Greeting cards can be found in about 100,000 retail outlets in the U.S., and approximately 7 billion greeting cards are sold each year.  Since 1993, the number of people in the U.S. who buy greeting cards has increased by more than six percent.   More than 90 percent of all households in the country purchase greetings cards, in fact, the average household buys 30 individual cards a year. [1]  

Greeting cards are a part of the overall stationery market, which includes paper stationery, writing equipment, greeting cards and other office and school equipment except office furniture and computer hardware.  Greeting cards and stationery account for 65.1 percent of this market.  Market research firm Datamonitor reports this industry has been growing gradually, with compound annual growth rate (CAGR) at 2.8 percent between 1999 and 2003. [2]

According to the Greeting Card Association (GCA), approximately 3,000 greeting card publishers exist in the U.S. today, up from 100 in 1941.  These companies, ranging in size from small family businesses to large billion-dollar corporations, realize more than $7.5 billion from the sales of greeting cards each year.  In 2003, the wholesale greeting card industry in the U.S. was estimated at about $3.5 billion. [3]  

Companies primarily engaged in publishing, printing by any process, or both, of greeting cards for all occasions are categorized in Standard Industrial Classification (SIC) code 2771: Greeting cards – Manufacturing.  851 greeting card companies (both headquarters and individual locations) have reported their data to Dun & Bradstreet.  Of these companies, the average firm employs 15 people and generates annual sales of $4.10 million . [4]

Despite the steady growth in the industry in the 1980’s and 1990s’, industry revenues decreased in 2000, 2001, and 2002, showing that greeting cards consumers are more apt to buy more cards when the economy is strong.  According to industry analysts, the terrorist attacks of September 11, 2001 hurt the greeting card market. [5]  

According to Integra Information, industry revenue growth for those companies operating in SIC 2771 fluctuated dramatically between 1997 and 2001, with an annual average of .42 percent.  However, annual growth rates are expected to stabilize and grow by an average of 6.06 percent between 2004 and 2008 (see Table 1). [6]

Table 1: Industry Revenue Growth: SIC 2771 -- Greeting Cards

Source:  Integra Information

Increased competition in the industry and deflation in greeting-card priceshave been difficult on many businesses, including industry leader American Greetings. The company recently announced it will lay off 300 employees. That eliminates nine percent of the work force at the Cleveland-based card company, whose profits have been waning since 1997,” says Jackie Cohen of CBS Marketwatch.Jeff Stein, an analyst at Cleveland-based KeyBanc Capital Markets, "This latest round of layoffs is indicative of the difficult challenges that American Greetings faces in regrowing its business.” [7]

Competition among greeting card publishers is steep, and companies large and small spend much time and research trying to find the right fit for all consumers, according to the GCA. [8]    The leading competitors are: Missouri-based Hallmark, with its Hallmark, Shoebox and Ambassador brand names; and Cleveland-based American, with its Carlton Cards, Gibson and American Greetings brands.  These two companies control approximately 85 percent of the retail greeting card market. [9]    Hallmark has an estimated 50 percent share, and American Greetings, about 35 percent. [10]

Consumers are increasingly moving from card and gift shops to drugstores, supermarkets, and discount stores to buy their greeting cards, due to the desire for convenience and one-stop shopping.While the mass-market channel is larger and faster growing than specialty stores, it is not as profitable. The mass-market channel is dominated by American Greetings. [12] Greeting card companies have established exclusive deals with retailers, such as CVS with Hallmark and Rite Aid with American Greetings.  Both Hallmark and American Greetings are creating displays and environments that “are elevating the category to a level rivaling the traditional card store format,” according to Michelle Kirsche of Drug Store News. [13]

However, in an effort to compete with Hallmark and American Greetings, some retailers are offering a growing selection of 99 cent cards.For example, value-priced greeting card retailer Cardsmart Retail Corp., a chain owned by Rhode Island-based Paramount Cards, is selling its cards and products at 50 percent off list price. Cardsmart opened 44 stores in 2003 and expects to open 50 stores in 2004 and 70 to 75 stores in 2005, and the majority of the company’s stores are franchises. [14]

In addition, numerous Internet sites offer electronic greeting cards. Still, according to the Greeting Card Association, 64 percent of Americans prefer to receive the ‘old-fashioned handwritten card or letter” instead of email and text messaging. [15]    Indeed, many believe the Internet has not had the negative effect on retail card sales that some industry observers predicted a few years ago.  Premier Greetings’ vice president Mark Deuschle remarks: "One of the ways we choose to deepen our relationships with an Internet friend, buddy or colleague is to send a greeting card regarding an event in his or her life" [16]

Outlook

Over the past 10 years, sales of paper greeting cards have been flat, but Valerie Cooper of the Greeting Card Association does not attribute the flat sales to online cards or other types of competition. “There are a lot of new greeting-card publishers succeeding out there."  Still, Cooper is optimistic. Consumers are spending more on cards throughout the year, and approximately 91 percent of adults are planning to send at least one paper greeting card during the 2004 holiday season.  This is on par with last year's count. [17]   In addition, Datamonitor forecasts the overall stationery market will increase by an estimated CAGR or 3.7 percent between 2003 and 2008. [18]