8 minute read
Cardsharp: Dazed and Confused
So far, so good, feels Cardsharp as he listens to the feedback from the cardie retail frontline about festive trade. Is it because the winners tend to speak out while the losers keep quiet, wonders Cardsharp before jumping with whoops of delight.
Initial feedback from the likes of Scribbler, many good indies and small chains has certainly been very positive. Our largest bricks and mortar specialist, Cardfactory, was among the last of the big retail names to reveal its official festive trading update, but its announcement of a 7.8% increase in like-for-like sales, with bumper single card sales delivered a positive message from the sector too.
As for troubled Clintons, the sound of
dazed
silence, has been as loud as ever!
Certainly, the photographs of ransacked, nigh on empty supermarket Christmas card racks on Christmas Eve indicated that whatever many media commentators might claim, Christmas card sending as a tradition, was very much alive and well.
And speaking of his own experience, the number of Christmas cards Cardsharp received from non-industry friends was way up, not just on postal strike affected last year, but the year prior to that too.
Thinking about it though, in 2021 we had the Omicron Covid scare, and in 2020 we had Covid and the November lockdown. So, it could be argued that 2023 was the first ‘normal’ festive trading period we have had since 2019?
The ‘official data’ is very confusing. Generally, on the face of things, there seems to have been a trend this Christmas of food sales and essentials doing well and non-food sector performing poorly.
The British Retail
Consortium stated that “The festive period failed to make amends for a challenging year of sluggish retail sales growth, as weak consumer spending continued to hold back spending.” It reported a weak build up to Christmas and a subdued Black Friday performance.
So, in the words of the immortal Jimi Hendrix, Cardsharp feels ‘Dazed and Confused’, but is attempting to make some sense of it.
Firstly, although there were winners and losers, most of the big grocers seemed to do very well with their bricks and mortar sales other than in non-essentials. Which begs the question of whether greeting cards have become essentials, because of the volume of sales compared to previous years? Christmas card sales levels definitely seemed to be at odds with the decline in sales of gifts, housewares, jewellery and many other non-food sectors.
As Cardsharp pens this, greeting card publishers will be hoping that he is right and that returns and credits are at minimal levels. As, if this is the case, with retailers left with very little residual stock they can start again from scratch with their buying for this year.
Above: Cardsharp channelled his inner Jimi Hendrix to not be left ‘dazed and confused’ by the true picture of Christmas trading.
Left: Scenes of decimated Christmas card displays in Sainsbury’s and Waitrose on Christmas Eve.
Hendrix ‘Dazed and Confused’
What is tentatively encouraging though is that bricks and mortar retailing, which is still the channel through which the vast majority of our greeting cards are sold, is having something of a mini-revival meaning it could carry on to claim back more ground from online this year.
Cardsharp was interested to see a quote last week from Mark Allan head of mega investment company Landsec saying, “We are convinced the prime retail is a sector that’s going to do well”. And indeed Landsec’s plan to invest between £500 million and £1 billion in retail over the next couple of years is a big show of faith.
So, Cardsharp wondered what is changing? Is e-commerce starting to hit some buffers? Certainly, the glory days that e-commerce enjoyed during the Covid years, when online non-food sales soared to almost 50% seem to have gone for good and there has been a stunning drop in the values of many e-commerce retailers, Moonpig being a classic example. Why is this mused Cardsharp?
Firstly, the rising cost of borrowing and the drying up of investment money has forced e-retailers to look for profitability rather than sales growth. You can see this in the way many firms have started charging for returns. The consumer is having to pay the cost rather than the online retailer and this is contributing to a shift in behaviour.
The
Secondly, e-retailers’ cost advantages are disappearing rapidly. Rents for bricks and mortar retailers have dropped by a third and thankfully in many areas business rates are dropping too. Meanwhile, marketing costs for e-retailing are soaring. Google, which enjoys a near monopoly on internet searching has been increasing its prices by double digits for a number of years, making the cost of attracting new customers increase at a pace. In many ways, Google has become the e-commerce equivalent of the grasping unscrupulous landlord.
Cardsharp is not suggesting that ecommerce will disappear, only that having a high street presence could be more attractive in the next couple of years. People will continue to shop both online and offline, but certainly the scales seem to be tipping in the other direction, as indicated by a number of e-retailers – from Amazon to Gymshark - investing in physical shops.
The trend was very notable with the supermarkets in the lead up to Christmas. Nearly all grocers reported a significant decrease in home delivery, while instore sales showed a healthy increase.
Cardsharp thinks this in itself is good for the greeting card industry. Footfall not only
Late Winter Blues
Cardsharp reflects this is the time of year when many greeting card publishers take some very deep breaths. If ever there is a time when a major retail chain is going to go pop, or engineer ‘a financial restructuring’, which amounts pretty much to the same thing in most cases, it is post-Christmas and the early new year.
This horrid tradition goes back many years. Cardsharp remembers one of the most egregious examples being the Athena chain in 1996 going bust on the day after Boxing Day which left publishers and other suppliers literally £millions in debt.
Since then there have been too many others to remember. The various
incarnations of Cardfair, Birthdays, Clintons, and of course most recently Paperchase, come to mind though.
We have seen it so many times. A phoenix like rise, ‘pre-pack’ from the ashes. A supposedly new debt-free company leaves so many suppliers and landlords out of pocket. Funny it always occurs after the largest sales quarter and just as the next quarter’s rent is due!
As Cardsharp is writing this, so far so good, there have
means pennies, but also reminds people of their card buying needs. More people making a shopping expedition means more people will be making spontaneous purchases, popping in and browsing. And the investment that will hopefully come into town centres and shopping malls will have a halo effect on more greeting card sales.
Perhaps the surprisingly decent Christmas card sales we had is a part of this trend towards a bricks and mortar renaissance? Maybe Cardsharp is not so dazed and confused after all and we could be heading for a purple patch…or at the very least a ‘purple haze’!
been no major casualties, but no doubt publishers will be keeping a close eye on the weaker retailers in our sector.
Below left: It is just under a year since Paperchase ceased trading as a standalone retailer.
Below: Cardsharp reckons that some publishers will still have a sour taste in their mouth from when Athena went out of business the day after Boxing Day in 1996.
Right: Westfield Shopping Centres have been sending out positive messages about a bricks and mortar revival. Below right: Even High Street retailers’ online nemesis has joined the bricks and mortar brigade.
Above: Could we be turning away from shopping on our phone and enjoying going to the shops and returning with our goodies?