Mintel - Progressive Greetings

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Minting
The Mintel
Mintel has just produced its latest report on the UK greeting
card industry, and given the lack of industry research now
available, this is very welcome.
While many of its quantative findings make interesting
reading, some of the editorial conclusions should be taken with
a healthy handful of salt. PG reviews the Mintel report.
Ever since TNS ceased providing greeting card
industry data based on a massive consumer
spending panel, there has been a conspicuous
lack of market information about our
industry. The big two American owned
publishers and the GCA, both looked hard to
find an alternative, but after kissing many
frogs, concluded that what was on offer in
the market was…A: Not very accurate, and B:
did not represent value for money, for what it
provided.
Therefore the industry should be
grateful to Mintel for producing its latest
report on the greeting card industry, as it at
least gives us some facts and figures to
chew on.
However it is evident, upon
reading, that whoever has compiled
‘Greeting Cards - UK – April 2007’ is
Internet obsessed. Hardly a page
goes by without some reference to
e-cards. The first main theme is
‘Technological shifts are creating
real alternatives to the
conventional greeting card’ –
Above right: The Mintel Report panel’s
buying habits show that adults buy an
average of 5.1 occasions cards a year. These
occasion cards are an Ookie
Pookie age card from Maxandsid (left) and
a design from Liz and Pip's new
range (right).
Right: Hallmark's dynamic duo, Hoops &
Yoyo was first launched online. The e-cards
were available before the cards hit the
shops.
something that most in the industry would
dispute. The report does later admit that this
risk appears small for the present at least
‘although this may well change’, but it does
not seem to prevent the authors mentioning
it at every available opportunity!
Emails, text messaging, free e-cards and
digital cards generated by digital cameras are
all described as being potential threats to the
industry, yet its own research figures seem to
show that the sending of e-cards has actually
declined from 17% of its market sample in
2003 to just 15% in 2006.
However, most in the trade would find it
hard to disagree with Mintel’s overall
conclusion as to the state of the UK greeting
card market - that ‘The UK greeting card
market is large but mature, with limited
opportunities for growth in volume sales in
particular’. It does however, provide comfort
with the statement that the industry has seen
steady sales growth since 2002, taking the
market value to an estimated £1.4 billion in
2007. It continues that, ‘The strongest growth
has been at the edges of the market rather
than in the mainstream – for instance, in
handmade craft cards and through non-core
retail outlets like bookstores and galleries,
plus online’ – although
virtually no evidence is given
to substantiate this assertion.
Mintel estimates that the
market was worth £1,406
million in 2006 and will grow
by 1% in 2007, although the
research company thinks that
volume sales will still be lower
than in 2004.
Another comment made
is that the most frequent card
buyers have responded well to
design creativity in the market,
and restored at least some of
the volume sales lost in a
disappointing 2005. It states
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Left: The Mintel Report highlighted recent postal
strikes and lack of confidence in Royal Mail in general
as a concern for card senders, although the
introduction of PIP had run relatively smoothly.
Below: The report states that most prolific card buyers are
women aged 25-64 and those with families. In retail terms
cards are also easier to find since women are heavier users
of supermarkets, cardshops and department stores - Image
of Paper Passions in Putney, London
Mintel also seems a little unsure of
itself on the size of the trade market, (ie the
value of the cards sold by publishers to
retailers and wholesalers). For instance,
Mintel puts Paper House’s value market
share at 3% which, extrapolated in turnover,
would put its value at around £300 million.
It also estimates that Hallmark and UK
Greetings have 62% of the market, which to
many in the trade would seem to be on the
high side. Most industry observers would
probably reckon on the trade market value
being in the region of £470 – 500 million
rather than £300 million.
‘This is impressive in a large and
mature sector with only limited
growth opportunities’.
2002 2004 2006 % Change
Mintel’s view is that, the
2002-2006
introduction of the Royal Mail’s
Birthday
£1.05
£1.09
£1.11
+5.7%
new postal charging system (PIP)
Christmas
18p
18p
18p
based on both size and weight,
Other
everyday
£1.23
£1.35
£1.38
+12.2%
went relatively smoothly, giving
Spring
£1.72
£1.78
£1.80 +4.7%
credence to both to Royal Mail’s
advertising campaign, and by the
Source: Mintel
use of the GCA-initiated logo for
the backs of greeting cards
All through the
detailing which postal rate is
report there are
required. Yet PIP, recent postal
continuing references
strikes and lack of confidence in
to small on-line
Sales by market segment
Royal Mail gave Mintel another
operators with
at current prices (2006):
opportunity to bang on about enegligible turnover but
Birthday
41%
cards! ‘One real benefit offered by
no mention of major,
Christmas 27%
e-cards, is their speed of delivery.
£multi-million players
Everyday 17%
People can be pretty sure that an
like International
Spring
15%
e-card and still more an e-mail or
Greetings, Watermark,
text message will arrive on time…. While this
The Regent Group, Is It Art or Wishing Well.
warning may not be justified, it is another
Both Kingsley Cards and KCNY are referred to
small negative factor for this market, perhaps
as major players even though they were the
helping to further boost e-cards at the
same company and went into administration
expense of greeting cards’.
in April 2006.
Average Price Paid For A Card
UK Card Market
Breakdown
Willingness To Pay
From Mintel’s research, half of consumers put a limit of £1.99 on their outlay and the great
majority would not spend more than £2.99
Interestingly, males and younger pre or no-family consumers are the most prepared to spend
over £3 on a greeting card, doubtless because they buy on fewer occasions than average.
In general, consumers are prepared to pay more for a card for a romantic occasion
than for a more everyday event, with Valentine’s Day topping the list. Men are as likely to
buy a Valentine’s card as women, whereas they are obviously far less likely to be involved in
all other areas of card purchases.
Nature Calls
Mintel’s research finds that 25% of
consumers have bought a card for a new
baby in the last year and 30% a card to
mark a wedding or engagement.
Although neither marriage nor
birth-rates are buoyant, each sector still
offers considerable further growth
potential on the basis of numbers alone.
In addition, perhaps the trend towards
serial marriages, and therefore divorces,
could generate more opportunities in
itself – for instance with the creation of
more cards designed for stepmums and
dads, and more ‘Well done on your
divorce – good times ahead’ cards.
Mintel also signals what it considers
‘unmet opportunities’ for the recognition of
the growing numbers of family units where
parents do not marry. This factor might
come into play in relation to major events
of significance to most families such as
anniversaries, birthdays, Mother’s or Father’s
Days; in each case there is a possibility of
the ‘non-traditional’ family unit feeling not
quite part of the target market and so being
less likely to buy a card.
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The Ageing Population
Card Sales By Type Of Outlet
Mintel suggests that the ageing
2002
2004
2006
% Change
population does not bode well for
2002-2006
the greeting card market. ‘Declining
£m
%
£m
%
£m
%
numbers of under-15s will mean less
Specialist cardshops
459
35
485
35
475
34
+3.5
younger age cards and less birthday
Grocer multiples
287
22
318
23
335
24
+16.7
parties, which are a key driver of
Varietal stores*
160
12
167
12
170
12
+6.3
volume sales to consumers in the
Stationers, bookshops,art shops**
135
10
147
11
152
11
+12.6
family lifestage’ the report claims.
CTNs, convenience stores, post offices 148
11
140
10
128
9
-13.5
In addition, it makes the point
Other***
117
9
123
9
145
10
+23.9
that as the population ages there
Total
1306
100
1380 100
1405 100
+7.6
will be less occasions to buy cards
* Including Woolworths, department stores, M&S etc
for, as many events triggering card
** Including Paperchase concessions.
sales will have passed, eg good luck
*** Includes giftshops, charity shops, galleries, garden centres, online, mail order, market stalls
in your exams, driving tests, new
(Source: Mintel)
baby and weddings.
Birthday cards are of particular
importance to the market in value terms; the
On a positive note though, in the
sector accounts for less than 20% of volume
meantime there will be growing numbers of
but around 40% of total value, largely
opportunities to send special cards to mark
because of the higher-value cards frequently
all the ‘important’ ages from 21 up through to
chosen for special birthdays for instance, or
100. With increasing life expectancy. ‘The
for giving between partners.
older milestones from 80-100 may take on
It makes the point though that the
greater importance in the market than
declining number of children could indirectly
currently and drive demand for a wider
help to increase the average price paid still
choice of cards to mark such occasions,’
further, since often pricier adult cards will
Mintel points out.
make up a larger proportion of the total.
Right: Mintel suggests that the ageing population does
not bode well for the greeting card market. - A card
design from Tracks.
Strengths And Weaknesses
Mintel sums up the minus and plus points of the trade.
STRENGTHS
Ë
Ë
Ë
Ë
Ë
There is great emotional/sentimental attachment to the idea of sending cards making the practice almost universal.
Also an entrenched tradition and habit that is resistant to change.
Despite already large volume sales there is still growth potential in general everyday cards.
Men buy fewer cards than women so they represent further potential to increase sales.
Consumers buy cards both on impulse and after planning, so all types of retailer from the specialist card shop to the
gallery gift shop to the garden centre etc can take a slice of the market.
Ë Wide availability also stimulates impulse purchase.
Ë Easy access to the market means good opportunities to bring new ideas to the market.
Ë Increasing competition in terms of price and availability ensures the category cannot stand still and will see constant
freshness and innovation.
WEAKNESSES
Ë Resistance to spending more than £2.99, and the average spend is much lower at £1.95.
Ë Consumer resistance to newer events that are seen as marketing ploys.
Ë Men under-participating, with women almost twice as likely to send cards on five or more occasions a year (61%
compared with 37%).
Ë Concerns for the environment could lead to more consumers turning to e-cards instead of the paper alternative (as
already promoted by Friends of the Earth with its own range).
Ë Going forward, will younger generations buy as many cards as the families and older buyers of today?
Ë E-cards already represent a challenge to the market and are likely to become more widely used. Technological
innovation may well bring more such alternatives.
Ë Growing numbers of people are already creating their own greeting cards; this trend might spread further, especially
with technological advances like those made possible by digital photography.
Ë Increasingly crowded market, becoming highly fragmented.
In Conclusion
Arguably the most useful part of the Mintel
report is its BRMB consumer study, which
involved almost 1,000 adults aged 15 plus.
Its results from this panel’s buying habits
show, for example, that adults buy an
average of 5.1 occasions cards a year, with
most prolific buyers being women aged 2564 and those with families. In retail terms
they are also easier to reach, since women
are heavier users of supermarkets,
cardshops and department stores.
The report contains much detailed
information on buying patterns and
attitudes based on socio-economic and
demographic groups. The attitudinal
analysis section is interesting – some
53% of the consumer sample thought
that cards were too expensive for what
they are, a figure surprisingly low given
that the question is somewhat leading
and that presumably half the sample
group are male.
Overall however, for all its
limitations, the Mintel report is a
welcome addition to industry discussions.
Mintel is offering the report titled 'Greetings Cards' to
PG readers for the discounted price of £1,350 (usually
£1,500). Contact Mette Holm on 020 7606 6000.
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