This category includes establishments which publish and/or print greeting cards for all occasions. Producers of hand-painted greeting cards are classified in SIC 8999: Services, Not Elsewhere Classified.
323110 (Commercial Lithographic Printing)
323111 (Commercial Gravure Printing)
323112 (Commercial Flexographic Printing)
323113 (Commercial Screen Printing)
323119 (Other Commercial Printing)
511191 (Greeting Card Publishers)
According to the Greeting Card Association, almost 7.0 billion cards were sold in 2001. Two manufacturers dominate this business: American Greetings Corporation, the largest publicly owned greeting card manufacturer in the world, and Hallmark Cards, Inc., the largest privately owned manufacturer. Together, these two companies control about 80 percent of the $7.5 billion U.S. greeting card market. In 2000 American Greetings acquired Gibson Greetings, Inc., which had controlled about 10 percent of industry sales.
Throughout the latter part of the twentieth century, this industry grew annually by roughly 1 percent, based on sales revenues. The Greeting Card Association revealed that retail sales of greeting cards increased some 20 percent between 1993 and 2001. However, sales were relatively stagnant in the early 2000s. Conditions changed following the terrorist attacks made against the United States on September 11, 2001. The tragic events of that day caused a spike in the sale of greeting cards—especially those with patriotic and religious themes. However, by late 2002 sales had more or less returned to previous levels. According to some industry observers, the rising use of e-mail, as well as fewer greeting card purchases by younger consumers, were among the factors contributing to slower industry growth.
Citing figures from the Greeting Card Association, Drug Store News reported that in 2001 about half of all greeting card sales were seasonal in nature, while everyday cards accounted for the other half. Within the seasonal category, Christmas cards accounted for $2.28 billion (61 percent) of sales. Valentine's Day cards brought in $930 million, or 25 percent of seasonal card sales. In the everyday card category, birthday cards accounted for $2.25 billion (60 percent) of sales, followed by anniversary cards at $300 million (8 percent). In 2001, the Greeting Card Association indicated that greeting cards ranged in price from less than 40 cents to $10.00, with most cards priced between $2.00 and $4.00.
Greeting card companies run their establishments on two structural models. Larger establishments have in-house creative staff, including graphic artists, designers, creative consultants/directors, and writers. Smaller companies typically use freelancers to provide these services. Generally, printing is done in-house by both large and small establishments; the notable exception to this arrangement, however, is Hallmark Cards, Inc., which has used an outside printer since the late 1940s. Common to both types of establishments is the emphasis on marketing. Leaders in this industry have highly developed distribution and marketing research and promotion systems.
Distribution. Since greeting cards formerly appeared in drug and grocery stores in relatively small quantities, manufacturers relied heavily on small-package delivery services. Hallmark Cards, Inc. used long-haul trucks and trains to ship cards from distribution centers in Liberty, Missouri and Enfield, Connecticut to regional offices throughout the country. From there, smaller courier services handled regional distribution. However, Material Handling Engineering reported that, in 1995, Hallmark began handling all phases of its own distribution from its Research Distribution Operations division in Kansas City, a 226,000-square-foot facility that used ergonomic operator workstations, high-tech carousels, and a state-of-the-art tracking system to triple its throughput.
According to Distribution, other manufacturers, however, have relied heavily on relationships with couriers. Because of the seasonal nature of most greeting cards, companies require timely shipments and a courier that is able to handle the returned unsold cards at the end of a season. Moreover, throughout the year unsold cards need to be returned and replaced speedily as part of this industry's marketing strategy.
Marketing Research and Promotion. Manufacturers have structured their marketing divisions to engage in marketing research and promotion at two levels. One level addresses retailers and works with each store or regional chain to create a product mix and display specific to each retailer's sales record. The other level addresses customers directly by using consumer-specific research. The industry extensively uses demographic studies and surveys of consumer tastes and purchasing behaviors.
Louis Prang, a German-born immigrant who founded a lithography business in Boston, made the first commercially printed greeting cards in the United States during the Christmas season of 1874. His folded cards contained messages inside, copying the newly formed tradition of Victorian English Christmas cards. Since Americans were not accustomed to purchasing greeting cards, Prang's first year of business went exclusively to England. He put his cards on the U.S. market the following year and soon added birthday and Easter cards to his product line. But sales were slow, and by 1890 he had stopped producing cards. In The Romance of Greeting Cards, Ernest Dudley Chase suggests that Prang's lack of success with the American market was due in large part to the popularity of less expensive German-made greeting cards, which resembled postcards more than greeting cards. Prang's cards costs more to produce due to their use of colors.
Joyce C. Hall, founder of Hallmark Cards, entered the greeting card industry in the early 1900s by producing postcards similar to the German-made cards. Hall had predicted that the postcard craze would not last because he felt that postcards were an inadequate means of personal communications. Hall's prediction was realized at the onset of World War I. At this time greeting cards, as known from the Victorian era, were reintroduced to the American consumer market because the war curtailed postcard shipments from European manufacturers. Greeting cards also filled a niche by providing sentiments and morale boosters sent to soldiers.
World War II saw another increase in card sales, as greetings were again sent to soldiers overseas. But this time, card sales continued to grow in post-war America as more people moved across the country and corresponded more by mail. Also, the industry grew with increased competition; at the end of the war, American Greeting Publishers (later named American Greetings Corp.) entered the market and by the mid-1950s proved to be a major competitor for Hallmark. The competition between these two industry leaders and the increase in television advertising evolved into the marketing-oriented greeting card industry of the late twentieth century.
Sales Trends. From the 1970s to the early 1990s marketing underwent major changes within this industry. At the retail level, sales to chain variety stores and drug and grocery stores increased while sales to card shops decreased. This shift from card shops to departments of other retail stores resulted in large part from changes in consumer habits, for people wished to purchase cards at the same store in which they made their other purchases. In the mid-1980s, this shift was fueled by a price war among industry leaders, which dramatically reduced prices for retailers while retaining the same pre-printed prices for consumers.
Historically, marketing directed at consumers has been difficult for this industry. Studies have revealed that card shoppers (90 percent of whom are female) do not tend to purchase cards on the basis of brand names. One approach to this marketing problem has been to attract customers through messages available in greeting cards, which reflect trends in consumer interests and lifestyles. It has been observed that greeting-card vendors are at the forefront of responding to shifts in consumer tastes or identifying the latest trends.
The 1980s marked a departure from tradition for card manufacturers as they responded to changes in consumer behavior with "alternative" or "non-occasion" cards. The demand for such cards emerged from changes in letter-writing habits and in personal relationships. Instead of spending time writing letters, consumers were more apt to devote time to finding an appropriate greeting card. The alternative cards assist personal communications by dealing with such topics as drug and alcohol addiction. These cards have also responded to changes in personal relationships with messages addressing topics such as coping with a divorce or living with a stepparent. Alternative cards grew in sales by nearly 10 percent per year in their first few years of production.
As U.S. consumers became increasingly diverse, alternative cards remained very much in demand by the early 2000s. In Progressive Grocer , Hallmark Vice President Wayne Strickland said: "Today's culture is a mix of ethnic groups, non-traditional and extended families, work relationships, and several generations—more than in the past due to increased longevity. Today's consumers feel the pressure of not enough time. They want the right card in a convenient setting, displayed informatively so that the perfect card is easy to find. For them, convenience equals time. They also want value, which includes price, convenience, quality, and brand."
Another notable shift in the types of messages in greeting cards has been movement away from the more traditional poetry to conversational verse and prose. Marketing research for alternative cards showed consumers wanted straightforward messages written in a straightforward style. An exception to this trend for prose messages has been in religious cards. All of the industry leaders produce a religious or inspirational line of cards, which experienced an increase in sales during the 1990s. Along with patriotic cards, religious and inspirational cards received a boost in popularity following the terrorist attacks of September 11, 2001. For example, American Greetings marketed inspirational Chicken Soup for the Soul cards, as well as its Messages of Faith collection. Hallmark created its Liberty Collection line of cards and home decorations to honor those killed on September 11.
By the mid-1990s the concept of market segmentation had evolved further. Progressive Grocer noted in August 1996 that Hallmark had developed an ethnic line with Mahogany, a highly successful selection of cards for the African-American market, and that specially-designed Tree of Life cards enjoyed a growing popularity with Jewish customers. By 2003, these categories remained strong for major manufacturers like Hallmark and American Greetings, which together marketed thousands of different cards for different racial and ethnic groups, especially Hispanics and African Americans. For example, Hallmark sold cards under the label Hallmark En Espanol, while American Greetings' offerings included lines like Momentos de Inspiracion and Spanish Soft Touch.
During the mid-1990s, drugstores and supermarkets were among the most important outlets for greeting cards. Since card suppliers maintained card displays, a store rarely carried more than one brand, and often worked in tandem with the manufacturer to maximize its profits. By the early 2000s, supermarkets remained a key distribution channel for greeting card companies, providing access to large numbers of time-pressed impulse buyers. However, sales were relatively flat in comparison to the growth experienced during the 1990s. According to different estimates, by 2002 supermarkets accounted for 15 to 20 percent of greeting card sales, and many devoted considerable percentages of floor space to greeting card displays. In the early 2000s, the fastest-growing greeting card sales channels included mass merchandise stores and so-called "dollar stores."
Innovations and Developments. Throughout the mid-1980s and early 1990s significant developments in production and distribution of greeting cards took place. In the mid-1980s an innovation in printing added to the many printing processes used by greeting card manufacturers. A process called Prismatic Imaging stamps a card with a silver dye and then prints on top of the stamping. By 1991, the House of Gold, New Jersey, which has exclusive license on the process, stamped 40 million cards annually for the greeting card industry.
In 1991, Gibson Greetings introduced a line of recyclable cards. At that time, Hallmark Cards and American Greetings had started using recyclable paper to a lesser extent in some of their products. Gibson Greetings also began using other environmentally sensitive materials in production, such as organic dyes, inks, and cleaning solutions.
A significant development in the distribution of greeting cards emerged with the use of electronic ordering and inventory control systems, known as electronic data interchange (EDI). Replacing the use of the postal service, EDI systems allow retailers to order cards through a computer linked directly to the manufacturers and independent distributors. This arrangement has facilitated speedier ordering and more accurate inventory controls.
In 1992, Hallmark and American Greetings introduced self-access personalized greeting cards, which enabled customers to create their own greeting cards at an in-store computer kiosk. A variety of designs, colors, and typefaces made it possible to buy cards, which were far more original than mass-produced ones and a personal message helped to express a sender's personality.
While the idea was potentially profitable, the path of the computer kiosks was not a smooth one. Since several companies chose to introduce them almost simultaneously, there was a controversy over patent rights. In 1992 Hallmark filed a claim against American Greetings asserting that Hallmark had marketed the concept first with its Touch-Screen Greetings, patented in July 1991, while American Greetings patented CreataCard in October 1991. Also heavily involved in the dispute was Custom Expressions, Inc., the company which had invented the technology behind these kiosks.
Nevertheless, Morry Weiss of American Greetings predicted that his company's CreataCard kiosks would generate nearly $500 million in annual sales by the end of the twentieth century. His reasoning, given the fact that customers were now able to express their own personal taste, was that the kiosks would encourage more card-buying by younger shoppers and by men and would also make it easier for market researchers to gauge the tastes of the buying public. However, as the Kansas City Star noted, these kiosks did not fulfill their early promise. By June 1995, Hallmark was expected to close 1,500 of its 2,700 centers, based on a two-year survey of sales.
Other innovations of the mid-1990s came from Hallmark and American Greetings, both of whom provide card and gift shopping services through their own Web sites and online services such as America Online (AOL). By the early 2000s, electronic greeting cards continued to grow in popularity. Both Hallmark and American Greetings offered literally thousands of cards online. However, e-cards had not displaced the sale of traditional paper cards, which remained more appropriate for certain card-giving occasions. Another trend tied cards to the movies. As early as the 1990s, industry leaders like Hallmark were engaging in licensing arrangements with companies like Disney and Warner Brothers to produce theme cards based on popular movies. This trend continued in the early 2000s, as card companies sought to break through in-store clutter and grab the attention of consumers, especially for children's greeting cards.
Founded in 1910 as Hall Brothers, Hallmark Cards, Inc. has become the leading producer of greeting cards sold in the United States, with 2002 sales of $4.2 billion. Along with industry leader American Greetings Corporation ($2.4 billion in 2002 sales), Hallmark also manufactures wrapping paper and other gift and novelty items.
In 2002 the privately held Hallmark employed 20,000 workers, with roughly 5,000 working in production (printing, lettering, die-cutting, and related jobs) and 700 in writing and designing. Up until the early 1990s, staff developing new cards worked independently within their own department. Hallmark reengineered this process so that a team of mixed-occupation personnel (artists, writers, lithographers, merchandisers, and administrators) worked on a single holiday. This system was not expected to completely replace departments but was intended to speed up development time, increase responsiveness to consumers, and increase efficiency, according to Fortune.
Due to the slow growth of this industry, Hallmark and other industry leaders have diversified into new markets. In July 1999, Hallmark announced that it had bought Dayspring Cards Inc. from Cook Communications Ministries. According to the New York Times, Hallmark bought Dayspring with the hopes of "broadening Hallmark's appeal in the fast-growing Christian card market." Dayspring published more than 150 million cards and had sales of $52 million in the fiscal year that ended in May 1999. In addition to producing 3.5 billion Hallmark cards, Hallmark also owned Hallmark Entertainment, which produced prime time television movies. Hallmark also owns Binney and Smith, the makers of Crayola crayons and the portrait studios Picture People. The company Web site, Hallmark.com, integrates these brands and offers e-cards, gifts, and more.
In recent years, American Greetings has been busy with international restructuring, acquisitions, and Web site development. In an effort to expand its Design Ware party-goods unit, American Greetings acquired in 1999 Contempo Colours, Inc. of Kalamazoo, Michigan. In 2000, it made a major acquisition when it bought Gibson Greetings. The move helped to boost American Greetings' market share, as Gibson was the third player behind Hallmark and American Greetings.
In August 1999, American Greetings and America Online, Inc. engaged in a $100 million deal that enabled the card company to offer its cards via AOL's various online channels. American Greetings and Lycos also signed a deal in 1999. AmericanGreetings.com, which became a subsidiary of American Greetings, agreed to provide free and fee-based e-greetings to Lycos.
The Internet brought significant changes to the face of retailing during the late 1990s. As both Hallmark and American Greetings developed e-commerce sites of their own, smaller greeting card publishers also were on the Web attracting Internet users. In 1994, Stephen Schutz and Susan Polis Schutz, owners of the Blue Mountain Arts Publishing Company, created Bluemountain.com to be a free source of e-greeting cards. The Web site grew quickly, thanks to word-of-mouth publicity. In October 1999 Internet gateway Excite@Home, which was majority owned by the AT&T Corporation, paid up to $1 billion to acquire Bluemountain.com. In 2001, Bluemountain.com was acquired by American Greetings and became part of its subsidiary AmericanGreetings.com, Inc., along with Egreetings. By 2003 consumers were required to pay a membership fee in order to access services offered by AmericanGreetings.com. This change represented a shift from past years, when e-cards were available from AmericanGreetings.com at no cost.
In the United States, greeting card manufacturers employ an estimated 60,000 workers. Administrative and marketing staffs make up 50 percent of the workers; additional marketing and public relations agencies frequently provide temporary personnel. Printers and production specialists make up nearly 40 percent of this workforce. Graphic artists and writers account for only 10 percent, but their numbers are expected to increase with increased production of alternative cards.
According to the Greeting Card Association, this industry has virtually no competition from foreign manufacturers selling in the United States. As exporters of greeting cards, the American industry has limited its business due to the high cost of small shipments. American exporters primarily license foreign printers to print their cards. Historically, Canada and the United Kingdom have been the largest importers of American-made greeting cards.
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