Hallmark Moments

The highly seasonal greeting card industry is transitioning into the digital age.

Given that greeting card sales are so reliant on seasonal fluctuations in demand, you might be surprised to learn that the industry brings in around seven billion dollars annually in the US alone. The lion’s share of this revenue can be attributed to entrenched megaliths like Hallmark and the American Greetings Corporation (AGC).

Like others in the publishing space, greeting card companies have been hit hard by the rise of digital media. Though Americans still send an average of 25-30 greeting cards per year, the cache of a once personal tradition has been eroded by the immediacy and ease of e-cards and the overabundance of pre-written drug store stock. Hallmark’s revenue shrunk by 5% from 2012 to 2014, while AGC has failed to expand its own market share — despite restructuring and a 2013 privatization.

The Tides of Change

Though ecards have provided a much-needed avenue into the digital age, they don’t produce much in the way of revenue — customers enjoy the easy customization of messages but obviously spend less (if any) money creating and sending them. Still, companies like AGC and Blue Mountain have diversified their offerings to include e-cards alongside traditional print in an attempt to compete with digital-only companies.

That said, physical innovations such as the use of recycled paper, voice recording software, and LED lights have boosted over-the-counter sales in recent years — especially among shoppers willing to spend a little more for these bells and whistles. Unfortunately, the bulk of greeting card buyers are budget-conscious and opt for low-cost cards, thus nullifying this advantage.

Seasonal cards make up a large percentage of greeting card revenue (up to 25% of total sales, according to one UK publisher). This creates a surplus of inventory, growing steadily less relevant as the holiday comes and goes. So what do retailers do when a special occasion passes and leaves unsold greeting cards in stock?

Retailers will often opt to keep stock out on the shelves. Sometimes that stock is marked down as much as 50%. Even extreme markdowns are preferable, in many cases, to returning or donating stock.

The bottom line: though it remains profitable, the modern greeting card industry is still in choppy waters. Even after a 1.7% jump in profit from 2011 to 2016 — mostly due to cost-cutting measures, not increased sales — the industry is expected to begin digressing to the tune of -3.8% annually in the years to come as customers move even more decisively toward cheaper digital options.