it can be done without taking away from your everyday range. Who knows what needs customers have for buying a card an d getting it in the mail in advance of the season? Further, seasonal displays freshen the retail offering.

Ben Kay, manager of my store at newsXpress Forest Hill disagrees. He reckons retailers go out too early with seasons – Christmas displays in September/October etc. Ben would rather some ‘clean air’ between seasons.

As a consumer I’d like ‘free air’ between the retail seasons. Who doesn’t like normalcy? As a retailer I need to maximise every opportunity – hence the decision to go early with seasons. When Valentines Day came down, Easter went up and it’s selling already which in itself vindicates the decision. We’ve started Easter with this small display and it will grow every few days as we get closer.

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Valentine’s Day sales are usually made two or three days out from the big day. This year we’re seeing sales kick in sooner thanks, in part, due to this outpost we’ve been able to negotiate for a low price with the landlord. We used to run an outpost on another level but with Kmart going we felt we’re better off building noise on our level. Others tell me their sales are tracking well too.

With the way cards are usually managed in newsagencies most newsagents would wait for their card merchandiser to take down Christmas stock from their permanent fixturing and replace it with all-year designs. In our case it will be another day before For Arts Sake get to us leaving a half empty Christmas display.

I’d like to see card companies work better with newsagents on this – they could empower us to take the stock down before now and train us on placing new stock up.

Further to my post about the Coke / YouTube card partnership, Optus is promoting e-cards online. As I newsagent I say to my customers that the only way to really share your feelings is to write them on a card. Pixels on a screen are cold no matter how pretty they look. E-cards are a lazy greeting.

Webpronews reports that Coke and YouTube are collaborating on a Christmas greeting card play. The second paragraph of the article stabs at greeting card retailers and publishers:

Sure paper Christmas cards look nice sitting on a mantle, but what else do they do? While they are thoughtful, they cannot actually convey emotion the way that spoken words can. What better way to say Merry Christmas, Happy Hanukah, or Kwanzaa than with a customized holiday video card from Coke and YouTube?

Welcome to disruption on the greeting card space. MediaPost has more on the store here.

In the two weeks to the close of business tonight, unit sales of Christmas cards and wrap in our shop are up 26% compared to 2005. Other categories are tracking growth less than half that. By going big and bold with cards is paying off. We are having exceptional success with Hallmark boxed cards.

Newsagents usually see Christmas sales of cards and related items kick in early in ember. This year, based on data from several stores in three different states, Christmas seems to have started earlier. Cards are the best indicator and in my own shop Christmas card sales are up 35% on the same time last year and we are down one outlet (our second shop is closed – moving to a new location and underground a complete re-fit). The newsagencies I have spoken with are early-adopters – they have seen the commercial by the majors and went out early with Christmas to capitalise on the market awareness. Sales results prose the early (for newsagents) move to be worthwhile.

Our landlord gave us ten days to quit the temporary location of our second shop in advance of opening in a permanent location next month so we decided on a sale. Below is a picture of the main card aisle with one day to go. The image graphically illustrates the most sought after card categories. The empty pockets make me wonder about the cost of real-estate and stock on the pockets with stock remaining.

If cards are not selling when they have been discounted 30% and then 50% then one has to question whether we should have them in the first place. Of course, every retailer wants every item to be the fastest mover. I appreciate that is not practical. However, the many empty pockets in the women’s section versus almost no empty pockets in the men’s makes me want to cut back on men’s titles. Cards stock needs to turn at least three times a year in a shopping centre to pay for the real-estate. The titles left after steep discounts are the titles not performing.

Having helped develop the newsXpress newsagent group to 95 stores, I and my fellow Directors have been developing a second franchise group, sophie randall cards and gifts. This will be a complimentary retail offering which will appeal to newsXpress franchisees as an additional business as well as providing a model for existing and new entrants into the card and gift space under a new brand.

I mention this new business here because some in the industry are already gossiping about Sophie Randall. By sharing some details here I can exert some control over what you hear about this exciting new initiative.

sophie randall cards & gifts is a fresh approach to helping owners of card and gift shops to unlock greater value from their businesses. Using a franchise model, existing and new card and gift shops will have access to the benefits of a national brand without having to give up their own branding if they wish. We will provide access to product rebates hitherto unattainable by individual stores. We will also deliver significant operational cost cutting opportunities as well as access to products previously not available to individual card and gift shops. Franchisee stores will be supported with professional consistent marketing collateral and support materials designed to increase traffic and boost sales.

Sophie Randall, the inspiration for this business, is a forty-something greeting card and social stationery designer. Sophie worries that technology makes it too easy for people to stop putting their feelings in writing. She got into greeting card design because she felt the world was becoming impersonal and that people were losing the art of sharing their feelings. Part designer, part philosopher and part raconteur, Sophie is on a mission to help people express themselves, in writing. Sophie is feisty – never afraid to share an opinion. She is also caring and always ready with a word of encouragement.

Sophie Randall is a fictional character, created to bring this retail concept to life, to provide us with exclusive and valuable Intellectual Property. She is a character people, particularly card and gift buyers, will respect and turn to for inspiration.

We are naming the business after a person because it removes any barrier a product based name causes and allows us more control over the IP surrounding the whole concept. We own Sophie, who she is, what she thinks and how she acts. Her name makes our business more unique and valuable.

We expect Sophie Randall stores to provide an opportunity for newsagents to spread their risk – to establish second and third retail outlets and thereby not rely on the traditional newsagency model for all their income. It also provides tenants with greater leveraging with landlords – two stores in a centre is better than one.

We’ll have more details soon at the Sophie Randall website.

A year ago we moved greeting cards from the traditional newsagent card aisle down to the front of our shop. This involved a $95,000 investment in new fittings, a new floor and more appropriate lighting for the 50 sq metres allocated. Several months ago we, working with our main card supplier, Hallmark, we extended the range, further tweaked the shop-fit and relayed cards and associated products. The result is a significant increase in sales. The first two photos below fit together to show the whole space.

We have created a space people wander. Average browse time has more than doubled thanks to more product and more surprises on the journey through the space. Also, moving cards away from the high traffic area of the newsagency has improved the customer experience. Below is a picture of what we have done with wrap – lifting it off the traditional floor unit and displaying it horizontally. Newsagents have tended to not like this approach. Our feeling is that it is easier for the customer. We use a similar approach on another wall (not photographed) for our bags. Customers can see 80% of each bag and get a better feel for what they are buying without having to dig into the stock as often happens in newsagencies with bags.

The final image shows the depth of the space and the range of stock carried. The aisles are wider than they seem. We often see five or more browsing our cards which, for our shopping centre, is amazing.

The result of the investment of time and money has been a significant increase in sales. I won’t quote detailed figures yet because it is too early but I will note that for Father’s day sales were up 350%. What is interesting is the significant increase in multiple item sales. Whereas in the past the majority of card sales involved a single card, now the majority of sales involve multiple cards. We’re using data from our point of sale system to tweak the card space in pursuit of greater basket depth.

Without wanting to blow our own trumpet we feel that what we have done represents generational change for newsagents and cards. Moving cards out of an aisle and into a warmer specialist space in-store reflects a commitment newsagents ought to consider.

The Australian Taxation Office last week published a fact sheet on the handling of GST for incentive payments made by greeting card companies to retailers. Incentive payments from card companies are common in the newsagency channel. They lock in loyalty and guarantee retail real-estate. The advice last week from the ATO will challenge some newsagents who have considered the whole amount payable available for investment in the business.

I expect some greeting card companies are now reconsidering their position on incentive payments.

Incentive payments supplement owner capital and often help improve the business through a re-fit or some other vital capital investment. They are also problematic because they alter the relationship with the supplier – sometimes making the newsagent less demanding of the supplier.

The best incentive is that which is tied to commercial success week in week out. Prepaying for potential success is messy on all sides.

For decades newsagents have treated bag sales as the poor cousin to greeting cards. No more as this photo from my shop shows. Australia’s biggest greeting card and bag suppliers Hallmark and John Sands are working with newsagents to reinvent the category and better compete with the majors. This new approach to merchandising is having an immediate effect on sales and lifts newsagents out of the 1970s. In our own case we are finding that this new display leads to bags being purchased with cards more often – leading to a more efficient basket.

The newsXpress newsagent marketing group, of which I am a shareholder and Director, has for the last three years been developing a new greeting card season. Care and Friendship Week is about acknowledging people we usually take for granted. teachers, coaches, friends, neighbours, priests, team members … the list is endless. The idea is to acknowledge these people and thank them for their friendship. Okay, I know it sounds soppy. The in store material is all about reminding people to say thanks and while we are hoping for a lift in card sales, it is not as blatant a card season as, say, Valentines Day or Mother’s Day. People who do purchase a card are given a free 50 cent stamp.

Customers ask what Care and Friendship is. Once they hear the explanation, says it’s a good idea. A couple of people today made the comment that they wouldn’t see this running in any of the big stores – and that’s what I like about it. It’s a small shop promotion focused on the personal. Even if they don’t buy anything, they walk out with good thoughts about the business.

The newsXpress Care and Friendship Week campaign is a personal touch campaign which separates our business from our competitors.

I saw data from a cross-section of newsagencies yesterday for Mother’s Day. All recorded strong sales growth. Greeting cards, social stationery and magazines were up on last year with Greeting Cards the big improver. The data shows that, on average, 60% of the time cards were purchased alone – meaning that newsagents remain top of mind with consumers when it comes to a considered card purchase. Cards are usually purchased along around 45% of the time.