The UK Greeting Card Market in 2002

By Tim Porte, President of GCA, UK and Adrian Atkinson, Card Connection, UK
Source: Taylor Nelson Sofres
February, 2003

The UK the greeting card market continues to be resistant to downward economic pressures. In the year to June 2002 the market grew by 7.4% in value and 8% in volume. The market is now valued at almost £1.1 billion with just under 2.5 billion cards bought. The UK greeting card market is worth more than chocolate countlines, flavoured fizzy drinks (excluding colas) and potato crisps.

All sectors of the market grew in value with the greatest growth 13.6% in spring seasons, and the lowest 5.5% growth in Christmas. Everyday cards grew by 6.9% in value. In volume everyday cards grew by the least 2.3%, Christmas grew by 9.9% and spring seasons grew by 9.3%.

The average price of cards fell by 0.5% from 44.4 p to 44.2 p. Both the everyday and spring seasons sectors showed strong growth in average price of 4.6% and 4.2% respectively. The everyday average price is now 110.3 p and the seasonal average price 135.1 p. The Christmas sector showed a fall in average price of 3.9%, from 17.8 p to 17.1 p.

The average price of everyday cards has grown by 3.1% to 140.4 p in the direct to retail sector and by 5% to 76.8 p in the wholesale sector. The price point volumes of the wholesale sector showed that the majority of cards were sold at price points between 50p and 100 p. The price point volumes in the direct to retail sector showed that the majority of cards were sold at price points between 110 p and 150 p with further peaks at 199 p and 2 50p.

The 3.9% fall in the average price of Christmas cards is due to a sharp fall in the average price of multipack Christmas cards. Single Christmas cards show price growth of 3.4% to 114.4 p. This downward price pressure is most strongly demonstrated in packs containing more than 15 cards. With individual card prices as low as 4.3 p each for multipacks containing 40 or more cards. To achieve these very low prices most manufacturing has now been transferred to Far East sources.

Average prices per card show growth across all spring seasons with the highest growth of 7.6% and average price per card of 186.3 p in Valentine's Day. Mother's Day shows the lowest growth of 2.1% and average price of 150.1 p. Father's Day shows 4.3% growth to an average of 132.3 p.

Specialist card shops continue to hold up well as retailers of greeting cards and have increased their share of the market by 2% to 42% in value terms. Grocery multiples are also continuing to strengthen their hold on the market and now account for 16.6% in value. CTNs, post offices and independent grocers have lost 2% of market share, market stalls and others have also lost market share. High street multiples have neither lost nor gained. Grocery multiples, high street multiples and specialist card shops continue to dominate the high-value sector of the market. CTNs post offices and independent grocers; market stalls and others are stronger in the low value sector of the market.

Grocery multiples specialist card shops and CTNs are strongest in the everyday and spring seasons sectors of the market whereas high street multiples market stalls and particularly others are stronger in the Christmas sector. It is clear that other outlets, i.e. those who do not normally sell cards throughout the year, feature strongly in the Christmas market with almost 28% share by value. This sector of the market principally provides the very low unit cost, overseas manufactured Christmas multipacks that continue to deflate the unit cost of the Christmas market sector. Very low unit cost Christmas multipacks also form a strong part of the offering for high street multiples and grocery multiples.

Specialist card shops and grocery multiples are the preferred retail outlets for the younger age groups. Specialist card shops are particularly strong in the 12 to 34 age group. CTNs post offices and independent grocers become more significant outlets as age increases mostly at the expense of grocery multiples and specialist card shops. The strength of specialist card shops in the youngest market sectors is encouraging however, grocery multiples have made most inroads in the 35 to 44 age group.

The structure of the greetings card market by class reveals that specialist card shops and grocery multiples have the largest market share of AB and C1 groups but high street multiples also have a significant market share in these class groups. Lower value outlets such as CTNs and market stalls become increasingly significant in the C2 and DE class groups.

The principal threats to the well-being of the UK card market are as follows:

The proposed introduction of format based pricing by the Royal Mail.

Increasing demands of large retailers for improved margins.

The drive to overseas, particularly Far Eastern, manufacturing sources to achieve these margins. This is particularly apparent in Christmas multipacks.

New minimum wage legislation, which has had the effect of driving the manufacture of high-value handmade and hand, finished products overseas.

The possibility that using Far East manufacturing sources could result in a flood of cheap imports and counterfeit goods.

The opportunities for the UK card market are as follows:

1. The perceived threat from electronic greetings and text messaging has not had a significant effect on the UK market.

2. The UK market continues to attract young age groups to the concept of sending greeting cards.

3. Specialist card shops are particularly effective in attracting and maintaining an appeal to the youth market.

Significant Market Trends

1. Decline of the Independent retail sector through closures as well as reduced sales.

This has been caused mainly by the impact of out-of-town and edge-of-town superstores and supermarkets, as well as the growth of Convenience buying groups.

As a consequence there will be a further centralisation of retail ownership. This trend would not contract the total card market. However, it could lead to even greater market share for major publishers with lots of buying power, at the expense of medium-to-small size publishers.

This would not be good news when considering the positive role of small publishers in product innovation, and in providing consumers with choice.

2. An ageing population could lead to a higher proportion of the population with an above-average spend on greeting cards ­ good news!

Potential Threats

1. Reduction in consumer expenditure and confidence - caused by consumer worries concerning pensions, house prices/mortgages, war and terrorism.

2. Growth of Internet-based greeting card sending as well as text messaging ­ these could erode greeting card sending in the medium-to-long term.

Other Points

Notwithstanding the issue of format-based pricing, I think that we still have a very creative and dynamic industry which will continue to be resilient and innovative whatever happens.

 
actualities

New charts with information
of the greeting card market
in Germany in 2008.
A study of GFK ordered by AVG,
Feb. 2009

Foreign Greeting Card Markets:
United Kingdom 2002
Canada 2002
USA 2002
USA - Facts and Trends -