SIC 5947
GIFT, NOVELTY, AND SOUVENIR SHOPS



This industry consists of establishments primarily engaged in the retail sale of combined lines of gifts and novelty merchandise, souvenirs, greeting cards, holiday decorations, and miscellaneous small art goods.

NAICS Code(s)

453220 (Gift, Novelty and Souvenir Stores)

Charles Gordon, writing in the Canadian newsmagazine Maclean's, stated "We live in a souvenir society, a world in which everything we do, everywhere we go, has to be commemorated." This attitude has encouraged the growth of gift, novelty, and souvenir shops, which have expanded from limited operations in airports and near tourist destinations into a multimillion dollar industry of its own, with specialty stores opening up in shopping malls and retail centers around the country. Many different kinds of stores, including discounters, drug stores, and supermarkets, sold gifts and novelties. However, specialty retail shops marketing exclusively in gifts and souvenirs had become a distinct billion dollar industry by the mid-1990s.

The Walt Disney Company was the leader in the field of specialty shops. Consumer product revenues were $3 billion in 1999, a 5 percent drop from 1998, due to declines in worldwide merchandise licensing and sales from the Disney Stores. Declines were partially offset by increases at Disney Interactive (Disney's software and publishing operations). While this downward trend reflects a move toward online merchandising, Disney pledged in 2000 to invest up to $750,000 in revamping its 715 retail stores worldwide in an effort to reverse the profit slump.

Other leaders in this field included Spencer Gifts Inc., Cracker Barrel, Marriott Hotel Shops, Matthews Inc., Spains Gifts, Museum Shop, and South of the Border Shops. These stores were located in shopping centers, near tourist destinations such as monuments or resorts, or even in museums, zoos, hotels, and airports.

Seasonal and temporary carts, kiosks, and stores gained prominence in the novelty shop industry, ballooning into a $10 billion business in the late 1990s. Virtually every enclosed mall had a temporary retail program; this allowed major retailers to explore new concepts, artists to peddle handmade items, and entrepreneurs to capitalize on hot trends.

Retail outlets that specialize in the sale of greeting cards are also classified in this industry. Not classified with other stationery products, greeting cards are a cornerstone of the gift and souvenir shop retail industry. The greeting card industry diversified considerably since its beginnings in the 19th century. Mass-produced Christmas cards were first sold in England by Sir Henry Cole in the 1840s, and Louis Prang introduced such cards to the United States not long afterwards. Some of these lines of cards were sold through stationery stores, but other lines were a better match for contemporary gift and novelty shops. Souvenir stores in tourist destinations often carried greeting cards that targeted travelers.

Greeting cards are commonly purchased for a variety of special events, from birthdays to weddings to holidays. The perennial popularity of such items provided retail outlets with a steady source of income throughout the year, regardless of economic factors that might have devastating effects on other industries.

Hallmark Cards Inc. remained the undisputed leader in the retail sales of greeting cards by virtue of its huge presence in both the manufacturing and retailing of greeting cards. The long-time card manufacturer opened the first of its many retail outlets in the 1950s, establishing a dominant position in the industry. The other two market-share leaders were American Greetings and Gibson Greetings. American Greetings, the largest publicly held greeting card company, acquired Gibson Greetings in early 2000.

Hallmark and American Greetings were in steep competition with some relative newcomers to the industry, as gift and souvenir shops that specialized in the sale of greeting cards faced a vastly changing market. Distributors of gifts and novelties increasingly utilized large warehouse clubs and superstores that carried many product lines at reduced prices. Also, many card manufacturers sold their products through discount stores and grocery stores such as Wal-Mart and Kmart. In some cases, smaller gift and novelty stores were forced to restructure their businesses radically to compete. Buying patterns shifted; in the 1970s and 1980s the card market began moving away from card shops toward one-stop shopping establishments, such as discounters, grocery stores, and drugstores. While half of all cards purchased 20 years ago were sold at specialty shops, that figure shrank rapidly through the 1990s.

Hallmark and American Greetings both began to sell over the Internet. Their sites allowed customers either to design and personalize their own cards or to order traditional cards, all from their home computer. Customers can also send electronic greetings as e-mail messages. This online trend saw tremendous growth in the late 1990s. The number of Hallmark e-cards sent on a daily basis in November 1999 increased more than 600 percent over November 1998. Discount Store News noted the danger of this technological revolution: "The increasing use of e-mail poses a long-term threat to category profits by offering consumers an alternative that is often free, and in some respects superior to paper cards." A survey conducted by American Greetings revealed that 95 percent of e-mail users prefer to keep in touch with friends and relatives electronically, and about 75 percent of these people receive and send cards online. Companies such as Blue Mountain Arts and Egreetings.com became very popular card sites on the Internet, offering free electronic greetings with animation and sound.

The Greeting Card Association in the late 1990s estimated the greeting card business to be a $7.1 billion industry. Growth in recent decades was attributed to societal trends, as greeting cards took the place of letter writing in the modern world, and niche marketing was successful due to society's diversity.

Further Reading

"American Greetings Extends Tender Offer for Gibson Greetings' Stock." PRNewswire, 4 January 2000.

Bawden, Tom. "Disney Stores in GBP 300m Overhaul." Marketing Week, 18 November 1999.

Business Rankings Annual. Farmington Hills, MI: Gale Group, 1997.

Cooke, Bethany. "Card-Bored Greetings." Information Week, 24 January 2000.

Disney Press Release, 4 November 1999. Available from http://disney.go.com/investors/earnings/q499.html .

Forkan, Jim. "Disney Shuts ESPN Stores, Touts Web." Mulitchannel News, 6 September 1999.

"Giftware News Greeting Card Gazette." Available from http://www.giftwarenews.net/NewIssue/Pages/052Gaz.htm .

Ginsburg, Janet. "They're Looking Better and Better as Holiday Sales Venues." Business Week, 13 December 1999.

Gordon, Charles. "Christmas Shopping at the Beer Store." Maclean's, 16 December 1991.

"Greeting Cards and Stationery Reach $12.1 Billion in Sales." Business Wire, 28 May 1999.

Hallmark Press Release, 18 January 2000. Available from http://hotnews.hallmark.com/1312199901.html .

Lazich, Robert S., ed. Market Share Reporter. Detroit: Gale Research, 1997.

Taylor, Dennis. "Very Best Not Good Enough." The Business Journal, 18 November 1996.

Troy, Mike. "E-Greetings Break the Mold, Redefine the Industry." Discount Store News, 13 December 1999.

Ward's Business Directory of U.S. Private and Public Companies. Farmington Hills, MI: Gale Group, 1997.

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