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Steady, sweet profit: A valentine for card makers

The total number of Valentine’s Day cards sold has remained steady over the past decade in Canada and the U.S.

Charles Buchanan/The Associated Press

The heart is still beating strong in the business of selling sweet nothings on paper.

As makers of everything from phone books to magazines grapple with the rise of the digital age, the humble Valentine's Day card is proving to be perhaps the most irreplaceable pulp-based product.

Most consumers still prefer to reach out to their loved ones with a personal note on paper. That is generating much-needed stable returns for companies such as retailer Indigo Books & Music Inc., which is seeing a decline in books purchases but double-digit growth in greeting-card sales.

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The number of Valentine's Day cards sold has remained steady over the past decade in Canada and the U.S., with an expected 145 million of them being bought south of the border in 2013, according to the Greeting Card Association of White Plains, N.Y.

And Feb. 14 is taking on an increasingly important role in the U.S. card-making industry, as the total number of greeting cards sent year-round has slipped about 7 per cent to 6.5 billion cards over the past decade. While Christmas is still the top card-sending period, those sales have dropped as shoppers scale back on their boxed card purchases, industry insiders say.

"What keeps us vibrant is that, for these emotional topics – Valentine's Day is a good one – there just is a need for a more personal and provocative form of communication than sending an e-mail message," said Alan Friedman, president of Great Arrow Graphics in Buffalo, N.Y., which makes silkscreened greeting cards.

That is not to say that Great Arrow and titans Hallmark Cards Inc. and American Greetings Corp. are immune to challenges. The growing trend of buying greeting cards at dollar stores and other discounters has hurt some suppliers' profit margins.

Nor are they ignoring the Internet: Hallmark and American Greetings are stocking a mounting array of e-cards and online customized card services.

But for the most part, companies are finding that on Valentine's Day, consumers are ready to shell out a little more for a physical card that glitters, sings or boasts other bells and whistles.

"All these things are bringing a new dimension to the cards – they're adding a premium element, almost making the card a bit more like a gift," said Dan Bengert, director of advertising at Hallmark Canada.

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It estimates Canadians will buy 10 million to 12 million Valentine's Day cards this year – worth about $27-million to $29-million, roughly the same as a decade ago, although the overall market has outperformed that of the U.S., probably because of a deeper tradition of letter writing.

Indigo executives say its double-digit annual increases in greeting cards over the past couple of years is part of a wider strategy to shift more focus to gifts and cards to offset declining revenues from physical books.

To help spur Valentine Day's card sales in particular, Indigo has over the past few years handed out discount coupons worth 10 per cent or more for buying a card with another purchase.

The chain has also shifted to more premium cards, priced at up to about $8, with hand-painted illustrations, lined envelopes, and other upgrades, said Tod Morehead, an executive vice-president.

Almost 80 per cent of Canadians prefer real greeting cards, while just 11 per cent would opt for a virtual card, according to research conducted for Canada Post last year.

"I will always prefer paper Valentine's Day cards over digital ones," said Emily Ferreira, 19, a student at Humber College in Toronto, who is giving her boyfriend a paper card with a Photoshop picture on it.

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"Something about writing your feelings on paper with an actual pen is so sincere and almost makes it seem like a love letter from the olden days."

For their part, postal services are trying to encourage the resurgence of interest in greeting cards, particularly for Valentine's Day.

Canada Post, for instance, recently stepped up its customized stamp program, including one with a heart theme. The program helps generate fatter profit margins: A sheet of 20 custom-made stamps costs about 40 per cent more than regular ones.

"I compare it a bit to digital music," said Jim Phillips, director of stamp services at Canada Post. "Digital music is king but vinyl is not dead. Almost every band still issues a small bit of vinyl."

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About the Author
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More

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