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WWW.IBISWORLD.COM Greeting Cards & Other Publishing in the US June 2016 1

IBISWorld Industry Report 51119Greeting Cards & Other Publishing in the USJune 2016 Sarah Turk

Not in the cards: Revenue growth will remain flat as consumers turn to digital alternatives

2 About this Industry2 Industry Definition

2 Main Activities

2 Similar Industries

3 Additional Resources

4 Industry at a Glance

5 Industry Performance5 Executive Summary

5 Key External Drivers

7 Current Performance

9 Industry Outlook

11 Industry Life Cycle

13 Products & Markets13 Supply Chains

13 Products & Services

15 Demand Determinants

15 Major Markets

16 International Trade

17 Business Locations

19 Competitive Landscape19 Market Share Concentration

19 Key Success Factors

19 Cost Structure Benchmarks

21 Basis of Competition

22 Barriers to Entry

23 Industry Globalization

24 Major Companies24 Hallmark Cards Inc.

25 American Greetings Corporation

26 Visant Holding Corporation

28 Operating Conditions28 Capital Intensity

29 Technology & Systems

29 Revenue Volatility

30 Regulation & Policy

30 Industry Assistance

31 Key Statistics31 Industry Data

31 Annual Change

31 Key Ratios

32 Industry Financial Ratios

33 Jargon & Glossary

www.ibisworld.com | 1-800-330-3772 | [email protected]

This report was provided toIBISWorld Staff Member (211573052)by IBISWorld on 14 February 2017 in accordance with their licence agreement with IBISWorld


This industry comprises publishers that primarily publish greeting cards in print or electronic form. Some companies also publish products such as postcards,

calendars, coloring books, yearbooks and more. This industry excludes newspaper, magazine, book, directory, map, atlas, database and music publishers.

The primary activities of this industry are

Greeting card publishing

Art print publishing

Calendar publishing

Catalog (i.e. mail order or store merchandise) publishing

Clothing pattern publishing

Coloring book publishing

Diary and time scheduler publishing

Discount coupon book publishing

Postcard publishing

Yearbook publishing

45322 Gift Shops & Card Stores in the USThis industry retails a range of gifts, gift wrap, novelty merchandise, souvenirs, greeting cards, party supplies and seasonal and holiday decorations.

51111 Newspaper Publishing in the USThis industry produces and distributes print newspapers. Companies that solely publish online news are excluded from this industry.

51112 Magazine & Periodical Publishing in the USThis industry produces and distributes magazines and other periodicals. Operators gather, write and edit articles, and sell and prepare advertisements for print or electronic publication.

51113 Book Publishing in the USOperators carry out the design, editing and marketing activities necessary for producing and distributing books. These establishments may publish books in print, electronic or audio form.

Industry Definition

Main Activities

Similar Industries

About this Industry

The major products and services in this industry are

Business, trade and professional publications

Consumer publishing

Greeting cards sold in boxed sets

Single greeting cards

Other

Provided to: IBISWorld Staff Member (211573052) | 14 February 2017


About this Industry

For additional information on this industry

www.bea.gov Bureau of Economic Analysis

www.greetingcard.org Greeting Card Association

publishers.org The Association of American Publishers

www.census.gov US Census Bureau

Additional Resources

IBISWorld writes over 700 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com



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Revenue Employment

Revenue vs. employment growth

Products and services segmentation (2016)

54.9%Single greeting cards

24.0%Consumer publishing

12.4%Greeting cards sold in boxed sets

4.7%Other

4.0%Business, trade and

professional publications


Key Statistics Snapshot

Industry at a GlanceGreeting Cards & Other Publishing in 2016

Industry Structure Life Cycle Stage Decline

Revenue Volatility Low

Capital Intensity Medium

Industry Assistance Low

Concentration Level High

Regulation Level Light

Technology Change Medium

Barriers to Entry Medium

Industry Globalization Low

Competition Level High

Revenue

$4.8bnProfit

$543.8mWages

$946.8mBusinesses

2,835

Annual Growth 16-21

-3.8%Annual Growth 11-16

-3.2%

Key External DriversExternal Competition for the Publishing industryConsumer spendingDemand from gift shops and card storesDemand from book storesNumber of children aged nine and younger

Market ShareHallmark Cards Inc. 56.3%

American Greetings Corporation 26.2%

Visant Holding Corporation 12.6%

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FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31




Key External Drivers External Competition for the Publishing industryAlthough the industry includes companies that publish both print and electronic products, it does not include companies that solely publish their products online. Consumers are increasingly able to access alternatives to industry products on their mobile phones and tablets, which has hastened the shift toward companies that solely provide digitally-based substitutes. External competition is expected to intensify over

2016, representing a potential threat to the industry.

Consumer spendingA rise in consumer spending may lead to more consumers purchasing high-cost greeting cards, such as interactive greeting cards. Furthermore, revitalized discretionary spending amongst consumers incites businesses to purchase mail order catalogs from industry publishers. Consumer spending is expected to increase during 2016,

Executive Summary

Over the past five years, the proliferation of paperless substitutes has dampened revenue for the Greeting Cards and Other Publishing industry. Many industry products, such as greeting cards, day planners and calendars, have been rendered increasingly obsolete, as more consumers prefer digital calendars via their mobile phones. Moreover, as many downstream markets have consolidated, such as brick-and-mortar book store retailers, the industry has grappled with fewer retailers including industry

products on their retail shelves. In response, many publishing companies have consolidated, enabling some industry players to cut their operational costs, increase production volumes or integrate similar brands to enhance their product portfolio. In addition, industry consolidation has strengthened some publishing companies’ ability to negotiate favorable contracts with downstream suppliers (e.g. Amazon) and artists.

The industry’s profitability has experienced downward pressure as its downstream market has increasingly

been characterized by online rather than brick-and-mortar retailers. For example, large-scale e-tailers, such as Amazon, have become key distributors for publishers, enabling this downstream market to negotiate low costs for greeting cards and other products. Nevertheless, industry profit grew from 9.6% of industry revenue in 2011 to 11.3% in 2016 due to the industry’s key players implementing cost-cutting strategies, which have slightly boosted their profit margins. Still, during the five years to 2016, industry revenue is expected to decline at an annualized rate of 3.2% to $4.8 billion, including a 2.0% decline in 2016. To remain afloat, many publishing companies have focused on creating or licensing their products, thereby eliminating or lessening their reliance on distributors.

In the five years to 2021, industry revenue is forecast to decline at an annualized rate of 3.8% to $4.0 billion. Many publishing companies will consolidate, enabling these industry operators to secure superior contracts with downstream markets. For example, some publishing companies will expand their portfolio of electronic greeting cards and cater to nontraditional downstream markets, such as clothing retailers.

Industry PerformanceExecutive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage

With growing technology, many products have been increasingly rendered obsolete



Industry Performance

Key External Driverscontinued

representing a potential opportunity for the industry.

Demand from gift shops and card storesGift shops and card stores retail industry products, including greeting cards, art prints, posters, calendars and postcards. As gift shops and card stores exhibit larger sales volumes, they will require more industry products to stock their retail shelves. In 2016, the Gift Shops and Card Stores industry is expected to grow.

Demand from book storesBook stores typically sell greeting cards and other publishing products. Book store consolidation has caused the complete liquidation of some stores, such

as Borders, resulting in an oversupply of stocked items. Therefore, fewer book stores have required greeting cards and other industry products. The Book Stores industry is expected to decline in 2016.

Number of children aged nine and youngerChildren are major recipients and purchasers of greeting cards, coloring books, posters and art publications. Furthermore, educational institutions and students represent a major market for yearbooks. Therefore, growth in the number of children aged nine and younger bolsters industry revenue. The number of children aged nine and younger is expected to slightly grow in 2016.

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Current Performance

Over the past five years, the Greeting Cards and Other Publishing industry has contended with growing competition from low-cost digital alternatives. The industry excludes companies that solely publish industry products, including art prints, greeting cards and calendars, online. As more companies have benefited from the lower costs associated with publishing and distributing products only online, the industry’s level of external competition has increased. Furthermore, as some downstream retailers have consolidated, such as brick-and-mortar book stores, the industry has grappled with fewer outlets to generate industry revenue.

Further exacerbating this trend, the price of paper rose during the period, which has translated to higher input commodity costs for publishers. Over the five years to 2016, industry revenue is expected to contract at

an annualized rate of 3.2% to $4.8 billion, including a 2.0% decline in 2016. At the same time, profit is expected to rise from 9.6% of industry revenue in 2011 to 11.3% in 2016, largely driven by key players’ cost-cutting initiatives.

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Intensifying competition

Many digital technologies have caused consumers to view some industry products as obsolete. For example, many businesses and consumers alike have used applications for calendars and schedulers via their mobile devices, thus lowering demand for industry products. Moreover, the proliferation of e-cards, or electronic greeting cards, has had mixed effects on the industry. While many publishing companies have expanded their digital presence to derive sales volumes, there has also been the emergence of companies that solely publish products online, which are included in the Internet Publishing and Broadcasting industry (IBISWorld report 51913b). As a result, external competition for the industry has intensified.

The trend of customization has also had mixed effects on the industry. For example, many consumers have preferred to design and customize their own greeting cards online, which has incited

some companies that solely offer online publishing services to tap into this market, adding to external competition. In response, many industry publishers have offered products with additional features, such as animated digital pictures and voice-recording technologies. However, these new product offerings have still failed to prompt the industry into growth. As consumers became increasingly time strapped, the process of purchasing stamps and mailing greeting cards presented another obstacle for industry growth.

Moreover, demand for industry products aimed at the educational market, such as yearbooks and school planners, has declined. According to data from the US Census Bureau, fewer individuals enrolled in school (measured by the total number of students enrolled in elementary school, high school and college), which declined at an estimated




Shift toward interactive greeting cards

Many big-box retailers and mass merchandisers, such as Target and Walmart, have increased their leverage to negotiate low-cost contracts with greeting card publishers, which has failed to generate sufficient sales volumes to offset marked-down greeting card prices. Nevertheless, some industry operators have moved toward developing a market niche by offering greeting cards with technological additions. For example, many publishers offered technological elements, like recording features and light-emitting diode (LED) lights, to create an interactive greeting card. These cards, along with greeting cards made from recycled materials, have slightly buoyed the industry’s profit margins as consumers were attracted to these higher-priced products. While many holidays have bolstered demand for greeting cards, particularly Christmas and Valentine’s Day, poor off-season sales mitigated these holiday-related sales volumes. While high-margin cards with innovative features attracted a

market niche of consumers, the industry has still appealed to budget-conscious consumers with low-cost cards.

Many smaller greeting card publishing companies have struggled as a result of consumer emphasis on value; these companies lacked the operational resources, like the large-volume production and distribution network that enables large players to manufacture cards at low costs, which has hastened industry consolidation. Further hampering industry revenue and profit, the price of paper, a key input commodity, is expected to grow at an annualized rate of 0.6% during the five years to 2016, which has added to the industry’s operational costs.

annualized rate of 0.7% to 68.5 million individuals from 2011 to 2015 (latest data available). As fewer students enrolled in

school, there were fewer students to purchase yearbooks, school calendars and other industry products.

Intensifying competition continued

Some operators have moved toward developing a niche by offering cards with technological additions

Consolidation During the past five years, the industry has exhibited strong acquisition and consolidation activity. Many key industry players have acquired smaller players to create synergies with similar brands, combine manufacturing facilities and increase their leverage to negotiate favorable pricing with downstream markets (e.g. retailers). For example, American Greetings acquired Recycled Paper Greetings, a specialty manufacturer of eco-friendly greeting cards. The company also acquired Papyrus, a luxury card manufacturer, to merge the two acquired companies into

the subsidiary Papyrus-Recycled Greetings. Due to industry-wide consolidation, the number of industry enterprises is expected to decline at an annualized rate of 4.7% to 2,835 over the five years to 2016.

Consolidation has been a key strategy for industry operators to close underperforming locations, reduce overhead costs, divest secondary businesses and product lines, adopt newer technologies and outsource some printing activities. As more industry operators have offered digital services, the need for a large workforce has




Over the next five years, the industry will continue to grapple with growing competition from digital substitutes. In particular, the advent of smartphones has caused many industry products, such as paper-based calendars and time schedulers, to be considered obsolete by consumers. Additionally, many companies are going paperless to cut waste and implement more eco-friendly business practices. As a result of this trend, demand for paper-based desk calendars, time schedulers and other industry products will steadily decline, dampening industry revenue growth.

The industry’s landscape will continue to change considerably as many publishing companies expand their online presence. According to data from the Greeting Card Association (GCA), Americans purchase about 6.5 billion

greeting cards each year. While younger and more technologically-savvy consumers are currently driving online sales volumes for the industry, according to the GCA, this will likely expand to include more demographics during the five-year period. For example, major player Hallmark has attempted to attract a diverse customer base with its online greeting card services that enable consumers to print cards in Spanish, French and other Latin language diacritical marks.

Industry Outlook

The Greeting Cards and Other Publishing industry will struggle to generate revenue over the next five years, due to mounting external competition. For example, as more digital publishing companies inundate the market, with companies that solely operate online being excluded from the industry, external competition will heighten. Moreover, the continued consolidation of brick-and-mortar book stores will cause industry publishers to grapple with lower demand for calendars, greeting cards, time schedulers and other industry products.

During the five years to 2021, industry revenue is forecast to decline at an

annualized rate of 3.8% to $4.0 billion, which can be partly attributed to many large-scale downstream markets negotiating lower costs for industry products. Profit is expected to contract from 11.3% of industry revenue in 2016 to 10.6% in 2021, partly due to the rising cost of paper, a key input commodity for publishers, adding to operational costs and cutting into profitability. While industry publishers can markup product prices to offset higher raw material prices, growing competition from companies that solely publish their products online will prevent many industry publishers from raising prices.

The industry will continue to grapple with growing competition from digital substitutes

declined. For example, Hallmark’s Go Cards application enabled smart phone users to personalize cards, including adding photos and their signature, and pick up the card at the nearest Walgreens store. This trend, coupled

with consolidation, has allowed industry operators to hire fewer employees. As a result, the number of industry employees is expected to decline at an average annual rate of 0.5% to 23,009 during the period.

Consolidation continued

Demographic shifts




Consolidation continues

While integrating industry products with technology will buoy demand for many industry operators, the industry will still contend with fewer brick-and-mortar retailers, such as book stores, stocking industry products. Furthermore, poor industry performance has incited some industry operators to offer low-price industry products in dollar store chains, which will likely fail to generate sufficient sales volumes to become a lucrative option for generating industry revenue.

Additionally, downstream market consolidation, such as office supply stores, will increase their ability to negotiate low prices for industry products, thus hampering industry revenue. As the Book Stores industry’s revenue declines at an estimated average annual rate of 1.4% during the five years to 2021, the industry will contend with fewer retailers including greeting cards and other industry products in their product portfolio. Nevertheless, gift shops and card stores are expected to exhibit growth, at an annualized rate of 0.7% during the five-year period, stimulating demand for premium greeting cards from industry operators.

While this trend will prompt demand for industry products, downstream markets will still be wary of entering into long-term contracts with greeting card publishers. Rising postage stamp prices, coupled with more time-strapped consumers, will likely deter many consumers from mailing greeting cards.

During the five years to 2021, the number of industry enterprises is expected to decline at an annualized rate of 3.4% to 2,379. The industry will continue to consolidate in order to have the financial resources necessary to invest in enhancing their digital presence as well as implement new digital applications that enable consumers to personalize their greeting cards. During the same period, the number of employees is expected to decrease at an average annual rate of 2.9% to 19,814 people, as the industry consolidates and hires more part-time employees to cut costs.

Moreover, American Greetings’ justWink brand has recently developed an Apple Watch application that enables users to send emojis. Overall, this trend is indicative of the industry seeking new methods to expand both its customer base and its use of digital platforms. More greeting card publishers will move toward the customization trend, by

providing innovative ways for users to write card greetings or become more involved with card design. Additionally, industry operators that offer greeting cards that integrate well with technology will develop a market niche. American Greetings’ video e-cards allow users to send personalized videos and pick lyrics for the card’s birthday song.

Demographic shifts continued

The industry will continue to consolidate in the coming years



Industry PerformanceThere has been a contraction in industry activity

Consumers are demanding lower-priced products

Competition from substitutes is increasing

Life Cycle Stage

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DeclineShrinking economicimportance

Quality GrowthHigh growth in economic importance; weaker companies close down; developed technology and markets

MaturityCompany consolidation;level of economic importance stable

Quantity GrowthMany new companies; minor growth in economic importance; substantial technology change

Key Features of a Decline Industry

Revenue grows slower than economyFalling company numbers; large fi rms dominateLittle technology & process changeDeclining per capita consumption of goodStable & clearly segmented products & brands

Gift Shops & Card Stores

Paper Mills

Offi ce Stationery Wholesaling

Newspaper Publishing

Printing

Greeting Cards & Other Publishing




Industry Life Cycle Industry value added (IVA), which measures the industry’s contribution to the overall economy, is expected to decline at an annualized rate of 4.1% during the 10 years to 2021. Comparatively, US GDP is anticipated to grow at an average annual rate of 2.1% during the same period. The industry is in the declining life cycle stage, which can be attributed to more consumers and businesses using digital substitutes. For example, greeting cards, calendars and day planners are increasingly being considered obsolete by consumers due to mobile phones offering similar services.

Furthermore, many publishers have contended with mounting competition from digital substitutes, such as e-cards and electronic organizers. While the industry includes companies that publish both paper-based and electronic greeting cards, yearbooks, calendars and other products, it excludes companies that solely operate online. As many downstream markets have consolidated, such as book stores, the industry has grappled with fewer revenue streams to generate industry revenue. In response, the industry has consolidated, with the number of enterprises falling at an estimated average annual rate of 4.1% to 2,379 during the 10-year period.

This industry is Declining



Products & Services The products and services segmentation within the Greeting Cards and Other Publishing industry has remained fairly consistent during the five years to 2016. While a range of products and services is included in the industry, each segment depends on many of the same demand determinants and often has similar fluctuations in revenue. Therefore, segmentation by share of revenue is relatively stable.

Greeting cardsGreeting cards sold individually make up an estimated 54.9% of total revenue. Comparatively, greeting cards sold in boxed sets, such as value packs and assorted boxes, comprise about 12.4% of

total revenue. Greeting cards are also divided into two broad categories: seasonal cards and occasional cards. Occasion greeting cards comprise the largest portion of greeting card sales. In particular, the most popular occasion card is for birthdays, followed by other secondary occasions that include: Sympathy, Thank You, Wedding, Thinking of You and Get Well, among other greeting cards.

Christmas cards comprise of the largest portion of seasonal cards, with 1.6 billion purchased annually, which accounts for 75.0% of the most popular seasonal cards. This is followed by cards for Valentine’s Day (6.8%), Mother’s Day (6.2%), Father’s Day (4.2%), Graduation

Products & MarketsSupply Chain | Products & Services | Demand Determinants Major Markets | International Trade | Business Locations

KEY BUYING INDUSTRIES

32212 Paper Mills in the US Paper mills supply paper for printed products.

32311 Printing in the US Many publishers outsource printing to commercial printers.

KEY SELLING INDUSTRIES

42412 Office Stationery Wholesaling in the US Office stationery wholesalers distribute some industry products

42492 Book, Magazine & Newspaper Wholesaling in the US Book, magazine and newspaper wholesalers distribute some industry products

44511 Supermarkets & Grocery Stores in the US Supermarkets and grocery stores are distribution channels for greeting cards and other publications.

45121 Book Stores in the US Book stores sell greeting cards and other publications.

45211 Department Stores in the US Department stores sell greeting cards and other publications.

45311 Florists in the US Florists sell greeting cards.

45321 Office Supply Stores in the US Office supply stores sell calendars and organizers.

45322 Gift Shops & Card Stores in the US Gift shops and card stores sell greeting cards and other published products.

61111a Public Schools in the US Public schools and their students purchase yearbooks, atlases and maps.

Supply Chain



Products & Markets

Products & Servicescontinued

(3.1%), Easter (2.7%), Halloween (1.0%), Thanksgiving (0.7%) and St. Patrick’s Day (0.3%), according to data from the Greeting Card Association. Over the past five years, this product segment has remained stagnant.

Consumer publishingThis product segment includes products published for consumers, excluding newspapers, periodicals and books. Yearbooks make up the largest share of this segment, with 7.4% of total revenue, followed by calendars (4.7%) and other products. This segment also includes coloring books, postcards and posters. Over the past five years, this product segment has declined, thanks to fewer students enrolling in schools. According to data from the US Census Bureau, the number of individuals enrolled in school (measured as the total number of students enrolled in elementary school, high school and college) has declined at an estimated annualized rate of 0.7% to 68.5 million

individuals from 2011 to 2015 (latest data available).

Business, trade and professional publicationsThis product segment includes products published for businesses, trade and professionals; however, it excludes publications for newspapers, periodicals and books. This product segment includes catalogs, diaries and time schedulers. Over the past five years, this product segment has contracted, thanks to the popularity of electronic organizers, including mobile calendar applications, which have replaced the need for printed schedulers and date books. Further exacerbating this trend, many businesses have gone paperless, lowering their demand for industry products.

Other publishingOther publishing services include selling advertising space, providing printing services and listening the rights to intellectual rights.

Products and services segmentation (2016)

Total $4.8bn

54.9%Single greeting cards

24.0%Consumer publishing

12.4%Greeting cards sold in boxed sets

4.7%Other

4.0%Business, trade and

professional publications




Products & Markets

Major Markets Individuals aged 24 and youngerIn 2016, individuals aged 24 and younger account for the smallest market segment, with 10.6% of total revenue. According to the Greeting Card Association (GCA), 60.0% of millennials bought a greeting card last year. In particular, some individuals within this demographic have demanded witty greeting cards that reference social media. Moreover, some greeting card companies have manufactured greeting cards that feature emojis to attract and strengthen demand from this demographic. Over the next five years, this market segment is expected to grow.

Individuals aged 25 to 54Individuals aged 25 to 34 account for 15.8% of total revenue, with individuals

aged 35 to 44 and aged 45 to 54 comprising an additional 14.7% and 15.5% of total revenue, respectively. Some individuals within this demographic have favored customized greeting cards, such as greeting cards that enable users to upload their own artwork and design the card layout or message. Moreover, some companies enable users to upload business logos to their greeting card. While demand for greeting cards from this market segment has been relatively robust, many individuals within this market segment have limited the number of holidays or occasions that require greeting cards. For example, according to the GCA, many people, including individuals within this demographic, recognize birthdays via Facebook and

Demand Determinants

The major determinants of demand include the level of promotion by publishers and retailers, household disposable incomes and businesses’ corporate profit. When consumers and businesses alike are confident in the economy, they will purchase more industry products. For example, more businesses, such as book, magazine and newspaper publishers, that experience in uptick in their profitability will demand more printing services. Household sentiment and personal disposable income are the primary determinants in the quantity of greeting cards and other publishing purchases by consumers.

Females are a strong source of demand for some industry products, most notably greeting cards. According to the Greeting Card Association, women purchase 80.0% of all greeting cards. However, this historically steady demographic may be shrinking as publishers are successfully targeting male customers. Men generally buy a single card at a time, while women are more likely to buy multiple cards at once. During the five

years to 2021, demand for greeting cards is expected to remain relatively stable. According to a survey conducted by the Greeting Card Association, 7 out of 10 card buyers consider greeting cards essential, while 8 out of 10 buyers expected their purchases to remain stable in future years.

Sales of products aimed at the school market, such as yearbooks, children’s coloring books and journals, are supported by growth in student numbers. The number of enrollments at all levels of education affects demand for these products. Industry changes will stem largely from the use of personal computers, the internet, smartphones and portable tablet computers such as Apple’s iPad. These changes will likely have an adverse effect on demand for a number of the industry’s products. For example, some external competitors have added to external competition for the industry by offering publishing products solely online. In response, many industry publishers have also offered digital cards online.



Products & Markets

International Trade Imports and exports are not significant in this industry. However, publishers often outsource the printing of their products to overseas-based manufacturers. Many greeting card and other publishers may require input commodities from globally-based manufactures, such as electronic circuits. For example, many greeting card companies offer smart cards, which have recording features, and interactive cards, which use electronic circuits to create touch-sensitive components.

Furthermore, labor-intensive cards, such as cards that require handwork, may be sourced from global manufacturers as well. While the industry derives an insignificant amount of revenue from exports, many industry operators have expanded to include international locations in their operations. For example, American Greetings operates in North America, the United Kingdom, Australia and New Zealand.

Major Marketscontinued

other social media platforms, lowering demand for greeting cards.

Individuals aged 55 and older In 2016, individuals aged 55 to 64 and 65 and older make up 20.6% and 22.8% of total revenue, respectively. According to the US Postal Service, older individuals typically send the largest

volume of greeting cards each year. Over the next five years, some greeting card companies may potentially cut into demand from this key demographic by expanding their product portfolio to include witty greeting cards that feature social media references, thus appealing to millennials rather than this core customer base.

Major market segmentation (2016)

Total $4.8bn

22.8%Individuals aged 65 and older

10.6%Individuals aged 24

and younger

20.6%Individuals aged 55 to 64







Products & Markets

Business Locations 2016

MO2.8

West

West

West

Rocky Mountains Plains

Southwest

Southeast

New England

VT0.7

MA3.4

RI0.3

NJ3.4

DE0.2

NH0.3

CT2.1

MD1.3

DC0.3

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Additional States (as marked on map)

AZ1.7

CA14.0

NV0.7

OR2.4

WA3.6

MT0.4

NE0.4

MN3.5

IA0.7

OH2.5 VA

2.5

FL7.7

KS1.3

CO3.8

UT1.6

ID0.6

TX4.6

OK0.8

NC1.9

AK0.2

WY0.2

TN0.9

KY0.7

GA2.3

IL4.2

ME1.4

ND0.0

WI1.2 MI

2.3 PA2.8

WV0.0

SD0.1

NM0.5

AR0.7

MS0.3

AL0.8

SC0.7

LA0.3

HI0.1

IN1.6

NY9.6 5

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8

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Mid- Atlantic

Establishments (%)

Less than 3% 3% to less than 10% 10% to less than 20% 20% or more

Great Lakes



Products & Markets

Business Locations Industry operators’ locations are influenced by historical factors (i.e. where major players have located their headquarters and production facilities), population and economic activity concentration, production costs and the supply of skilled labor. The regions that account for the largest share of industry activity include the West (with an estimated 20.9% of establishments and 17.1% of the population), Southeast (18.7% of establishments and 25.4% of the population) and Mid-Atlantic (17.5% of establishments and 15.5% of the population).

In the greeting card segment (the largest segment in this industry), the two major players’ US operations are located predominantly in the Plains region (Hallmark Cards Inc.) and the Southeast region (American Greetings Corporation). States with the most establishments are California (13.9% of establishments), New York (9.6%) and Florida (7.7%).

While industry establishments are concentrated in highly populated areas, manufacturing facilities are typically located in the Midwest region because of its proximity to the west and east coast, which lowers transportation costs.

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Distribution of establishments vs. population




Cost Structure Benchmarks

The Greeting Cards and Other Publishing industry’s cost structure varies depending on numerous factors. For example, a company’s structure, size, products offered, production volumes, creative production costs as well as the level of technology and print quality used.

ProfitThe industry’s profit, measured as earnings before taxes and interest, is

estimated to comprise 11.3% of revenue. Typically, the greeting card segment is more profitable than other industry products, such as yearbooks and calendars. For example, industry operators can bolster their profit margins by providing a product portfolio of high-margin greeting cards, such as custom cards that enable consumers to include their own personal photos.

Key Success Factors Access to niche marketsPublishers must be able to identify a niche market, and then effectively serve it.

Effective cost controlsPrice competitiveness and access to steady supplies at reasonable prices are essential to success.

Production of premium goods/servicesQuality products (e.g. creative content and quality paper and print) and services (e.g. providing advice to customers and replenishing retailers stocks on time) can support sales.

Automation - reduces costs, particularly those associated with laborAutomation benefits industries producing mass quantities of specific products. It helps reduce costs, increase capacity utilization and may increase consistency of quality.

Establishment of brand namesHaving a strong brand name can bolster sales volumes and profit margins.

Control of distribution arrangementsStrong distribution networks can be very important to some products and in some market segments.

Market Share Concentration

The Greeting Card and Other Publishing industry has a high level of market concentration. In 2016, the top three players accounted for about 95.0% of industry revenue. Market share has been steadily increasing over the past five years due to large industry players conducting acquisitions. For example, Hallmark acquired SpiritClips, enabling Hallmark to expand its digital greeting card product portfolio. However, the level of concentration varies between different product segments. The greeting cards product segment is highly concentrated. US greeting card publishers range from

small, independently run organizations to major corporations. However, in general, the greeting card business is extremely concentrated.

In comparison, the yearbook product segment is less concentrated. Nevertheless, the majority of the market for yearbook products is divided among just a handful of companies, including Jostens, American Achievement, Herff Jones, Lifetouch Inc. and Walsworth Publishing Company. Additionally, industry operators are shifting manufacturing of low-cost cards to high-end cards to compete with boutique card makers.

Competitive LandscapeMarket Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization

Level Concentration in this industry is High

IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:



Competitive Landscape

Cost Structure Benchmarkscontinued

Rising competition from substitute digital products has pressured profit margins over the past five years. Furthermore, consolidation in many retail chains that provide greeting cards, such as supermarkets and grocery stores, has increased their leverage to negotiate low-cost contracts with industry operators. Still, the industry’s key players have implemented cost-cutting initiatives, which have bolstered profit margins.

PurchasesThe manufacturing process includes product specification, creative design, sheet arrangement, lithography (the process of printing from a flat surface that repels ink in some areas), sheetwise (card finishing is applied while the card is on the sheet) and cardwise finishing (finishing has to be applied to card manually), and packing and distribution. Material costs vary considerably between

companies. Some publishers have in-house printing operations, while others outsource printing.

For example, major company American Greetings Corporation (AGC) employs printing techniques that allows production of short runs and multicolor printing, which can be converted to direct-to-plate technology and increases their product turnover. AGC has a vertically integrated supply chain, which lowers purchase costs by performing all procurement, manufacturing, distribution, service and ordering activities in the company’s manufacturing facilities.

Operators are increasingly using higher quality images and printing papers for many of their products. Printing plates, blocks, ink, paper, adhesives and photographic film make up the majority of purchase costs. For example, greeting card manufacturing processes usually involve printing, die

Sector vs. Industry Costs

n Profi tn Wagesn Purchasesn Depreciationn Marketingn Rent & Utilitiesn Other

Average Costs of all Industries in sector (2016)

Industry Costs (2016)

0

20

40

60

Perc

enta

ge o

f rev

enue

80

100


15.8 11.3

13.92.9 0.55.0

46.7

19.7

22.1

3.53.88.2

23.1

22.2




Basis of Competition Internal competitionDue to the industry’s diverse product portfolio, greeting card and other publishers compete on a number of factors. Price-based competition is an integral component of competition for the industry. Many greeting card and other publishers attempt to pass on cost savings from efficient operations to consumers in the form of lower prices. However, many greeting card publishers,

for example, have developed a market niche for specialty products, like high-margin cards that are personalized. For example, allowing consumers to purchase cards with their personal photos or recordings, as well as cards with premium paper have enabled industry operators to differentiate their product. Many publishers also compete with their access to downstream markets. Consolidation in downstream markets,

Cost Structure Benchmarkscontinued

cutting, hot stamping and embossing. Such purchases account for about 46.7% of revenue for a typical firm operating in the Greeting Cards and Other Publishing industry.

WagesIn 2016, wage costs are expected to make up 19.7% of revenue. Wage costs typically do not include outsourced or contracted content production (e.g. artistic or editorial work). In the Greeting Cards and Other Publishing industry, many operators hire outsourced workers to create greeting cards that require labor-intensive handwork.

In the five years to 2016, total industry wages as a share of revenue have slightly declined. The industry’s labor costs have declined due to outsourcing and technological advancements lowering production and manufacturing inefficiencies. As a result, companies were able to reduce their workforce in line with revenue declines.

MarketingIn product segments where brand recognition and development is crucial for consumer demand, marketing expenses are much higher than the 0.5% industry average. While key players will typically incur substantial marketing expenditures, smaller firms will be unable to include large marketing

budgets in their expenditures. Well-recognized brands have greater access to major retailers; therefore, they are more likely to secure favorable supply agreements and coveted shelf space with those retailers.

Other costsThe cost of rent and utilities comprises 2.9% of industry revenue. Over the past five years, rent and utility expenditures have steadily declined, as the trend of consolidation reduced the number of greeting card manufacturing facilities. Depreciation in the industry is estimated to make up 5.0% of revenue for the typical publishing firm, which includes write-downs of company assets over a specific period. Depreciated assets for this industry include computers, software, manufacturing equipment and office furniture. During the past five years, deprecation has declined as more companies outsourced printing to cut costs.

Other costs make up 13.9% of industry revenue. Costs accounted for in this segment include insurance, legal costs, recruitment, compliance with environmental regulations, distribution and human resource management expenses. In particular, government taxes and license fees make up a significant share of other costs.

Level & Trend Competition in this industry is High and the trend is Increasing




Barriers to Entry Barriers to entry in the Greeting Cards and Other Publishing industry are not significant, though new entrants will likely cater to small geographic areas or markets niches. The industry is heavily concentrated, with key leaders Hallmark and American Greetings Corporation accounting for a large share of total revenue.

Some barriers to entry include startup costs; established brand-names that are well known at the retail and end-user levels; and intellectual property, which can protect existing popular brands and designs. Industry operators design and produce products that often require computers, specialized software and capital equipment like printers and

presses. Along with the cost of raw materials such as paper, ink and adhesives, these materials can make it a somewhat costly endeavor to start a firm. However, new technology has decreased the price of a number of these inputs in

Basis of Competitioncontinued

such as supermarkets and grocery stores as well as office supply stores, have increased many retailers’ ability to negotiate low prices for industry products, thus causing price-based competition to intensify. Furthermore, many publishers compete with their access to distribution networks. Larger publishers that are able to provide industry products in bulk to chain retailers will remain competitive.

Yearbook publishers compete on quality of service, product customization and personalization, timeliness, print quality and capabilities, price and product offerings. Historically, price has not been the primary basis of competition in this segment, but continued consolidation among operators may increase competitive pricing pressures in the next five years.

Publishers may contend with retailers’ terms, such as incurring costs from payments and other concessions to retail their product under long-term agreements. Some retailers may secure exclusive supply-side contracts with retailers, which enables operators to

prevent competitors from being included in a retail chain’s product portfolio. Product development initiatives and protection under intellectual property laws in some product segments can provide companies with competitive advantages regarding product quality and design.

External competitionMany of the industry’s operators face competition from digital media. For example, publishers of calendars and time planners face competition from digital substitutes like tablets, smartphones and e-mail calendars. To a lesser extent, greeting card and yearbook publishers compete with online substitutes like e-mail and social networking sites such as MySpace and Facebook. Operators have reacted to the growing use of online communication by developing and marketing products that can be purchased and sent through their websites. Companies have also adjusted their marketing campaigns to emphasize the value of more traditional products in the digital age.

Level & Trend Barriers to Entry in this industry are Medium and Steady

Barriers to Entry checklist

Competition HighConcentration HighLife Cycle Stage DeclineCapital Intensity MediumTechnology Change MediumRegulation & Policy LightIndustry Assistance Low





Industry Globalization

The industry has a moderate level of globalization, with a large number of small establishments catering for localized or niche markets. Some factors that keep down the level of globalization in this industry include the ready availability and low cost of printing equipment; the jobbing nature of most work; the need for a thorough understanding of and close contact with customers and end-users, and high transportation costs.

Nevertheless, there are some segments with relatively high levels of globalization, such as the greeting cards segment (Hallmark and American Greetings Corporation have subsidiary companies inside and outside the United States) and, to a lesser extent, the consumer and office products segment. In addition, a number of major

publishers rely on foreign manufacturers for various products they distribute. Similarly, manufacturing greeting cards that require handwork, which requires a labor intensive workforce, may continually be outsourced from Asia due to cheaper labor costs. However, the industry overall is impeded from outsourcing manufacturing facilities due to high transportation costs. Also, developing manufacturing facilities that are not in close proximity to greeting card artists and designers poses as a barrier to production, as the seasonal nature of the greeting card industry makes it difficult for global manufacturers to meet deadlines. Manufacturing greeting cards requires a standardized production process and synergy between manufacturers and card designers, which can be impeded from global facilities.

Barriers to Entrycontinued

recent years. The trend of supply chain stores consolidating, such as supermarkets, is increasing their leverage to negotiate low-prices, thus heightening price-based competition for publishers. Due to consolidation causing fewer retailers to require industry products, many publishers have struggled to access consumers via distribution. For example, downstream markets like Walmart and Target are increasingly demanding lower prices for greeting cards to remain competitive with dollar store chains that also sell industry products.

Existing players’ economies of scale and scope represent a barrier to new entrants. For example, some greeting card publishers have their own manufacturing plants, retail operations (i.e. either owned or franchised) and established websites. Some have also developed sales agreements and scan technology with third-party retailers. All in all, potential industry entrants face the barrier of needing to conduct efficient manufacturing operations to offset large marketing, packaging and advertising expenditures.

Level & Trend Globalization in this industry is Low and the trend is Increasing



Player Performance Founded in 1910, Hallmark Cards Inc. is a family-owned and operated company with headquarters in Kansas City, MO. Hallmark publishes more than 65,000 card varieties and introduces 10,000 new or redesigned cards yearly to more than 40,000 retail outlets in the United States. The company includes 2,000 certified Hallmark Crown Gold stores, which includes many stores that are independently owned and operated. Manufacturing facilities in Kansas produce most of the greeting cards offered in the United States, although cards that require handwork are manufactured by the company’s suppliers located in Asia.

Hallmark employs more than 27,000 employees worldwide, including 17,800 part-time employees. In addition, the company has a majority ownership stake in the publicly listed Crown Media, which

owns and operates the Hallmark Channel, a cable TV network. Crown Media also owns Crayola LLC, which produces Crayola brand crayons. In 2013, the company entered into an agreement with CaringBridge, a nonprofit that assists families connected during any type of health-related event. The collaboration will enable the companies to create co-branded content to provide information that families can share, thus creating a supportive community network.

Financial performanceDue to the company being privately held, industry-relevant revenue is estimated. In the five years to 2016, IBISWorld estimates that Hallmark’s industry-relevant revenue will contract at an annualized rate of 2.3% to $2.7 billion. The company has focused on streamlining its greetings product

Major CompaniesHallmark Cards Inc. | American Greetings Corporation Visant Holding Corporation | Other Companies

4.9%Other

Hallmark Cards Inc. 56.3%

American Greetings Corporation 26.2%

Visant Holding Corporation 12.6%SOURCE: WWW.IBISWORLD.COM

Major players(Market share)

Hallmark Cards Inc. (industry-relevant operations) - fi nancial performance

YearRevenue

($ million) (% change)Employees

(People) (% change) (% change)

2011 3,037.0 N/C 21,608.0 N/C N/C

2012 2,963.0 -2.4 17,364.0 -19.6 -17.6

2013 2,889.0 -2.5 20,747.0 19.5 26.0

2014 2,815.0 -2.6 20,317.0 -2.1 -0.7

2015 2,741.0 -2.6 20,000.0 -1.6 -2.2

2016 2,709.0 -1.2 19,112.0 -4.4 -3.9

*Estimates SOURCE: IBISWORLD

Hallmark Cards Inc. Market share: 56.3% Industry Brand Names Hallmark Shoebox Sunrise Greetings Ambassador



Major Companies

Player Performance Founded in 1906, American Greetings Corporation (AGC) is a manufacturer and distributor of greeting cards and other social expression products, which includes gift wrap, party goods, stationery and gifts. Headquartered in Cleveland, AGC employs about 24,800 people and operates production facilities in the Southeast region of the United States.

In 2013, the Weiss family, who previously owned a small share of the company, incurred $612.0 million in costs from acquiring AGC, which will become a privately held company. Industry-relevant revenue for AGC is derived from AGC’s financial information. In 2009, AGC acquired Recycled Paper Greetings Inc. and Papyrus brand greeting cards, known as Papyrus-Recycled Greetings Inc., a

high-end line of cards and stationery. Despite growing competition from low-value cards, these acquisitions have helped improve AGC’s average card prices. In 2009, AGC sold its retail operations segment, which owned 341 card and gift retail stores, to Schurman Fine Papers; this company operates stores under the American Greetings, Carlton Cards and Papyrus brand names. In 2012, the company acquired Clinton Cards PLC, one of the largest specialty retailers for greeting cards in the United Kingdom. In fiscal 2016, the company derived 48.0% of its total revenue from everyday greeting cards, compared with 25.0% being derived from seasonal greeting cards, gift packaging and party goods (18.0%) and other products (9.0%).

Player Performancecontinued

development process by combining many operations from Hallmark Canada into US-based Hallmark facilities. Furthermore, the company has cut operational costs by consolidating manufacturing facilities and increasing production volume. As consumers shift to exchanging greetings via social networking sites

and other online platforms, demand for Hallmark cards will continue to decline. Falling revenue pushed Hallmark to concentrate more on cost-cutting measures, including layoffs and outsourcing manufacturing; Hallmark’s North American division eliminated more than 1,000 positions in the United States.

American Greetings Corporation Market share: 26.2% Industry Brand Names American Greetings Gibson Recycled Paper Greetings Papyrus Carlton Cards

American Greetings Corporation (industry-relevant operations) - fi nancial performance**

Year*Revenue

($ million) (% change)Operating Income

($ million) (% change)

2011-12 1,214.7 N/C 109.5 N/C

2012-13 1,217.5 0.2 62.2 -43.2

2013-14 1,258.3 3.4 88.7 42.6

2014-15 1,291.1 2.6 93.9 5.9

2015-16 1,270.6 -1.6 147.2 56.8

2016-17** 1,261.4 -0.7 159.5 8.4

*Year-end February, **Estimates SOURCE: ANNUAL REPORT AND IBISWORLD



Major Companies

Player Performance Founded in 2003 and headquartered in Armonk, NY, Visant Corporation is a holding company that specializes in marketing and publishing services. Employing more than 3,404 workers, Visant manufactures industry-relevant products including school yearbooks, memory books and related products. Visant operates in the Greeting Card and Other Publishing industry through three of its subsidiary businesses: Jostens Inc., Dixon Direct and Leigh Phoenix. Jostens is a manufacturer and supplier of

yearbooks, class rings, commercial brochures, promotional material, books and education-related products. Dixon Direct publishes mini-catalogs, calendars, inserts, coupons and other marketing materials. Leigh Phoenix publishes book components, overhead transparencies, collectible cards, folders, catalogs and calendars. In October 2015, Jarden Corporation acquired Visant for $1.5 billion; however, in December of that year, Newell Rubbermaid Inc. acquired Jarden for $15.0 billion.


Financial performanceIn the five years to fiscal 2017, AGC’s industry-relevant revenue is expected to grow at an annualized rate of 0.8% to $1.3 billion. The acquisitions of Papyrus and Recycled Paper Greetings have helped drive the company’s revenue growth during the period. The company has also invested in new opportunities and innovations for its online businesses. To stay competitive within the industry and with external substitutes, AGC has grown its interactive online business and expanded into social media. Customers can now send greetings from AGC’s

website to their friends and family on Facebook, in addition to e-mail greetings.

AGC’s profitability has been negatively affected by demand for lower-priced cards, which erodes average selling prices. In addition, costs involved in revamping the core greeting card business reduced profitability. The challenging operating conditions in the Greeting Cards and Other Publishing industry during the five-year period forced AGC to make some strategic adjustments to its operations, including reducing costs and divesting noncore businesses.

Visant Holding Corporation (US publishing segment) - fi nancial performance

Year*Revenue

($ million) (% change)Net Income

($ million) (% change)

2011-12 669.3 N/C -44.3 N/C

2012-13 644.7 -3.7 0.8 N/C

2013-14 632.8 -1.8 64.3 7,937.5

2014-15 626.5 -1.0 60.0 -6.7

2015-16** 616.0 -1.7 61.4 2.3

2016-17** 606.7 -1.5 62.8 2.3

*Year-end January, **Estimates SOURCE: ANNUAL REPORT AND IBISWORLD

Visant Holding Corporation Market share: 12.6% Industry Brand Names Jostens Inc. Dixon Direct Leigh Phoenix



Major Companies

Other Companies American Achievement CorporationEstimated market share: less than 1.0%American Achievement Corporation (AAC), a private company headquartered in Austin, TX, is a manufacturer and supplier of class rings, yearbooks, graduation products, achievement publications and recognition and affinity jewelry. AAC conducts industry operations through Taylor Publishing, a company that has been publishing yearbooks for 70 years. The company’s yearbook manufacturing and prepress

operations are located in Texas, and it also operates a prepress bindery in Pennsylvania. Demand is falling and pricing pressure is rising because advances in technology and international manufacturing have slightly lowered the costs of entering the market. AAC is also facing heightening competition from internet-based publishers, alternative web-based virtual products and social networking sites. As a result, the company is expected to account for less than 1.0% of total industry revenue.


Financial performanceIn the five years to fiscal 2017, industry-relevant revenue from Visant’s subsidiaries is expected to decline at an annualized rate of 1.9% to $606.7 million. In fiscal 2014, net income skyrocketed due to the company divesting its Lehigh Direct operations, which operated under the company’s

Lehigh Press LLC subsidiary. Also in fiscal 2014, the company acquired Brady Palmer Label Corp., a company that provides book component and labels. Overall, this acquisition will provide synergies for the company’s Scholastic, Memory Book and Publishing and Packaging Services business segments.



Capital Intensity In 2016, for every dollar spent on wages, the industry incurs an estimated $0.25 in capital costs. While the Greeting Cards and Other Publishing industry is typified with a moderate level of capital intensity, it varies considerably between firms and product segments within the industry. For example, some industry operators include manufacturing and distributing products in their operations, whereas others outsource manufacturing and instead focus on product development.

As the industry has consolidated, capital and wage expenditures have declined. Nevertheless, many publishers have moved toward implementing technology in their manufacturing process, such as using

customized software solutions, which have added to capital costs. Furthermore, technology has enabled operators to lower

Operating ConditionsCapital Intensity | Technology & Systems | Revenue VolatilityRegulation & Policy | Industry Assistance

Tools of the Trade: Growth Strategies for Success


Labo

r Int

ensi

veCapital Intensive

Change in Share of the Economy

New Age Economy

Recreation, Personal Services, Health and Education. Firms benefi t from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labor skills are key to product differentiation.

Traditional Service Economy

Wholesale and Retail. Reliant on labor rather than capital to sell goods. Functions cannot be outsourced therefore fi rms must use new technology or improve staff training to increase revenue growth.

Old Economy

Agriculture and Manufacturing. Traded goods can be produced using cheap labor abroad. To expand fi rms must merge or acquire others to exploit economies of scale, or specialize in niche, high-value products.

Investment Economy

Information, Communications, Mining, Finance and Real Estate. To increase revenue fi rms need superior debt management, a stable macroeconomic environment and a sound investment plan.

Gift Shops & Card Stores Paper Mills

Offi ce Stationery Wholesaling

Newspaper Publishing

PrintingGreeting Cards & Other Publishing

Capital intensity

0.5

0.0

0.1

0.2

0.3

0.4

SOURCE: WWW.IBISWORLD.COMDotted line shows a high level of capital intensity

Capital units per labor unit

Greeting Cards & Other

Publishing

InformationEconomy

Level The level of capital intensity is Medium



Operating Conditions

Revenue Volatility Revenue is affected by economy-wide consumer spending, which is not particularly volatile. Demand for some products, such as greeting cards and yearbooks, is often seasonal. Nevertheless, this industry covers a wide range of products, which limits revenue volatility. However, greeting cards, calendars and planners are all examples of industry products that fluctuate on a seasonal basis. Typically, these products generate high sales volumes at the end of the calendar year or during holidays.

Additionally, consolidation in downstream markets, such as

supermarkets and grocery stores, which retail greeting cards, have increased their ability to leverage low prices. As a result of this trend, industry revenue growth has been constrained. During the five years to 2016, the price of paper, a key input commodity for the industry, is expected to grow at an annualized rate of 0.6%, which has increased input commodity costs for many publishers. While this trend has added to revenue volatility for the industry, it was mitigated by operational efficiencies from automation, which cut production costs.

Technology & Systems Implementing new technologies will allow industry operators to compete with competitor industries such as e-cards. However, electronic media and social networking websites will continue to affect demand for yearbooks, particularly from universities. The growing use of electronic organizers, such as personal digital assistants and cell phones, has adversely affected demand for paper-based organizers and calendars. Also, e-mail, social websites and cell phone messaging lowers demand for postcards.

Within the greeting cards product segment, using customized software solutions automates the card design process and streamlines efficiency. Hallmark automates its process of composing individual card design layouts by using software that inserts 8,000 card designs onto the card template before printing. Hallmark previously used technology that was paper-based and

required workers to manually operate the system. New technology allows Hallmark to insert barcodes and pricing onto card templates as well. Additionally, Hallmark’s Card Create system streamlines the design and production process, which reduces error and requires a smaller administrative workforce.

Innovations, such as using electrical circuits and electronic widgets about the size of a postage stamp, allow industry operators to implement interactive design elements. This technology can be applied to manufacturing cards with touch-sensitive components, creating a market niche for interactive greeting cards. Touch-sensitive components allow industry operators to manufacture greeting cards with innovative components like microphones, light-emitting diodes (LEDs) and recording features.

Level The level of Technology Change is Medium

Level The level of Volatility is Low

their required employees, thus streamlining the production of 6.5 billion greeting cards that Americans purchase per year.

Capital Intensity continued



Operating Conditions

Industry Assistance Other than intellectual property law, there is no other significant assistance for this industry.

Greeting card companies have a number of copyrights, patents and trademarks. Greeting card designs and verses are protected by copyright. Industry operators may file for a patent, although their greeting card has to have a

functional or mechanical aspect to be patent eligible. Licensing of copyrighted trademarks and designs can also generate revenue. A copyright is the legal exclusive right of the author of a creative work to control the copying of that work. In the United States, the law that governs copyrights is Title 17 of the United States code, commonly cited as “17 USC.”

Regulation & Policy There is relatively light regulation applicable to this industry.

Environmental protectionIndustry players are subject to federal, state and local environmental laws and regulations related to product safety, chemical use, air emissions, waste generation, the handling, management and disposal of waste, and remediation of contaminated sites. The industry’s major players have all designed operations to comply with applicable laws and regulations, and these efforts have not generally had adverse effects on the industry’s financial condition, cash flows or operating results.

Intellectual property rights and Postal Service changesIntellectual property law is important to industry operators. For example, the major greeting card companies have a number of copyrights, patents and registered trademarks to protect the value of their products and brands.

The US Postal Service (USPS) proposed eliminating its Saturday mail delivery service, attempting to lessen the burden of nearly $16 billion in losses in 2012. Although Congress blocked USPS from implementing the cost-saving strategy, uncertainty regarding a five-day or six-day mail delivery week could hamper industry revenue.

Revenue Volatilitycontinued

Level & Trend The level of Regulation is Light and the trend is Steady

Level & Trend The level of Industry Assistance is Low and the trend is Steady


Volatility vs Growth

Reve

nue

vola

tility

* (%

)

1000

100

10

1

0.1

Five-year annualized revenue growth (%)–30 –10 10 30 50 70

Hazardous

Stagnant

Rollercoaster

Blue Chip

* Axis is in logarithmic scale

A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment.

When a fi rm makes poor investment decisions it may face underutilized capacity if demand suddenly falls, or capacity constraints if it rises quickly.

Greeting Cards & Other Publishing



Key StatisticsRevenue

($m)

Industry Value Added

($m)Establish-

ments Enterprises Employment Exports ImportsWages ($m)

Domestic Demand

Print advertising expenditure

($b)2007 7,975.3 3,010.7 4,796 4,252 27,343 -- -- 1,332.8 N/A 57.32008 7,336.8 2,655.8 3,861 3,666 23,186 -- -- 1,225.3 N/A 51.82009 6,168.5 2,295.2 3,870 3,631 22,518 -- -- 1,176.5 N/A 42.22010 5,944.9 2,258.7 3,788 3,557 22,146 -- -- 1,248.7 N/A 42.92011 5,662.6 2,139.0 3,782 3,599 23,540 -- -- 1,231.3 N/A 42.12012 5,421.6 1,702.4 3,157 2,980 19,389 -- -- 1,021.3 N/A 42.22013 5,060.1 1,396.5 3,206 3,026 23,761 -- -- 911.5 N/A 42.02014 4,907.7 1,511.3 3,108 2,934 23,881 -- -- 888.2 N/A 39.12015 4,909.1 1,616.5 3,161 2,984 23,800 -- -- 992.5 N/A 39.02016 4,812.2 1,731.7 3,009 2,835 23,009 -- -- 946.8 N/A 38.52017 4,777.4 1,773.3 2,991 2,819 23,103 -- -- 947.9 N/A 38.02018 4,591.2 1,676.8 2,830 2,664 22,061 -- -- 902.6 N/A 36.52019 4,309.7 1,572.7 2,751 2,597 21,308 -- -- 861.3 N/A 34.12020 4,184.8 1,499.3 2,578 2,430 20,372 -- -- 823.6 N/A 32.82021 3,969.3 1,412.6 2,520 2,379 19,814 -- -- 792.8 N/A 31.1Sector Rank 35/40 32/40 21/40 14/40 30/40 N/A N/A 32/40 N/A N/AEconomy Rank 919/1556 847/1556 704/1556 645/1556 845/1556 N/A N/A 857/1556 N/A N/A

IVA/Revenue (%)

Imports/Demand

(%)

Exports/Revenue

(%)

Revenue per Employee

($’000)Wages/Revenue

(%)Employees

per Est.Average Wage

($)

Share of the Economy

(%)2007 37.75 N/A N/A 291.68 16.71 5.70 48,743.74 0.022008 36.20 N/A N/A 316.43 16.70 6.01 52,846.55 0.022009 37.21 N/A N/A 273.94 19.07 5.82 52,247.09 0.022010 37.99 N/A N/A 268.44 21.00 5.85 56,384.90 0.022011 37.77 N/A N/A 240.55 21.74 6.22 52,306.71 0.012012 31.40 N/A N/A 279.62 18.84 6.14 52,674.20 0.012013 27.60 N/A N/A 212.96 18.01 7.41 38,361.18 0.012014 30.79 N/A N/A 205.51 18.10 7.68 37,192.75 0.012015 32.93 N/A N/A 206.26 20.22 7.53 41,701.68 0.012016 35.99 N/A N/A 209.14 19.67 7.65 41,149.12 0.012017 37.12 N/A N/A 206.79 19.84 7.72 41,029.30 0.012018 36.52 N/A N/A 208.11 19.66 7.80 40,913.83 0.012019 36.49 N/A N/A 202.26 19.99 7.75 40,421.44 0.012020 35.83 N/A N/A 205.42 19.68 7.90 40,428.04 0.012021 35.59 N/A N/A 200.33 19.97 7.86 40,012.11 0.01Sector Rank 30/40 N/A N/A 33/40 23/40 30/40 38/40 32/40Economy Rank 641/1556 N/A N/A 918/1556 741/1556 978/1556 1002/1556 847/1556

Figures are in inflation-adjusted 2016 dollars. Rank refers to 2016 data.

Revenue (%)

Industry Value Added

(%)

Establish-ments

(%)Enterprises

(%)Employment

(%)Exports

(%)Imports

(%)Wages

(%)

Domestic Demand

(%)

Print advertising expenditure

(%)2008 -8.0 -11.8 -19.5 -13.8 -15.2 N/A N/A -8.1 N/A -9.62009 -15.9 -13.6 0.2 -1.0 -2.9 N/A N/A -4.0 N/A -18.62010 -3.6 -1.6 -2.1 -2.0 -1.7 N/A N/A 6.1 N/A 1.72011 -4.7 -5.3 -0.2 1.2 6.3 N/A N/A -1.4 N/A -1.82012 -4.3 -20.4 -16.5 -17.2 -17.6 N/A N/A -17.1 N/A 0.32013 -6.7 -18.0 1.6 1.5 22.5 N/A N/A -10.8 N/A -0.52014 -3.0 8.2 -3.1 -3.0 0.5 N/A N/A -2.6 N/A -6.92015 0.0 7.0 1.7 1.7 -0.3 N/A N/A 11.7 N/A -0.32016 -2.0 7.1 -4.8 -5.0 -3.3 N/A N/A -4.6 N/A -1.32017 -0.7 2.4 -0.6 -0.6 0.4 N/A N/A 0.1 N/A -1.42018 -3.9 -5.4 -5.4 -5.5 -4.5 N/A N/A -4.8 N/A -4.02019 -6.1 -6.2 -2.8 -2.5 -3.4 N/A N/A -4.6 N/A -6.62020 -2.9 -4.7 -6.3 -6.4 -4.4 N/A N/A -4.4 N/A -3.72021 -5.1 -5.8 -2.2 -2.1 -2.7 N/A N/A -3.7 N/A -5.3Sector Rank 37/40 6/40 40/40 40/40 36/40 N/A N/A 38/40 N/A N/AEconomy Rank 1410/1556 180/1555 1516/1556 1508/1556 1469/1556 N/A N/A 1488/1556 N/A N/A

Annual Change

Key Ratios

Industry Data




Apr 2015 - Mar 2016 by company revenueApr 2012 - Apr 2013 - Apr 2014 - Apr 2015 - Small Medium LargeMar 2013 Mar 2014 Mar 2015 Mar 2016 (<$10m) ($10-50m) (>$50m)

Liquidity Ratios

Current Ratio 1.4 1.5 1.8 1.5 0.9 1.8 n/aQuick Ratio 0.9 1.0 1.1 0.9 0.8 1.1 n/aSales / Receivables (Trade Receivables Turnover) 8.8 8.9 10.9 9.4 17.9 9.0 n/a

Days’ Receivables 41.5 41.0 33.5 38.8 20.4 40.6 n/aCost of Sales / Inventory (Inventory Turnover) 12.2 13.1 16.2 17.2 n/c 4.7 n/a

Days’ Inventory 29.9 27.9 22.5 21.2 n/a 77.7 n/aCost of Sales / Payables (Payables Turnover) 10.1 10.9 12.9 9.8 9.4 7.0 n/a

Days’ Payables 36.1 33.5 28.3 37.2 38.8 52.1 n/aSales / Working Capital 10.3 11.3 12.1 16.5 -105.8 6.9 n/a

Coverage Ratios

Earnings Before Interest & Taxes (EBIT) / Interest 5.5 3.0 9.6 6.5 7.7 6.5 n/a

Net Profit + Dep., Depletion, Amort. / Current Maturities LT Debt 2.6 3.7 n/a n/a n/a n/a n/a

Leverage Ratios

Fixed Assets / Net Worth 0.8 0.5 0.3 0.8 0.8 0.3 n/aDebt / Net Worth 2.7 2.7 1.3 2.8 2.8 0.9 n/aTangible Net Worth 11.9 14.7 18.0 18.9 11.3 33.0 n/a

Operating Ratios

Profit before Taxes / Net Worth, % 26.7 20.4 30.6 22.8 60.9 7.8 n/aProfit before Taxes / Total Assets, % 7.1 6.3 9.3 5.6 11.7 4.7 n/aSales / Net Fixed Assets 23.5 27.3 40.8 25.2 27.4 28.6 n/aSales / Total Assets (Asset Turnover) 1.7 1.8 2.1 2.2 3.1 2.1 n/a

Cash Flow & Debt Service Ratios (% of sales)

Cash from Trading 51.4 54.5 53.8 55.3 63.6 56.0 n/aCash after Operations 6.3 8.0 9.3 6.3 6.8 6.1 n/aNet Cash after Operations 7.7 7.2 9.3 5.8 5.4 4.1 n/aCash after Debt Amortization 3.0 2.4 3.6 0.4 3.0 -0.1 n/aDebt Service P&I Coverage 2.4 2.2 6.6 2.1 2.0 2.6 n/aInterest Coverage (Operating Cash) 8.6 5.5 13.1 6.1 15.2 7.1 n/a

Assets, %

Cash & Equivalents 15.1 13.9 18.2 12.2 16.9 10.4 n/aTrade Receivables (net) 21.8 22.6 20.6 25.7 24.5 28.8 n/aInventory 19.1 17.4 20.2 13.8 5.4 22.7 n/aAll Other Current Assets 3.9 3.8 4.4 4.5 2.5 6.2 n/aTotal Current Assets 59.9 57.7 63.4 56.2 49.4 68.1 n/aFixed Assets (net) 13.9 14.7 12.4 14.8 15.6 12.7 n/aIntangibles (net) 16.5 16.7 13.7 14.9 13.2 8.6 n/aAll Other Non-Current Assets 9.6 10.9 10.5 14.1 21.9 10.5 n/aTotal Assets 100.0 100.0 100.0 100.0 100.0 100.0 n/aTotal Assets ($m) 2,681.2 1,540.5 964.1 1,024.4 46.7 354.6 623.2

Liabilities, %

Notes Payable-Short Term 7.1 9.0 8.9 6.7 8.2 7.0 n/aCurrent Maturities L/T/D 3.6 2.0 2.0 2.9 3.8 2.2 n/aTrade Payables 13.0 11.9 12.8 16.6 22.5 15.2 n/aIncome Taxes Payable 0.9 0.1 0.1 0.2 0.2 0.3 n/aAll Other Current Liabilities 14.6 13.6 12.0 19.2 23.7 16.1 n/aTotal Current Liabilities 39.2 36.6 35.8 45.6 58.3 40.9 n/aLong Term Debt 19.3 20.3 14.4 13.9 11.1 12.2 n/aDeferred Taxes 0.4 0.4 0.2 0.4 0.1 0.2 n/aAll Other Non-Current Liabilities 12.7 11.2 17.9 6.3 6.0 5.1 n/aNet Worth 28.4 31.4 31.7 33.8 24.5 41.6 n/aTotal Liabilities & Net Worth ($m) 2,681.2 1,540.5 964.1 1,024.4 46.7 354.6 623.2

Maximum Number of Statements Used 82 56 49 51 19 25 7

Industry Financial Ratios

Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more than 260,000 statements of member financial institutions’ borrowers and prospects.Note: For a full description of the ratios refer to the Key Statistics chapter online.



Jargon & Glossary

BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.

CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the “real” growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.

DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.

EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.

ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.

ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.

EXPORTS Total value of industry goods and services sold by US companies to customers abroad.

IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.

INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.

INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.

INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry’s contribution to GDP, or profit plus wages and depreciation.

INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.

LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industry’s life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry’s products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.

NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals.

PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.

Industry Jargon

IBISWorld Glossary

E-CARD A digital greeting card selected online (free or for a fee) that is sent to the recipient via e-mail.

ELECTRONIC ORGANIZER A small calculator-size computer, often with a built-in diary application and other functions, such as an address book and calendar.

LICENSING A way for a publisher to allow others to use the publisher’s (owner’s) designs or images on their products, while the owner keeps control of the copyright.

PERSONAL DIGITAL ASSISTANT (PDA) A mobile device that functions as a personal information manager.

SMARTPHONE A mobile phone that offers advanced PC-like capabilities.



Jargon & Glossary

VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.

WAGES The gross total wages and salaries of all employees in the industry. The cost of benefits is also included in this figure.

IBISWorld Glossary continued


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