Shoppers bring Holiday cheer to card makers

By Nivedita Bhattacharjee

BANGALORE (Reuters) - This holiday season, Santa and Rudolph are likely to face unusually stiff competition from the U.S. Postal Service. As costs balloon and unemployment rises, many more shoppers are planning to send out greeting cards in lieu of gifts, minimizing the hit the card industry will take in a down economy.

Gift buying is expected to be limited to immediate family, children and close friends only, market research firm IBISWorld said in a recent report.

The firm expects around 20 billion mail items to be delivered by the U.S. Postal Service between Thanksgiving and Christmas Day.

"Card companies may not see the same decline that retailers in general might see," Britt Beemer, chairman of American Research Group, said, given "the probability that if you do not visit your family this time, you would send out more greeting cards than you would normally do."

Visits home are expected to be down during the Holidays as cash-strapped consumers cut down on travel plans.

The net effect of the positive trend is, however, expected to just about offset recent downward trends, including increased use of online cards and pricing pressures.

"I see the greeting card business to be flat to down 1 percent," Beemer said.

"However, where other (retailing) sectors might be down almost 4 percent or more, being flat to down 1 percent is not bad at all."

Greeting-card market leader Hallmark Cards expects industry-wide Christmas card sales to be down marginally to 2.1 billion cards from 2.2 billion last year.

American Greetings Inc, the No. 2 U.S. card company, believes that evidence of the trend can be seen at greeting card aisles -- where it has stocked cards carrying messages of "hope and appreciation," to go with current sentiments.

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From what shoppers have to say, the companies are reading their customers well.

"My gifts to friends this year for Hanukkah, Christmas and Thanksgiving are going to be cards and chocolates - to me that is a pretty smart way to negotiate the recessing economy without disappointing friends and family," Pallavi Banerjee, a PhD student at the University of Chicago, said.

Boston-based Ajita Perera, who lost her job as marketing head of an IT services company in a recent downsizing, concurs.

"I will definitely send out cards, internationally and locally, but on gifts, I will have to cut down this year," she said.