Greeting card companies turn to gifts
By Usha Somayaji | 23 Oct 2000
Then came the greeting card revolution, with entire stores devoted to a single brand of cards, and full fledged companies devoted to the design and manufacture of greeting cards. Some even went public!
Now, the greeting card industry appears to have come full circle, with greeting card houses turning to gifts to augment their range of personal and social expression products. Two of the leading players in the Indian greeting card business, Archies Greetings and Gifts and Vintage Cards and Creations, have ventured into the gifting business, and propose to go ahead in a big way.
font face="Times New Roman">Archies introduced Archies Perfumes last year, offering a range of perfumes, deodorants and snow sprayers. Archies stores also stock, besides the new perfumes, soft toys, jewellery, stationery, key chains, et al.
Pune-based Vintage Cards, a licensee of the globally renowned US-based Hallmark, has, besides cards, a range in posters, mugs, gift wrapping sheets, calendars and letter sets under its own brand. The company is even planning to get into the manufacture of party paperware products and art material.
().
Extension, not diversification
So why are card companies diversifying into gifts? "It isn't a case of diversification. It's a natural extension of the product line rather than an additional focus into a different area, " says Mr. T.V. Thyagharajon, chief executive of Vintage Cards.
One reason is the business opportunity. Says Mr. Anil Moolchandani, chairman and managing director of Archies, "At franchisee stores, the ratio of cards to gifts is already 50:50 and is growing at the rate of 50 per cent every year." (The greeting cards business is growing at around 20-25 per cent per annum.)
Mr. Rajesh Vaishnav, managing director, Vintage Cards, puts the share of cards at these stores even lower, at 40 per cent, the rest of it coming from gifts and other articles, "especially where stores stock gifts in the higher value range."
The other reason is to get a better return on investment. As Mr. Thyagharajon points out, Vintage did not have the advantage Hallmark had in other parts of the world, where they could sell cards from shops within shops. "We did not have the same kind of departmental stores. So we had to develop our own, which meant putting up franchisee stores. Having invested in creating a retail chain, and invested in a brand that had no exposure in this country, it makes economic sense to get as many customers in, and then get as much business value from each customer," he says.
Mr. Vaishnav echoes the same sentiments. "We set up the shops, we do the branding, the advertising for the franchisees, and if 50 per cent of the turnover goes to a vast number of small players, that is not a great idea."
Currently, 80 per cent of Vintage's revenues come from greeting card sales, while 20 per cent comes from posters, calendars and other items. "It is important that the shop's turnover from its different product mixes should reflect in my turnover too," says Mr. Vaishnav.
This will involve offering a wide range of products to fulfil the requirements of different types of clients. "We have identified these items, and, in two years' time, will have a perfect blend of product mix," promises Mr. Vaishnav.
The objective will be to offer a gamut of gifting products so as to enhance the 'per bill' value of a customer. "With greeting cards alone, there is a limit to the amount of money spent. If you have a wider complement, chances are that the customer will pick up something more that will fit in with his or her attending the party or occasion," says Mr. Thyagharajon.
The products offered will come from some of the top brands, apart from from the Hallmark repertoire, including the Party Express and Crayola range. But the company's USP will be its understanding of the mindset of the gift-buying customer.
"We may not be great at making leather goods or perfumes or acquiring product proficiency in any particular stream. While we will offer a complementary range from established brands, our value addition (in gift products) will come from making it a special occasion, or a memento to be cherished," Mr. Thyagharajon says.
Expanding presence
To cash in on the new business, both Archies and Vintage are putting up their own stores.
Archies, which operates from 400 franchisee stores, has already set up 12 flagship Vision 2000 stores across the country, and plans to open nine more in the next two months. The company opened its first Vision 2000 stores in Delhi, Mumbai and Pune.
"Our stores will showcase the entire range and help us level up on the gifting business," says Mr. Moolchandani. He expects the gifting business to reach 50 per cent of the company's income within five years, from current levels of 12 per cent.
Vintage, which has so far been operating largely through 290 franchisee stores, plans to put up 15 flagship Vision 2010 outlets, which are 1,500 to 2,000 sq. ft. large, run and managed by Vintage. These will be in addition to exploring new distribution channels for some of its products, such as toy stores, stationery, et al.
At Vintage, the target is much more aggressive. "In two years' time, we expect to level up," says Mr. Vaishnav. According to him, the flagship stores will, besides displaying the entire range of Hallmark products and setting the example for its franchisees, be interactive 'fun' places, offering enjoyable, complete shopping experience to the customer.
Vintage tied up with Nestle this year to combine a card-and-gift idea in the form of "choco-cards" for Friendship Day, during the first week of August. For all purposes, these were cards with all the requisite greetings and design, but carried gifts of chocolates inside.
Archies has taken the gifting business one step further. Its new subsidiary, archiesonline.com, the objective of which is to increase market penetration and generate further business to its brick-and-mortar entity, will have an extended facility for third-party gifting.
Computer kiosks are to be put up at Archies stores where customers can search, feel, choose gifts for their near and dear ones, and place orders to dispatch gifts to any place within the country.
"Gifts worth Rs 250 and above will be shipped and delivered free of cost," says Mr. Moolchandani, for which the company is establishing its network of C&F agents. The next step will be to personalise the service with specialised messages and gift-wrapping.
Archies plans to align with a number of horizontal portals requiring gift links, just as it has, for greetings content, with search engine giant, Yahoo India. "Horizontal portals cannot provide fulfillment. We can, with our in-house source for a range of gifts besides the standard books, music and flowers," says Mr. Moolchandani.
