Grocers have a chance to grow their social expression departments as many independent card shops fold.
By Jane Olszeski Tortola
She received numerous good wishes on her 51st birthday: 30 or more Facebook posts, 20 text messages, five phone calls and four emails. But, it was the two greeting cards that were sent her way via the U.S. Postal Service that confirmed my sister Joan Olszeski’s decision to exit the 30-plus-year-old, family-owned card and gift shop business.
There is no doubt that the world’s technology boom has dramatically changed all of our lives and our businesses—changes for the good, and in some cases like my sister’s and countless other card store owners, the not-so-good.
Many once-thriving independently owned card and gift stores flying prestigious banners such as Hallmark, American Greetings and others have closed up shop in small towns throughout the country and it does not take a rocket scientist to figure out why. On the average, 40% of total revenues for these types of stores were generated from the sale of one major category—greeting cards—that continues to take a hit as consumers become more and more comfortable expressing their good wishes digitally.
Thus, therein lies an opportunity for supermarkets, albeit perhaps short term, to increase their share of the social expression business.
“As a card shop owner for more than three decades, it was frustrating during the past few years to walk into Walmart or Sam’s Club, Walgreens, department stores such as Kohl’s and local supermarkets and see their displays being serviced by Hallmark-employed personnel,” my sister explains. “Couple that labor savings with other benefits extended to mass merchants that are not typically offered to small card stores, such as seasonal merchandise return privileges and in many cases no retailer investment in display equipment, it became virtually impossible to compete. For us, the playing field was no longer level.”
She adds: “In the past, businesses like ours, operating with a 50% gross margin in neighborhood strip centers, could effectively compete and perform quite well. But, when our nationally recognized brand became readily available to larger retailers, and more recently as consumers became more dependent on technology and mobile apps for their communication needs, we understood the importance of an exit strategy.”
In addition to the mass merchants, grocers should also keep in mind that office supply giants such as Staples and Office Max are also in the game by offering a wide variety of greeting card and customized stationery software programs for the do-it yourselfers.
“In my opinion, today’s consumer no longer can afford to think about shopping trips just to purchase a greeting card,” says my sister.
Since closing more than one year ago, sales from the once 10-store chain have disbursed to other local retailers, including supermarkets and drug stores, who are capitalizing, for now, on the higher-margin items with virtually no investment.
“To operate our retail card shops required a cash outlay for each location of approximately $250,000,” my sister says.
In today’s struggling economy, consumers of all age groups are focusing on what they need more so that what they want. And they all want good deals right now.
That proved true during my sister’s month-long store closing sale when more cards were sold at 50% to 75% off than during the entire prior year.
Granted, people may still want to send the very best, but during these challenging economic times, few can afford to pay for it.
Jane Olszeski Tortola, a regular columnist for Grocery Headquarters, devoted more than three decades of her career to working at a family-owned supermarket company founded by her late father. She is a graduate of The Ohio State University and is active in a number of food industry organizations. She can be reached at email@example.com.