Not All Greeting Card Stores Need 'Sympathies'

NEW YORK ( MainStreet) -- After more than a quarter-century in business, Avant Cards & Gifts of Lincoln, Neb., was having a tough time surviving in the greeting card business. Owner Duane Krepel turned to the store's Facebook page to get customers in the door.

"WE NEED YOUR HELP! This has been a tough and relentless recession," the Nov. 14 status update read. "Unfortunately our bank has determined that due to decreasing sales we will have to close our doors after the holidays. They will reconsider only if we show a significant increase in sales this Christmas. Please don't forget to shop with us and bring your friends and relatives. ... We believe in Christmas miracles & appreciate your help!"
Dana Norman and Michele Rothberg bought discount card store CardSmart in Plainview, N.Y., because they thought there was an opportunity to sell to a more affluent clientele.

Krepel, 67, used to have three stores in the area, but closed two. He says a large portion of his cash and personal savings have been eaten up trying to keep the business running.

"I had to throw the proverbial Hail Mary pass," he says of the Facebook post. "I didn't have any choices. I had to do something and thought , 'Well, if I could just let my customers know how bad this is, I know they will come help.' It was one of the hardest things I had to write."

The plea not only got customers in the door, but attracted local media. Krepel says sales have been booming and thinks he will have something positive to show his lender, Great Western Bank ( TONE), after the holidays are over.

Day by day there is a "minimum of 50% increase," he says. "It's a very good Christmas. I have awakened a lot of my customers that have not made it into the store in a while ."

Krepel describes his cards and merchandise as up to date, edgy and humorous. Avant Cards' foray into social media (he says the Facebook page was created only a few months ago by a younger employee) has got Krepel thinking that while he's not truly comfortable with the Internet, he needs to embrace technology.

The recent sales have given Krepel a renewed optimism, and he says he wants to launch an e-commerce store and be more diligent with social media.

Recent sales aside, Avant Cards is an example of a small business struggling in a shrinking independent greeting card store industry, particularly with the ability to buy cards online and at discount retailers such as Target ( TGT), Wal-Mart ( WMT) and drugstore chains including CVS ( CVS) and Walgreens ( WAG).

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"The impact of the economy on small businesses, the rise in the use of cellphones, email and other electronic media for communication and therefore a decline in writing and mailing personal correspondence, and the pervasiveness of big-box stores and chains selling paper goods and cards, makes it hard for small stores to compete," Caroline Kennedy, editor-in-chief of trade magazine Gifts & Decorative Accessories writes in an email.

Krepel notes that one of his stores used to be in a nearby mall, which also had a Hallmark store and an American Greetings ( AM) store. All three have closed, he says.

He blames consumer attitudes more than discount retailers for taking market share.

"It's more psychological than anything," he says. "Here in Lincoln we only have about 5% unemployment. We're mostly an agricultural area. We've been doing pretty darn well. But everybody thinks the same way" as the rest of the country in that "everybody is afraid that they'll be the next to lose their job."

Still, Cinda Baxter, founder and president of The 3/50 project, a campaign to strengthen local bricks-and-mortar businesses by encouraging consumers to shop local, says while small card shops have an uphill battle, they have strengths to call upon.

As a former owner of an upscale stationery store, she knows that even with the proliferation of do-it-yourself paper products such as invitations and letterheads, "corporate customers came scrambling back. They recognized what a lot of consumers are now recognizing ... there are a lot of times when email is not appropriate."

There is a renewed need, particularly in a tough economy, for more personnel connection "that we can't get from a computer," she says.

Not all card stores will survive.

"It needs to be about unique cards," Baxter says. "Handmade cards are wonderful things that you cannot buy online. Ideally you want to create inventory that is unique, that people need to come to you for, and you need to layer that with fantastic customer service. It's the experience as much as the product."

Zoel Fages, the owner of Perch, an urban gift and home decor store in San Francisco, says cards are his third-best sales category.

"We do a little more off-humor," he says. "We still have nice cards, but I think the selection we offer is what has helped us."

Especially in the economy, "someone will be willing to spend even $4 to $5.50 for a card -- maybe not a gift -- but if they found a really nice card that really hits the nail on the head for the person they are buying for," he says.

Cards are such a popular item at Perch that Fages decided rather than to sell boxed holiday cards, this year he is letting customers mix and match separates. Perch will offer price breaks at six cards bought and again at a dozen, he says. He also plans to create a loyalty program for cards.

"When we opened I had closets with two doors that I made cards and I now have both walls and five spinners" filled with cards, he says. "People come in and buy 20 cards at a time. If it's a really slow day, sometimes it's all cards."

Dana Norman, owner of CardSmart in Plainview, N.Y., is fairly new to the card store business.

Norman, along with her business partner, Michele Rothberg, bought the discount card store in June from its original owner because they thought there was untapped opportunity, given the affluent clientele and high foot traffic in the shopping center where the business is located.

"We felt that there was a void. The prior owner was missing the mark in what the market needed," Norman says.

She acknowledges that running an independent card and gift shop in today's times is challenging, but she has plenty of ideas on how to make it work. Her ideas include putting in a second line of full-price cards, making more room on the floor for giftware and perhaps even opening a satellite post office or doing custom invitations.

"The rent is really high. We have to sell an awful lot of stuff to pay the rent. On the flipside, we feel like we're being entrepreneurial and constantly bringing in new stuff," she says. "We're always trying to think of what can we do to get more people in."

Here are three lessons newcomer Norman has already learned:

1. Diversify and tailor merchandise to customer demand.
The business partners recognized immediately that CardSmart's merchandise needed to expand. They have added moderately priced giftware such as picture frames, hostess gifts, scarves and jewelry.

"You have to maximize every inch of space with other merchandise when you're selling cards at 50% off," she says.

2. Know your market.
"That's the difference between a Party City and us," says Norman, a former cardiovascular ultrasound technician.

For instance, CardSmart's hometown has many children who attend sleepaway camp. It's common to have "Welcome Home" balloons for them at the end.

Norman and Rothberg, living in the area and having kids of their own, knew that and were prepared. "We did not run out. Party City did," she says.

3. Get to know your customers.
"We've been here six months, we probably know 50 to 100 customers on a first-name basis. It's cliche, but everybody knows your name here," she says.

To follow Laurie Kulikowski on Twitter, go to: http://twitter.com/#!/LKulikowski

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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