Podcast Summary: "Greeting Cards" - The Economics of Everyday Things
Episode Details
- Title: Greeting Cards (Replay)
- Host: Zachary Crockett
- Network: Freakonomics Network & Zachary Crockett
- Release Date: December 2, 2024
Introduction to the Greeting Card Industry
In this episode of The Economics of Everyday Things, host Zachary Crockett delves into the multifaceted world of greeting cards, exploring their economic impact, industry dynamics, and evolving cultural significance.
Key Statistics:
- Annual Sales: Approximately 6.5 billion greeting cards are purchased by Americans each year.
- Market Share: Hallmark Cards and American Greetings dominate the market, controlling an estimated 80%.
- Demographic Shift: Millennials have become the largest buyers, surpassing Baby Boomers in total expenditure despite Boomers buying the most cards overall.
The Structure of the Greeting Card Market
Segment Overview: George White, president of Up with Paper and former president of the American Greeting Card Association, provides insider insights into the industry's structure, market segmentation, and consumer behavior.
Everyday vs. Seasonal Cards:
- Everyday Cards: Comprise over half of the market, including birthdays, weddings, new babies, sympathy, and "thinking of you" cards.
- Seasonal Cards: Represent about 1.5 billion out of the total 6.5 billion cards sold annually, with Christmas being the most significant, followed by Mother's Day, Easter, and Father's Day.
Notable Quote:
"Nine out of 10 US households buy greeting cards every year. And buyers tend to fit a certain profile." – George White [04:22]
Demographics and Consumer Profiles
The Kin Keeper Concept:
- Definition: Typically women between the ages of 40 and 65 who maintain familial and social connections by sending cards to relatives and friends.
- Behavior: These "kin keepers" are responsible for sending cards to a diverse group of people across different age ranges.
Generational Shifts:
- Baby Boomers: Entered their peak greeting card-buying years in the '80s and '90s, embracing a wide variety of occasions.
- Generation X: Showed a decline in greeting card purchases compared to Boomers, causing industry concern.
- Millennials: Emerging as key drivers revitalizing the market with a preference for unique, high-quality cards.
Notable Quote:
"The millennial generation is now the largest buyers of greeting cards. From a dollar standpoint, they've saved for." – George White [02:17]
The Millennial Impact on Greeting Cards
Revitalizing the Industry: Millennials, often credited with disrupting traditional markets, have paradoxically been instrumental in reviving the greeting card industry.
Spending Patterns:
- Expenditure: Millennials spend more per card than previous generations, favoring premium and artisanal designs.
- Selection Criteria: Preference for cards that are "cardworthy," reflecting personal relationships with originality and emotional resonance.
Distribution Channels:
- While Hallmark and American Greetings maintain strong presence in major retailers, artisanal cards find niches in diverse retail environments like jewelry stores, dress shops, and even car washes.
Notable Quote:
"Millennials... have no problem spending a lot more money on greeting cards." – George White [05:52]
Design and Innovation in Greeting Cards
Competitive Landscape:
- Hallmark & American Greetings: Utilize a scientific approach involving focus groups, psychographics, and dedicated creative teams to produce approximately 10,000 new cards annually.
- Smaller Brands: Rely on trend intuition and limited design portfolios, typically offering 100 new designs per year with price points ranging from $8 to $15.
Creative Challenges:
- Trend Adaptation: Staying relevant in a fast-paced cultural environment where trends can become outdated quickly.
- Content Generation: Balancing emotional relevance with broad applicability to appeal to a wide audience without alienating specific demographic segments.
Notable Quote:
"Pretty much every single card line that I worked on, there was at least a portion of that discussion that was about making cards that wouldn't turn millennials off for decades." – Mia Mercado [12:54]
Balancing Tradition with Modernity
Traditional vs. Modern Designs:
- Traditional Cards: Often family-friendly, polite, and sentimental, continuing to perform well among older demographics.
- Millennial-Friendly Cards: Tend to be self-deprecating, brutally honest, and edgy, breaking away from conventional motifs to resonate with younger audiences.
Case Study: George White shares an example where a seemingly unconventional card featuring a possum in a trash can saying, "Let's get trashed," initially puzzled traditionalists but became a bestseller among millennials.
Notable Quote:
"It was a possum in a trash can... I would not send that to somebody. But they totally would." – George White [15:00]
The Role of Technology and Competition
Digital Disruption: The rise of social media, text messaging, and e-cards presents significant competition to traditional greeting cards, especially among younger consumers who favor digital communication.
Independent Artists: Platforms like Etsy and Fiverr enable thousands of independent card artists to offer customized designs, challenging the market dominance of established brands like Hallmark by providing quick turnaround times and bespoke offerings.
Industry Adaptation: Hallmark and similar companies are striving to innovate their design processes and distribution methods to keep pace with the rapidly changing creative economy.
Notable Quote:
"A new Hallmark card, from start to finish, might take a year to hit the shelves. That's an eternity in today's creative economy, where trends live and die in a week." – Zachary Crockett [14:43]
Economic and Logistical Considerations
Cost Breakdown:
- Pricing: Sending a greeting card typically costs the sender around $6.
- Retail Margin: Stores often pay manufacturers roughly half the retail price.
- Manufacturer Profit: Greeting card companies earn about 30 cents per card sold.
Mailing Logistics:
- Forever Stamp: The Greeting Card Association advocated for the Forever Stamp to ensure mailing costs remain stable, essential since 60% of cards are delivered via mail.
- Postal Policies: The association also engages with Congress to address postal service challenges, ensuring affordability and reliability for card delivery.
Notable Quote:
"If it costs over a dollar to mail one of my cards, then people start thinking when they see our cards in the store, eh, I don't want to spend a dollar to mail this." – George White [15:39]
Conclusion: The Enduring Value of Greeting Cards
Despite facing numerous challenges from digital alternatives and shifting consumer preferences, the greeting card industry maintains its relevance by adapting to changing demographics and leveraging the emotional value of physical cards. Sending a card remains a meaningful gesture that conveys thoughtfulness and connection, underscoring its enduring place in the tapestry of everyday economics.
Closing Thought:
"I think it's one of the best values in the economy today. On that day, in that moment, that person knows that I was thinking about them. That's pretty powerful, right?" – George White [16:49]
Credits
- Produced by: Sarah Lilly
- Mixed by: Jeremy Johnston
- Assistance: Julie Canfer and Daniel Moritz Rapson
This summary provides an overview of the key discussions and insights from the "Greeting Cards" episode of The Economics of Everyday Things. For the full experience and more nuanced details, listeners are encouraged to tune into the episode.