Viewpoints

The Pricing Froth

Oh, for those ‘good old days’ when the trade price of greeting cards went up by 10% every January 1 and no one batted an eyelid. This year, at a time when everyone is being hit from all sides with cost increases, there is some trepidation about the inevitable price increases in the greeting card sector, despite taking comfort in the fact that the average cost of a card is a lot less than a takeaway cappuccino, let alone a pint of beer!

PG canvassed members of the greeting card community for their opinions on pricing for 2023 and the beverage/greeting card economy.

Miles Robinson

co-owner of House of Cards, seven shops based in the Home Counties:

“Everyone knows that price rises are on the cards, but it has been waiting game to see who jumps first! You cannot ignore the rising costs that are battering us all as consumers and businesses, it is a fact of life. The prices of greeting cards have to go up to reflect what is happening all through the supply chain.

While no one likes price rises, there is no sense in publishers supplying retailers and making a loss. Likewise, as retailers we have to put up our retail prices to safeguard our margin and ensure the continuity and investment in our stores and staff. As long as we all remain competitive, we have to accept that prices will go up in 2023. However, publishers need to think long and hard about the prices they offer to major retailers. It is wrong that some of the leading multiples, thanks to the discounts they achieve from publishers, are able to sell cards below RRP. While I accept that members of the public will not make price comparisons on individual greeting cards in the same way they would on white goods and other branded products, as an ethical business we want to be able to give our customers the best products at a fair price. I never want us to ever be seen as inflating prices as a result of multiples having been given disproportionate levels of discount from publishers.”

Mitigating measures: “At the start of this year, to accommodate the 2022 price rises, while we stuck to the same price points, we moved cards up to the next one, so a £2.25 card became a £2.50 card and so on. Thankfully we did not receive a single customer complaint.”

The beverage/greeting card economy: “We all have to remember that the majority of greeting cards are not only cheaper than a takeaway cappuccino, but mean more, last longer and won’t give you a frothy moustache!”

Right: House of Cards’ Woodley store. Below left: Miles Robinson with Presentation’s Andrea Pinder (left) and Sue Marks, editor of PG&H. Inset: Price increases get everyone into a froth, but the cost of a takeaway coffee is far more than a greeting card.

Seth Woodmansterne

managing director of Woodmansterne Publications

“We are committed to the survival of ourselves and the industry. When you combine all the cost increases since November 2021, no publisher can survive if they don’t pass on some increases to their retailers. And don’t retailers believe they can’t survive if they pass on increases to the consumer. And there you have it - a dilemma!”

Below: Seth Woodmansterne with Milton Keynes mayor Andrea Marlow at Woodmansterne’s Magna Park distribution centre.

VIEWPOINTS

Jarle Tatt

managing director of Noel Tatt

“Prices are going up everywhere. Everyone is expecting price increases. Can we buck the trend, hold back prices and still hold on to our brand values? Every business looks to maximise efficiencies as a cornerstone of their development. Long gone are the days of carrying any excess so-called fat in the business. As creatives, our job is to supply product to help the retailers entice customers across their thresholds. Creativity and strength of design is of the utmost importance. Catch the eye of the consumer and they will pick the product up for closer inspection. Only after having passed the initial inspection test, will the consumer then consider whether the product represents value for money to them. Naturally, there is a ‘tipping point’ over which a retailer/consumer will deem the cost of a product too expensive. Each retailer will know their customers and where to pitch their price offering accordingly.

Card giving is a fabulous tradition. It provides pleasure to those both giving and receiving. Every card speaks volumes about all involved. Publishers and retailers are dutybound to maximise the feelgood experience of the process, all the way from the card selection, to the smile on the face of the recipient.

Input prices have risen multiple times throughout 2022. Passing on some of these increases is unavoidable moving into 2023. For Noel Tatt, particular focus has been placed on hitting key retail price points (£1.99, £2.50, £2.99 and £3.50) and designing to achieve the best possible perceived value for money. The ever-increasing cost of postage will likely see less cards sent through the mail. Perhaps it will encourage more people to give cards by hand, which has the added benefit of face-to-face contact, and a consequent reduction of loneliness in many cases.

Ultimately, the giving of greeting cards is a way of showing we care. We come into this world with nothing and we leave with nothing. What we do in between is what matters. Several small gestures are often more valuable than single large gestures. Card sending is habitual and gratifying. We are very proud to be part of an industry which fosters happiness and empathy. Sending a greeting card remains a relatively inexpensive way of connecting with people and fortunately, there is huge choice, for every budget, even in these testing economic times. Long live our wonderful tradition of bringing smiles to our friends and family through the giving of greeting cards.” The beverage/greeting card economy: “I am not one for flavoured coffees, only taking it black and don’t enjoy shelling out several £pounds for something I can make just as well from my home machine. I might be more inclined to compare the relatively inexpensive cost of a card to a decent golf ball, which on some days last less time than a cup of coffee! These I buy a dozen at a time - fortunately, many loyal ultimate customers buy a dozen cards at a time too, to keep in their bottom drawer.”

Above left: Jarle Tatt (centre) with his father Noel (who founded the company) and his son Andreas, its operations manager. Above: Some of the new Spritz cards that were part of the 200 new designs that Noel Tatt launched a few weeks ago. Left: A cost of a quality golf ball is higher than a greeting card and invariably for Jarle, lasts a shorter time!

John Procter

co-founder of Scribbler

“Increasing prices is rarely easy, but sometimes you just have no choice.

We bit the bullet a few months ago, due entirely to the increased costs we have incurred, and increased the retail prices of our £2.75 own brand cards by 24p, taking them up to £2.99. Thankfully we did not receive any complaints from customers, but we are going to try and hold that price point as I do believe there is a bit of £3.00 price barrier for standard cards.

To go over that, a card needs to have extras, in the way of finishes or additions, and then the market will accept cards retailing up to £5.00.” Mitigating measures: “One way of mitigating price rises would be for us to increase the percentage of our own brand cards that we stock, but that won’t happen as we need to offer our customers a choice of looks. Branded publishers make up half of our selection and we have no plans to change that, so we will continue to work with them and navigate these choppy waters.” The beverage/greeting card economy: “For my money, in these tricky times, a pint of Ringwood Best Bitter in a decent pub is well worth the expenditure!”

Above left: John Procter. Above right: An A board outside a Scribbler store. Left: While cards are worth the money, John thinks a pint of Ringwood is also worth the expenditure.

VIEWPOINTS

Mike Lammas

managing director of specialist greeting card printer, Herbert Walkers

“Over the past year, it has been board costs that have driven general print price increases across all sectors, including the greeting card industry. This time last year it was high demand and supply chain issues that were pushing up costs, and we saw prices jumping suddenly, by as much as 10-15% at a time. As a result, some customers were buying board ahead of time to lock in the price and ensure availability. Now, the supply chain issues and lead times have settled down and board prices seem to have stabilised for the time being, but they are certainly not dropping. Moreover, the energy costs which are affecting production overheads for printers like Herbert Walkers are also affecting board production, which is very energy intensive, so there is still potential for materials to increase further in price.

Although we have been asked by some customers to lock in the price we’re quoting for a specific time period, this is not a route we’ve gone down because we want to be able to offer a fair price with as much transparency as possible. If material prices go up between the time we put the quote in and the order we receive we simply provide evidence to the customer that the cost of the board has increased and revise the quote accordingly. We feel it’s the most honest way to do things and it means that our customers know they can trust us to give them the best price, based on current costs.”

Mitigating measures: “Aside from material costs, the other big factors that are affecting pricing are labour costs, energy costs and productivity. The Government’s move to abandon National Insurance rises for now Top: The recent arrival of the new Bobst diecutter is part of Herbert Walkers’ £3 million and the energy cap they have put in place for investment in increasing the throughput of its businesses until next April gives us a bit of factory. Above: Mike Lammas on stage at The Henries breathing space on both counts, and it means about to present the Best Service to the

Independent Retailer trophies.

that we can avoid price rises due to energy and Below left: A pint of Peroni, Mike’s tipple of staffing costs over the next few months. choice, would cost more than a greeting card.

When it comes to energy, we will always be an energy intensive business, but we’re doing everything we can to reduce energy consumption and avoid waste, which delivers on our sustainability goals as well as our financial control objectives. There are two strands to that; one is our £3 million investment in new equipment and improvements to our building. Investment in new machines such as our Bobst NovaCut and Vision Foil, and our card packing equipment, mean that we have been able to increase capacity, enhance productivity and improve energy efficiency, which all helps us be a leaner business and pass on benefits to our customers by reducing our overheads. The other area of focus for reducing energy is in behaviour change and working methods. We have been monitoring our machines to identify any unnecessary energy consumption so that we can take action. In just a few months, we have reduced our energy costs by around 20%, and that’s a significant contribution to minimising our overheads.” The beverage/greeting card economy: “As a father of three young boys, I’m pretty busy at home, so there’s not much time for nipping out for a pint, or working my way through fancy coffee shop menus. As the md of a 75-year-old Yorkshire business, I ought to say I’d plump for a pint of traditional Yorkshire bitter, like Black Sheep or Timothy Taylor’s, but I’m actually only an honorary Yorkshireman, so I’d probably go for a fancy European lager, like Peroni!”

Rosie Trow

independent sales agent covering the South West

“Cost increases have been incurred all down the food chain. As a small business, all costs are my own responsibility and it’s been very noticeable this year, on the cost of fuel getting around the South West visiting customers - a full tank of fuel at one point was £29 more than the same time last year, and as we are commission-based we only get a pay rise if we sell more. I can't pass any of the increases on to anyone, so they are off my bottom line. Also, it’s very noticeable how the accommodation costs for Spring Fair have increased significantly, being at the show for three days and being off the road will be an expensive luxury.

In the present climate we are all flapping around in the unknown, but working with strong ranges will help ensure that the consumer still has the pleasure of selecting a quality card (even if they choose to cut down on the value of a gift), is the most positive way forward.”

Sensitive price points: “I have suggested to some of my customers to start moving their prices up gently this side of Christmas so that their customers will be used to the new prices in the New Year. I do sense though that retailers are currently very tentative about breaking through the £4.00 price point until they know how the start of next year is going to pan out.”

The beverage/greeting card economy: “I don't think I am the only one who enjoys writing, sending and receiving cards and letters and for me there will be no cost high enough to stop me from sending a piece of card in the post with a special heartfelt message. To my mind a greeting card is so much better value than a glass of wine, better for your liver and your heart!”

Top: Rosie Trow (second right) with customers Just Cards’ Maggie Wynn (far right) and Expressions’ Chris and Tracey Bryant at June’s PG Live. Above: A glass of wine is not as good on the liver or the heart as a card is, states Rosie.

VIEWPOINTS

Ian Braithwaite

commercial manager of paper company Fedrigoni UK

“At this stage, Fedrigoni has no intention to increase prices in the first quarter of 2023. Having said this, we must be mindful of contributing issues we’ve seen this year. Energy prices - which have been steering the ship of paper price movements for large parts of 2022 - despite stabilising recently, still remain the great unknown. So, events like an escalation in the war in Ukraine, as well as runaway inflation can be compounding factors. Outside of this, there is good availability and supply of Fedrigoni products. Nevertheless, if other paper mills were to be placed into administration, like we have recently seen with the Arjowiggins Creative Papers Stoneywood and Chartham mills, this can cause a short-term disruption to supply which is difficult to anticipate. However, it’s worth noting, with the acquisition of the Guarro Casas paper mill in Spain, Fedrigoni has additional capacity which helps to resolve any potential supply chain disruption.”

Above: Ian Braithwaite (far left) ready to fly paper aeroplanes with colleagues at PG Live last year in the lunchroom that was sponsored by Fedrigoni. Left: Woodstock, is a Fedrigoni range of uncoated papers and boards, pulp-dyed in 16 colourful shades, made with 80% recycled fibres and and 20% FSC® certified ECF virgin fibres.

Heidi and Dom Early

co-owners of the Earlybird Designs publishing and retail business

Fiona Pitt

“Speaking both as a card publisher and a retailer, it’s going to be such a fine balancing act! As a card publisher, we will swallow as much as we can on the cost increases front but unfortunately due to years of tough economic times there’s very little margin left to play with. We have had a lot of board, ink, envelope and warehouse price increases but it is getting to a stage where each part of the process needs to take a little hit. From printers to publishers to retailers. We cannot ask all our retail customers to keep upping their prices, we need to spread the burden among us all!”

Mitigating measures: “As some of our prices went up in the summer we have decided that there will only be one small increase in 2023 on one of our embossed neon lines. We hope that these costs start to level out so we can all get on with what we love doing designing and selling greeting cards!

From the retail perspective to help mitigate costs to our customers we will rely a lot more on our own designs so for those that we do buy in from elsewhere they absolutely have to provide something different either in the design or the finish.

We will play around with pricing and charge more for special-finished cards and take a hit on more standard offerings up to a point. Ideally, with standard cards we want to keep below £3 but some trade price increases mean some have gone up to £3.50. We’re keeping a close eye on those sales but at the moment they’re unaffected. In our shop, special cards ie letterpress, laser cut, those with decorations, patches or pins can stand going to a maximum price point of £4.99. We have a strict base margin, as long as the cards remain within that we’ll keep ordering but if the trade price increase means we can’t get the margin then we’ll look elsewhere. The brilliant thing about this industry is that the choice is enormous! In retail we’re going to increase our offering of smaller/mini cards and postcards so there’s always something for everyone. And for our trade customers we have the confidence of knowing how our designs are selling in our shop before we get to the trade shows, which means less risk for them. The beverage/greeting card economy: “Working with others like the GCA to promote why greeting cards are such an important part of our culture and worth every penny is going to be a key part of our agenda. Since Pret a Manger opened up next to our shop I’ve realised the price our customers are willing to pay for something they love - £3.69 for a basic organic coffee, £5.99 for an iced latte and £6.59 for an iced chia latte. Suddenly £3.50 for a basic greeting card doesn’t seem so pricey!” head of commercial at Hallmark Cards UK & Ireland “Hallmark, like most businesses is facing into significant inflationary pressures, with electricity, gas and sea freight prices in particular more than quadrupling as well as paper and road freight costs up at least 20% each. We’re working closely with our customers and supply base to mitigate these costs where we can. Inevitably, there will be some impacts on pricing to customers and consumers alike, but any price increases are always a last resort.”

Above: Fiona Pitt on stage at The Retas 2022 about to present the Hallmark-sponsored award.