Canadian Card Companies

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Retail Chains

In 1999, we did a survey of 40 Canadian retail chains, with a total of 10,000 outlets. Except for a small percentage with 'dollar cards', all but a few hundred of the outlets were covered by exclusive contracts with Hallmark Cards or American Greetings. The following letter was sent to the heads of the 40 companies, asking for their support.

Aug 9, 99


There was a war for the greeting card business in Canada, and you won. Most card sales now take place in chain stores, like yours, where cards are just another category. A category that most companies can't even be bothered to manage themselves. A mere 5% of card sales now take place in the country's remaining 650 card shops, where cards are a primary concern.

I'm writing to point out to you, as one of 40 senior managers of our drug, grocery and department store chains, that, with a combined total of almost 10,000 retail outlets, chain stores completely dominate the greeting card business. And, the habit that most of you share, of turning your card sections over to Carlton or Hallmark, is crippling the Canadian card publishing and distribution industry. While you sign away 75% of a 600 million dollar business to these two US subsidiaries, 150+ Canadian companies compete for the remaining 25%. It's an unacceptable situation. I would like your support in the revitalization of the Canadian card industry.

I'm all too aware that talking to most men about cards is like talking to most women about hockey. It just doesn't seem very important. So, if you imagine a world where Chicago and New Jersey are the only two hockey teams with big rinks and TV coverage, and you keep seeing them play over and over and over.  you'll have some sense of how people with a real passion for cards see a Carlton or Hallmark card section.

We have to understand that cards are less like clothes, vegetables and toothpaste, and more like movies, books and music. They are about images and words, feelings and spirit. Focused on the communication of emotions rather than ideas, their importance can easily be missed by minds -perhaps too often- busy with ideas and numbers. We have to make it a point to remember that many people, with good reason, really love cards; that cards are an integral facet of their self-expression.

We also have to understand that artists all over Canada and around the world are creating great little works of art that reflect and articulate life's humour, passion, grief and endless beauty. When local artists draw on their surroundings for their inspiration and their images, they reflect our part of the world back to us, affirming our connection to our culture and our land. And, in a sea of multinational sameness, we really do need more things that anchor our uniqueness and our sense of place.

Then we have to ask, why have we allowed two foreign art departments to supply 75% of the words and images available to us. It is not because they do it better. Recently, an excited cashier said to me, "A woman from Ontario just bought 11 of your cards! She said they were the most beautiful cards that she has ever seen! She's taking them home to send to all of her best friends." Can you imagine anyone having an experience like this in a Carlton or Hallmark card section?

The current arrangement, which is like turning over all the cosmetics sections to Avon, clearly benefits Carlton and Hallmark, but the costs of their success are too high for the rest of us. We need open and competitive card sections that will offer real variety, while supporting Canadian culture and a whole range of local companies. You'll have happier customers -just ask them- and you can probably make more money. The UK's WH Smith deals with 25 publishers, including Carlton and Hallmark, in their 700 stores. They have had double digit growth in their card sales for the past two years. As is, sales per store in Canada are bound to be soft because Carlton & Hallmark keep slicing their pie into ever more pieces -I've seen malls with five Carlton outlets and no alternative.

We've been conducting an exclusivity poll of the 40 companies receiving this letter and the results are not encouraging. At the lower price stores, Image Craft has their dollar cards in three chains. Other than this, everyone we've contacted has contracts with Carlton, Hallmark or both. We have only found two chains where these contracts are not exclusive. If your company does buy from a variety of publishers, I congratulate you and I would like to know more about your program. Even if you just allow one or two local companies to put up a rack beside Carlton or Hallmark, it's better than nothing and I thank you for that. However, the market share numbers make it clear that such cases are the exception to the rule.

If you do have an exclusive contract, I'd like to think that knowledge of the collective impact of these contracts will change your way of marketing cards. I have already presented my argument, backed by letters from customers, to two large chains that I have dealt with for years. One, based here in BC, has agreed to meet in late August to discuss the possibility of a small section for local cards. While not what is needed, it is a move in the right direction. The other, based in Ontario, has responded by throwing my cards out of their stores.

I know that we can't count on Carlton & Hallmark to willingly change their ways. So, I, along with 150+ card publishers and distributors, and their artists and suppliers, are petitioning the Canadian Heritage Minister, Sheila Copps, to set minimum levels for Canadian content in the card industry. We are also filing an Application for Inquiry with the Competition Bureau, as it appears that the exclusive contracts and tied-selling that Carlton & Hallmark use to maintain their duopoly are contravening part VIII, sections 77-79 of the Competition Act, which cover Restrictive Trade Practices and Abuse of Dominant Position. The Act is very clear about such matters and I am optimistic of a positive finding by the Tribunal. Both of these actions will be supported by national media and letter writing campaigns.

I wish that there was no need to make a case for a vital Canadian card industry, but after 40 or so years of Carlton and Hallmark having their way with the market, by whatever means, it takes a conscious effort to picture what can and should be. I hope that we can count on you to buy from Canadian card companies and help us build a strong, diverse card industry that we can all be proud of.

I look forward to hearing your thoughts about this situation.

Yours truly,

Terry McTavish

This letter was ignored by all of the companies except for three. One defended the status quo. One suggested the possibility of a Canadian card section in their stores, but did not follow through. One CEO wrote a very thoughtful letter, and their stores continue to allow other lines in their stores.