Greetings Cards Market Report Plus 2007
Key Note Publications Ltd, September 2007
The UK greetings cards market is a mature one, where volume growth is limited and competition is intense. Retailers find it more efficient, and ultimately cheaper, to work with fewer suppliers delivering more products, and these suppliers are frequently foreign competitors with lower production costs than those in the UK. From historically having a favourable overseas trade balance until 2004, the trade deficit for greetings cards and illustrated postcards reached £40m in 2006, as the value of UK exports increased insufficiently to compensate for the rise in imports.
Not surprisingly, the market has had corporate casualties, the most spectacular being that of the Greeting Card Group Ltd, which went into administration in December 2006. However, the retail chain that traded under the Cardfair and Card Warehouse brands was subsequently bought out of administration by a management team, and continues trading under the name of Celebrations Group. Publishers falling foul of the difficult trading conditions included Chatterbox Greetings and Kamrok Ltd. Interest rates reaching a 6-year high of 5.75% in July 2007 are likely to result in further failures for businesses with costly borrowings. Rising interest rates also continue to increase the strength of the pound against the US dollar, making conditions more difficult for exporters of greetings cards.
Nevertheless, the UK greetings cards market is renowned for its innovation and design skills, and the value of retail sales increased by a further 3.6% in 2006, to an estimated £1.4bn. An increase in population numbers, longevity and expanding family networks through divorce and remarriage mean an increase in the number of card-giving occasions and in the number of potential recipients. At the same time, the growth among minority ethnic groups offers considerable potential to increase sales of multicultural cards. Although there is a price-sensitive element to the market, it is also the case that many consumers do not begrudge spending significant amounts on quality cards that serve as keepsakes, and the UK has the highest per capita consumption of greetings cards. Our exclusive consumer research found that, in 2007, penetration of birthday and Christmas cards was as high as 93.2% and 90.2%, respectively, albeit this represented a decrease from the penetration rates recorded in a similar survey undertaken in 2006.
The greetings cards industry appears confident that any risk from electronic greetings is minimal, although it should, perhaps, be mindful of the fact that younger consumers have increased their usage of these forms of greeting in lieu of a traditional card. Other potential difficulties facing the greetings cards market include the growing encroachment of non-specialist retailers (particularly the supermarkets) into the market, Royal Mail's imposition of Pricing in Proportion (PiP), further intended closures of Post Offices and the need, in common with other industries, to be seen to be as environmentally friendly in its production as possible. Failure to do so may mean further `green' legislation and/or adverse publicity.
We forecast that, between 2007 and 2011, the total UK greetings cards market will continue to grow by between 1.9% and 2.4% year-on-year.
Executive Summary
1. Market Definition
REPORT COVERAGE
MARKET SECTORS
Everyday Cards
Christmas and New Year Cards
Spring Season Cards
MARKET TRENDS
Industry Confidence
Sending Occasions
Religious Images
Greetings Cards for Older Ages
Family Structures
The Bridal Market
Same-Sex Greetings Cards
Ethnic Occasions and Languages
Alternative Means of Communication
ECONOMIC TRENDS
Gross Domestic Product
Table 1: UK Gross Domestic Product at Current and Annual Chain-Linked Prices (£m), 2002-2006
Inflation
Table 2: UK Rate of Inflation (%), 2002-2006
Household Disposable Income
Table 3: UK Household Disposable Income Per Capita (£), 2002-2006
Population
Table 4: UK Resident Population Estimates by Sex (000), Mid-Years 2002-2006
Unemployment
Table 5: Actual Number of Unemployed Persons in the UK (million), 2002-2006
MARKET POSITION
The UK
Table 6: Household Expenditure on Newspapers, Books and Stationery at Current Prices (£m), 2002-2006
Overseas
2. Market Size
THE TOTAL MARKET
Table 7: The Total UK Retail Market for Greetings Cards by Sector by Value at Current Prices (£m at rsp), 2005 and 2006
BY MARKET SECTOR
Figure 1: The Total UK Retail Market for Greetings Cards by Sector by Value at Current Prices (%), 2006
Everyday Cards
Table 8: The UK Retail Market for Everyday Cards by Subsector by Value at Current Prices (£m at rsp), 2005 and 2006
Christmas and New Year Cards
Spring Season Cards
Table 9: The UK Retail Market for Spring Season Cards by Subsector by Value Share at Current Prices (%), 2006
OVERSEAS TRADE
Table 10: Overseas Trade in Greetings Cards and Illustrated Postcards (£m) 2002-2006
EU Trade
EU Imports
EU Exports
Table 11: Value of Imports and Exports of Greetings Cards and Illustrated Postcards To and From Selected EU Countries (£000), 2006
Non-EU Trade
Non-EU Imports
Non-EU Exports
Table 12: Value of Imports and Exports of Greetings Cards and Illustrated Postcards To and From Selected Non-EU Countries (£000), 2006
Leading Export Publishers
3. Industry Background
RECENT HISTORY
NUMBER OF COMPANIES
Table 13: Number of UK VAT-Based Enterprises Engaged in Other Publishing by Turnover Sizeband (number and %), 2006
EMPLOYMENT
Table 14: Number of UK VAT-Based Enterprises Engaged in Other Publishing by Employment Sizeband (number and %), 2006
REGIONAL VARIATIONS IN THE MARKETPLACE
DISTRIBUTION
From the Publisher
Wholesale or Direct to Retail
Own Label
Card-Buying Groups
Franchises
Brokerage
Direct to the Consumer
From the Retailer
Specialist Greetings Cards Retailers
Multiple Retailers
Supermarket Chains
Confectioners, Tobacconists and Newsagents
The Post Office
Charity Shops
Others
HOW ROBUST IS THE MARKET?
LEGISLATION
The Commercial Agents (Council Directive) Regulations 1993
Green Claims Code 1998
Printers' Imprint Act 1961
Local Communities Sustainability Bill
KEY TRADE ASSOCIATIONS
Confederation of Paper Industries
Giftware Association
Greeting Card Association
4. Competitor Analysis
THE MARKETPLACE
Table 15: Top Ten Companies Involved in Greetings Cards by Turnover and Pre-Tax Profit Margin (£m and %), 2005/2006
SELECTED COMPETITORS — PUBLISHERS
Hallmark Cards PLC
Company Structure
Current and Future Developments
Financial Results
International Greetings PLC
Company Structure
Current and Future Developments
Financial Results
The Paper House Group PLC
Company Structure
Current and Future Developments
Financial Results
UK Greetings Ltd
Company Structure
Current and Future Developments
Financial Results
SELECTED COMPETITORS — RETAILERS
The Card Factory Ltd
Company Structure
Current and Future Developments
Financial Results
Celebrations Group
Company Structure
Current and Future Developments
Financial Results
Clinton Cards PLC
Company Structure
Current and Future Developments
Financial Results
OUTSIDE SUPPLIERS
Paper and Board Suppliers
Printers
Specialist Greetings Card Envelope Manufacturers
Display Equipment
Art Work
MARKETING ACTIVITY
Main Media Advertising Expenditure
Table 16: Main Media Advertising Expenditure on Product Ranges Including Greetings Cards (£000), Years Ending March 2006 and 2007
Recent Promotions
www.moonpig.com
The Post Office
Other Marketing Activities
Hallmark Cards
Bubblegum
Exhibitions
Spring and Autumn Fairs
Summer Fair
Brand Licensing Europe
Card & Gift Wrap
Top Drawer
Greeting Card Retail Awards
5. Brand Strategy
INTRODUCTION
Humorous
Cute/Whimsical
Traditional
Photographic/Fine Art
Contemporary
Licensed
Multicultural and Religious
Sound Cards
Gay and Lesbian Cards
Selected New Ranges from Publishers
THE HENRIES
6. Strengths, Weaknesses, Opportunities and Threats
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
7. Buying Behaviour
HOUSEHOLD EXPENDITURE
By Gross Income Decile Group
Table 17: Average Weekly Household Expenditure on Diaries, Address Books, Cards, etc. by Gross Income Decile Group (£), 2005/2006
By Age of Household Head
Table 18: Average Weekly Household Expenditure on Diaries, Address Books, Cards, etc. by Age of Household Head (£), 2005/2006
CONSUMER PENETRATION
Purchasing of Traditional Cards
Table 19: Penetration of Greetings Cards by Type (% of respondents), 2007
By Sex
Table 20: Penetration of Greetings Cards by Type by Sex (% of respondents), 2007
By Age
Table 21: Penetration of Greetings Cards by Type by Age (% of respondents), 2007
By Social Grade
Table 22: Penetration of Greetings Cards by Type by Social Grade (% of respondents), 2007
By Region
Table 23: Penetration of Greetings Cards by Type by Region (% of respondents), 2007
Sending Electronic and Text Greetings
Table 24: Penetration of Those Sending Electronic and Text Greetings Instead of a Traditional Card by Type (% of respondents), 2007
By Sex
Table 25: Penetration of Those Sending Electronic and Text Greetings Instead of a Traditional Card by Type by Sex (% of respondents), 2007
By Age
Table 26: Penetration of Those Sending Electronic and Text Greetings Instead of a Traditional Card by Type by Age (% of respondents), 2007
By Social Grade
Table 27: Penetration of Those Sending Electronic and Text Greetings Instead of a Traditional Card by Type by Social Grade (% of respondents), 2007
By Region
Table 28: Penetration of Those Sending Electronic and Text Greetings Instead of a Traditional Card by Type by Region (% of respondents), 2007
Voice-Over Internet Protocol
8. Current Issues
CLOSURES, MERGERS AND ACQUISITIONS
Avant Garde Design and Publishing
CCA Occasions Ltd
Chatterbox Greetings
The Greeting Card Group
Kamrok Ltd
Paramount Card Holdings
Riverdale Publishing Ltd
Simon Elvin Ltd
BOARD AND SENIOR MANAGEMENT CHANGES
International Greetings PLC
Paper Rose Ltd
Piccadilly Greetings
THE FUTURE OF THE POST OFFICE
THE FUTURE OF THE ROYAL MAIL
CHARITY CARDS
ENVIRONMENTAL CONCERNS
9. The Global Market
THE EUROPEAN MARKET
THE ASIAN AND OCEANIC MARKET
THE US MARKET
THE LOUIE AWARDS
SELECTED GLOBAL COMPETITORS
Albert Horn Söhne GmbH & Co
American Greetings Corporation
Archies
Australian Christmas Cards
Busquets
GLMS Cards
Hallmark Cards Inc
Image Gallery Ltd
Origami Arquitetura de Papéis
10. Forecasts
INTRODUCTION
The Economy
FORECASTS 2007 TO 2011
Table 29: The Forecast Total UK Retail Market for Greetings Cards by Sector by Value at Current Prices (£m at rsp), 2007-2011
MARKET GROWTH
Figure 2: Forecast Growth in the Total UK Retail Market for Greetings Cards by Value at Current Prices (£m at rsp), 2005-2011
FUTURE TRENDS
11. Company Profiles
Clinton Cards Plc
Hallmark Cards Plc
International Greetings Plc
The Paper House Group Plc
Uk Greetings Ltd
12. Company Financials
13. Consumer Confidence
METHODOLOGY
KEY FINDINGS THIS QUARTER
THE WILLINGNESS TO BORROW
Confidence Improves
Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), February 2006-2007
Willingness to Borrow Slips Slightly
Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), February 2006-2007
SPENDING FROM SAVINGS
Slight Increase in Spending from Savings
Table C: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), February 2006-2007
Saving Grows in Relative Importance
Table D: The Average Amounts Adults Are Confident Spending to Purchase Expensive Items (£ and %), February 2006-2007
14. Further Sources
Associations
Publications
General Sources
Government Publications
Other Sources
Bisnode Sources
-Clinton Cards Plc
-Hallmark Cards Plc
-International Greetings Plc
-The Paper House Group Plc
-Uk Greetings Ltd
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