Peek No : 14
October 22, 2003

Hello,

The 'wellbeingness' of a society can be gauged by the size of its greeting card industry. It indicates the level of emotional bonding of families, communities and the society at large. This week, we take you through this personal communications sector.

But before that, a peek into our economy.

Business Inventories
A spurt in retail sales resulted in a marginal dip of 4% in inventories in August. Inventories are found to go southwards in automotive by 2.0%. Sales have improved by 1.7% in August while inventories have grown by 1.6% - both on year-over-year basis.

Consumer Price Index (CPI)
The CPI for September increased by 0.3%, due to the 3.0% jump in energy prices. Consequently, the core CPI (an index, less food and energy) has witnessed a very modest growth of 0.1%. As compared to the previous year, the core CPI has increased by 1.2% in September.

New Residential Construction
Housing rose by 3.4% to almost 1.9 million in September. The drop in mortgage rates is cited as the primary reason for the perk up in demand.

Happy Peeking!

Editorial Team
Marketspeek
Executive Editor - Dr. Sharon Livingston
Editor - Vijay
 Week's Peek

Connecting People

The American Greeting Card Industry

  • An average U.S. household buys 35 cards per year.
  • Women account for more than 80% of the purchase.
  • Seasonal cards account for 50% of the cards sold, with the rest being oriented towards personal moments.
  • Undoubtedly, Christmas remains the most popular card-buying holiday. Over 60% of all individual seasonal cards are sold during this period. Other popular triggers for purchase of seasonal cards are: Valentine's Day, Mother's Day, Father's Day and Easter. These occasions account for 95.5% of seasonal card sales in the U.S..

  • On the personal front, birthdays remain the most popular occasion for buying cards, accounting for nearly 60% of personal cards sold in the U.S.. The other popular moments to greet are: Anniversaries, Get Well Soon, Friendship and Sympathy. These top five personal situations account for more than 85% of personal cards sold.

Card Talk

  • The number of U.S. households with a likely incidence of purchasing greeting cards is growing at 6% per annum.
  • The industry has clocked an annual retail turnover of more than $7.5 billion through sales of close to 7 billion cards.
  • While cards range from $0.38 to $10.00, the average purchase value hovers between $2.00 - $4.00.
  • There are close to 2,000 card publishers in the U.S. They range from small family-based organizations to major corporations.
  • The average American receives close to 20 cards every year, 30% being birthday cards.
  • Parents receive a major share of seasonal cards. It is estimated that they are cheered with one out of every five seasonal cards sent.
  • Friends are the active recipients of personal cards. Three out of every five cards sent by Americans reach their mail boxes.

   Analysis - Greeting Cards

  • The greeting card industry can grow by increasing the incidence of purchases of cards. The personal (non-holiday) segment offers immense scope to improve the demand for cards, through innovative promotion of everyday occasions into moments to cherish. Instances like meeting a deadline at work, being able to come to work on time, kids doing well in games and many other special moments of life can be converted into card-buying opportunities.
  • The electronic ways of communication (cellular, telephones, faxes, PC-based communication) present a threat to printed greeting cards. This can be dealt with by developing cards with a 'treasure value' and coming up with messages that enrich the bonding between the sender and the recipient.
  • To attract women - the biggest spenders in the greeting card segment, and to prevent them from switching over to online cards, the industry can work on cards sensitized to women.
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 Wish I were

Mothers Work, Inc.
Philadelphia, PA

Mothers Work is a nationwide retailer of maternity-wear, designed especially for career women, keeping their unique needs in mind. Employing a few thousand people, Mothers Work has established its operations in more than 545 places all over the country.

While expecting her first baby, Rebecca Matthias found that maternity outfits, smart enough to go well with the image of a flourishing career woman, were very hard to get. This set her thinking and led to the launch of Mothers Work in 1980. Aware of the potential of an unexploited market, Matthias hit upon the idea of marketing maternity outfits suitable for women executives. Buying the products wholesale, she mailed catalogs to thousands of prospects, but to no avail. She ended up with unsold garments and a net loss of $6,500. Undaunted by this, she tried to get at the root of the problem. Making calls to all who had ordered the catalogs but never bought, she discovered that their needs were different from what was offered. This prompted her to design and produce her own creations.

Another hurdle awaited her, this time it was lack of funds. However, Matthias resorted to the franchising route to expand her business. This resulted in enough funds to start her own outlet. It was at this point, Meridian Venture Partners (MVP), a small business investment company (SBIC) came forward to lend $250,000. The first-ever institutional investor to impose faith in this company, the SBIC took this step in December 1988, with features of equity built in the investment. This happened at a time when the company had only 75 employees. By lending $300,000 more in June 1990, MVP participated in the successful growth of the company. These investments prompted other venture capital investors to show interest in the company. This made expansion of business possible. Mother Work acquired existing franchise stores and turned them into its own outlets.

MVP, from 1988 onwards, put in more than $2.2 million by way of long-term capital to fuel the expansion plans of the company. Mothers Work had its initial public offering in the year 1993. Matthias, appreciative of the patient long-term capital that helped her grow, says "Patient capital is critical in a startup company.” The IPO helped improve the company’s technical edge in manufacture. With the acquisition of Page Boy, A Pea In The Pod, and Motherhood Maternity Shop by 1995, the company appended more than 300 stores to the business.

Matthias is effervescent in her appreciation of MVP’s timely contribution to her company’s growth. "I had no experience. I had no capital. I really had no company. I had an idea. And if it hadn't been for the investment from a SBIC, that's where I'd still be."

For further reading:

http://www.nasbic.org/success/stories/mothers.cfm

http://www.icsc.org/srch/sct/current/sct0500/06a.html

http://www.pidc-pa.org/newsDetail.asp?pid=18
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 BrandFact
Li Ning Sports Goods Company, a dominant player in the sportswear market in China, is named after its founder Li Ning, a gymnast who won three gold medals in the 1984 Los Angeles Olympics.
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This Week that Age

October 18th, 1922 - The British Broadcasting Company (BBC) was formed.

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 Insight
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- Abigail Adams
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