Wednesday 16 May 2007

UK Now Has a Trade Deficit in Greetings Cards

The UK Now Has a Trade Deficit in Greetings Cards — Whereas Its Surplus Was as High as £31.2M in 1995 States New Report, Greeting Cards Market Report Plus 2006

DUBLIN, Ireland--(BUSINESS WIRE)--Research and Markets (http://www.researchandmarkets.com/reports/c56934) has announced the addition of Greeting Cards Market Report Plus 2006 to their offering.

The UK greetings cards industry is a mature one, in which the value of retail sales is virtually static and competition is intense. While dominated by the US giants Hallmark Cards and American Greetings, there is a myriad of small publishers that contribute to the diversity of the UK industry and the innovation for which it is justifiably renowned. More than a quarter of UK publishers of items other than newspapers currently have turnovers of less than £50,000, while just 1.3% achieves sales in excess of £5m.

The days of high profit margins for greetings cards publishers look to be well and truly over in this oversupplied market. Bearing in mind the relatively low production cost of a card compared with the average selling price, margins should be healthy, but publishers have little choice but to comply with the increasingly stringent demands of multiple retailers (including the leading supermarket chains). Another characteristic of the market is the growth in the discount retailing of greetings cards. These difficulties have resulted in many corporate casualties and near-casualties. Further consolidation on both the retailing and publishing sides of the industry looks inevitable in the future.

In common with other manufacturing sectors, the UK publishing industry struggles to compete with overseas operators with lower production costs. Some companies, including International Greetings PLC and Hallmark Cards PLC, have moved some of their own production facilities overseas. The UK now has a trade deficit in greetings cards whereas its surplus was as high as £31.2m in 1995.

On the positive side, longevity and expanding family networks through divorce and remarriage mean an increase in the number of card-giving occasions and of potential recipients for greetings cards. The industry continues to endeavour to persuade the card-buying public to embrace more card-sending occasions. While there is a price-sensitive sector of 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, with the average consumer sending 55 cards each a year. It is little wonder, then, that the industry put up such a fight to prevent the imposition of Pricing in Proportion (PIP) by the Royal Mail. Its failure to do so means that the scheme, effective from August 2006, makes it more expensive to post letters and cards of other than standard size and weight. It is to be hoped that its implementation does not stunt creativity in the industry or confuse consumers into sending fewer cards. In a difficult market, the UK greetings cards industry can do without such negative aspects, as it strives to maintain a buoyant market value.

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