Are gifts and cards retailers relying on Christmas to drive sales?

The UK greeting card market is worth billions, with the value of Christmas greeting cards reaching £161.8m last year. With gifts and cards retailers witnessing an overall decline in sales, many may be banking on Christmas to improve trading. Retail Gazette talks to experts to find out whether relying on an annual event could prove fruitful.

gifts
In the UK, the 'Christmas shopping season' can start as early as October

Card and gift sales increase dramatically during the Christmas period – which in the UK can start as early as October – as people purchase gifts, decorations and other supplies to celebrate the festive season.

Consumers inevitably turn to greeting card retailers during this time, and in 2020 the estimated value of Christmas greeting cards sold as single cards in the UK was valued at £161.8 million.

The greeting card market in the UK is worth £1.57 billion, according to Statista (2018), but it appears that gifts and greeting card retailers – particularly those with a strong physical presence – are struggling to trade on the British high street.

This year, greeting cards and stationery retailer Paperchase shuttered a bunch of stores since it launched a CVA in 2019, while Clintons’ 2019 administration led to the threat of losing 2500 staff members.

gifts
As of 2018, the UK greeting card market value is worth £1.57bn

The year 2019 appeared to be a crucifying period for UK gifts and card retailers as Smiggle’s Aussie owner Premier Investments revealed plans to drastically downsize its business in the UK market. The plans would allow the retailer to reduce rents or axe 117 of its 134 stores.

In a hasty attempt to improve its offering, Clintons announced in September this year that it would begin selling a selection of alcoholic drinks for the first time after partnering with independent Shropshire distillery Henstone.

The Works saw its sales drop by almost 20 per cent for the 53 weeks to May 2. Total sales declined 19 per cent to £206.2 million.

Defying this trend, Card Factory recently reported an improvement in its sales as Brits returned to its stores after the Covid-19 pandemic.

The gift and cards retailer found that the average basket value over this quarter continued to exceed pre-pandemic levels – up 22.5 per cent on a two-year like-for-like basis. Its customers are already ”responding well” to its Christmas ranges, indicating that there have been early buying patterns for Christmas.

In response to this boost, the retailer has brought forward the third phase of its festive product offering, launching it into 350 stores as it continues to sell well at this early stage of the season.

gifts
Card Factory reported an improvement in sales thanks to its Christmas range

“Christmas has started early this year with Christmas card sales showing double digit growth,” Scribbler managing director, John Procter said.

Proctor told Retail Gazette that the greeting cards retailer is not expanding its Christmas specific ranges this year, but it is ensuring that it has sufficient stock of its new generic gift ranges which include confectionery, soft toys and novelty socks.

“We utilise our website to attract customers, which has shown significant growth to market our stores,” he explained.

As Christmas nears, gifts and cards retailers may be relying too heavily on Christmas and could be at risk of neglecting other categories.

Despite three national lockdowns in the year to January 31, 76 per cent of adults still purchased greeting cards in 2020.

Greeting Card Association chief executive, Amanda Fergusson said the lockdowns of last year is driving people to buy Christmas cards earlier than ever this year.

“Card sending is a British tradition, we send more cards per capita than any other nation,” she said.

“We have also seen a consistent trend in recent years with 18-34 year olds sending more cards than a generation ago.

“People are on social media all the time, sending a heartfelt message to someone special requires more effort in, and that’s a card.

“Greeting Card Association research shows an increase in specialist caption Christmas cards sales over recent years, with people selecting an individual card for someone special rather than sending the same card to everyone.

“These cards are traditionally purchased in a bricks-and-mortar store, with consumers wanting to read messages and feel the quality of the card they are buying. Cards drive consumers into store, illustrated by the wide range of retailers now selling greeting cards.

“Christmas is, understandably, a big sales driver for gift and card retailers”

“Christmas cards are designed and sold into retailers up to a year ahead. The UK greeting card industry leads the world in innovation and design, there is a wonderful selection of designs out there to suit everyone and we export our cards all over the world.”

Retail strategy director at digital consultancy CI&T, Melissa Minkow argued that retailers should not bank on one annual event to drive annual sales.

“Christmas is, understandably, a big sales driver for gift and card retailers, especially in a year where consumers are excited to give gifts in person,” she said.

“Smart gift and cards retailers will learn what works during these occasions and apply those learnings to efforts year-round.”

Online loyalty program LoyaltyLion, chief executive and co-founder Charlie Casey said it is likely that gift and card retailers will aim to benefit from customers planning a big Christmas this year.

However, he added that they should also consider how they can use this peak to benefit them beyond Christmas too.

“Over the gifting period, many customers buy once and never return again. But, by giving customers reason to come back to the brand time and time again, these retailers will benefit from a greater customer lifetime value and a more secure source of revenue outside of seasonal events,” he told Retail Gazette.

“To build long-term loyalty from seasonal customers retailers should reward them with loyalty points, perks, and rewards for their big Christmas spend. Then, when the New Year comes around, they should send them an email reminding them of the points they’ve earned that they can spend on another purchase.

“Gifting and cards retailers could also run loyalty promotions after the Christmas peak to encourage seasonal shoppers back.

“This could be a double point event in typically quiet times – where customers get double loyalty points for every dollar they spend. Or members of the loyalty program could be offered a limited-time free gift with purchases made outside of the Christmas peak.”

Festive events are undoubtedly beneficial for retailers looking to draw shoppers into physical stores at a time when true experiences are needed to distract Brits from tempting online offerings.

Offering opportunities for consumers to personalise their purchases would be another way to draw more of a customer base. This year, retailers have the opportunity to attract customers by offering an exciting in-store experience which wasn’t possible last year.

Click here to sign up to Retail Gazette‘s free daily email newsletter

LEAVE A REPLY

Please enter your comment!
Please enter your name here