Cardsharp

cardsharp The Factory’s Jubilee

Cardsharp recalls that around the same time that those first Card Factory shops made their debut in the greeting card arena with their value concept, the mantra “You can’t sell sentiment cheap!” was often spouted by the founder and chairman of Clinton Cards, Don Lewin. Back then, Clintons was on a crest of a wave as Britain’s bricks and mortar retail scene was booming. Its only real competition, the Birthdays chain, at that stage was in a period of limbo, having been sold by its founder Ron Wood. Clintons was heading towards its aim of 1,000 stores, its profits were sky high, it had just opened a greeting card superstore in London’s Oxford Street while many city centres contained not just one but two Clintons outlets.

A quarter of a century later, how things have changed, mused Cardsharp. Clintons is down to a rump of just over 200 stores, after a series of business failures and financial restructures with its commercial strategy hidden behind the most opaque of walls and its future is considered uncertain by many.

By contrast, Card Factory now boasts over 1,000 stores, is listed on the stock exchange and contrary to the experiences of many retail businesses, it recently issued a trading statement pronouncing that its performance was above expectations, such positivity resulting in a 45% rise in the share price.

Added to its own stores, Card Factory also derives revenue from supplying a number of other major retailers. And in doing all this, Card Factory has comprehensively refuted Don Lewin’s mantra by demonstrating that “You can sell sentiment cheap!”

And in its march to secure its leading market share position, to Cardsharp’s mind, the whole face and structure of the UK greeting card industry has undergone a revolution, affecting everybody and everything down the line.

It wasn’t really until about five years after the opening of the first little Card Factory shop, that things really started to impact.

In those intervening five years, Dean and Janet Hoyle had rapidly grown their ‘new kid on the greeting card block’ to around 100 stores, aided by a very aggressive pricing policy. They were simply offering cards far, far cheaper than everyone else on the high street. Card Factory’s supply base was a mix of traditional wholesale cards and some direct to retail publishers, but as Card Factory grew, suppliers became

Some 25 years ago, a small greeting card shop was opened in Wakefield, West Yorkshire by husband-and-wife team, Dean and Janet Hoyle.

Who would have believed that this small event would go on to radically change the whole shape of the UK greeting card industry?

Cardsharp considers some of the changes to the UK’s largest greeting card retailer over the last two and a half decades.

Far left: Card Factory made the most of celebrating its 25th birthday. Left: Don Lewin (right), the founder of Clintons opened his first store in 1968 and its growth saw it become the benchmark until Card Factory came along. Above: Dean and Janet Hoyle, the co-founders of Card Factory. Bottom: Darcy Willson-Rymer, ceo of Card Factory.

increasingly twitchy. Wholesale publishers like Simon Elvin, were coming under real pressure from their respective wholesale customers, as Card Factory was selling the cards at lower retail prices than they could sell at wholesale. And on the direct to retail side, Clintons put even more pressure on its suppliers, allegedly threatening to delist any company that was trading with Card Factory. Almost unanimously they all decided to cease supplying Card Factory, leaving Dean and Janet devastated. By then they had a hungry empire that needed feeding and feeding quick!

The phrase “Cometh the hour, cometh the man” pops into Cardsharp’s mind, recalling the famous words uttered by English bowler, Cliff Gladwin on 20 December 1948 when he became the unlikely saviour in the match against South Africa.

One supplier who had become vitally important to Card Factory was Excelsior Graphics, a Warringtonbased card publisher owned by an entrepreneur Stuart Middleton. Stuart had an eye for greeting card design and had become particularly adept at cheap sourcing in the Far East. He had become increasingly important to Card Factory and vice versa. Without a supply of stock, Dean and Janet’s emerging empire would crash and burn, but was Stuart leaving himself too exposed by putting so much reliance on one large customer?

The answer to this dilemma was not just game changing, it was industry changing. Dean and Stuart decided, with a two-way exchange of shares, to go into what in effect was a partnership. And with that one giant step, Card Factory’s unique vertical integration model was born.

Stuart’s team would design the cards, they would then be printed mainly in China, and then shipped into Card Factory’s stores, enabling them to take the whole margin. This meant Factory’s prices were ridiculously low, far lower than anyone in the market. This had the dual effect of decimating the traditional wholesale sector and eroding Clintons hitherto impressive market share.

And gosh, how things went crazy from there! Although Card Factory sold cards cheap, the store environments were fresh and enticing and before long, the long queues of customers at the tills said it all.

Those 100 stores went to 200, then 300 then to 400, and then, with impeccable timing, in 2010 Dean sold out to venture capitalist group, Charterhouse for an estimated £350 million, while along with Stuart, maintaining a decent shareholding. The business model remained unchanged and the numbers kept rising. And then in 2014, Card Factory launched on the stock exchange, making multi-millionaires of both Dean and Stuart. This enabled Dean to achieve his dream of taking his beloved Huddersfield Town Football Club, which he now owned, into the Premier League. Meanwhile Stuart could concentrate on building an amazing classic car collection, become chairman and chief custodian of

Warrington Wolves Rugby League club while also still retaining an active role in the creative direction of the retailer’s products. Card Factory went on to achieve the landmark of 1,000 stores and despite the Covid crisis, the retail group seems to be well on the way to recovery, even its languishing share price has moved up of late.

Meanwhile, its nemesis Clintons went in the other direction, recalls Cardsharp. A disastrous acquisition of Birthdays led first to administration and then in 2011 the whole house came crashing down with the entire Clintons business failing and American Greetings (AG), its largest creditor and supplier gaining control.

Clintons’ demise and Card Factory’s rise has had a huge effect on the supply chain. Suppliers to Clintons had prospered during the glory years. While Card Factory’s ‘Draw it, Make it, Sell it’ renaissance strategy meant so many publishers were excluded from supplying this huge chunk of the market.

And in a sign of something of a full circle mused Cardsharp, some of those publishers that supplied Clintons are now supplying Card Factory, although on a lesser scale and in some cases in an own brand format.

In what Cardsharp sees as a spooky parallel of Clintons opening of its Oxford Street store, Card Factory has recently opened its first central London store just around the corner, in Tottenham Court Road.

And there is another weird twist to this story, concludes Cardsharp. In the dying days of the Lewin era at Clintons, a certain Darcy Wilson-Rymer was appointed as a non-family CEO. It was too late for him to have much of an effect, as by that time Clintons’ demise under the Lewin’s regime was imminent. Over a decade later, after spending that whole time outside the greeting card trade, last year saw Darcy return as CEO of Card Factory. Who would have thought that an opening of one small shop in Teall Street in Wakefield, would have changed the face of the UK greeting card industry forever, smiles Cardsharp?

Top: The unveiling of the new branded Clintons store that was to fanfare a new era for Clintons. Left: Card Factory’s store in Tottenham Court Road that opened a few months ago was its first in central London. Below: One of the many Clinton Cards’ orange and brown fascia-ed stores that were closed in 2012.