Outperforming Many Other Retail Sectors

2. Outperforming Many Other Retail Sectors • After a market-wide 2017 sales decrease of 6.5% for the US Census Bureau category, “gift, novelty and souvenir stores” (NAICS 45322), the market rebounded during 1H 2018 with a 5.4% increase, and ended the year with a 9.0% increase, to $18.26 billion. • Although other retail sectors underperformed during Q4 2018 and the holiday shopping season, “gift, novelty and souvenir stores” generated a robust 9.6% increase, or a total of $5.96 billion, compared to Q4 2017. • Much like the first half of 2018, the first half of 2019 was also positive, with a 6.1% increase, to $8.12 billion. Although elements of the general economy are slowing/moderating, the US gift market should enjoy another “green” holiday period.

3. Gifts Are What Make the Holidays Special • According to the Gifts and Decorative Accessories 2019 Gift Book (published October 2018), 77% of surveyed consumers said they were planning to buy Christmas décor during the next 12 months. • Significant percentages of Millennials (12%), Generation Xers, (8%) and Baby Boomers (10%) said they were most likely to buy Christmas tree ornaments at a gift store, compared to 49%, 57% and 44%, respectively, at a big box store. • During the 2018 holiday season, the National Retail Federation’s annual consumer survey found sales/price discounts was the #1 reason, (71%) consumers shopped a specific retailer, with quality and selection #2 and #3, at 60% each.

4. Bath and Body Products Are the Perfect Gifts for Many Shoppersv • According to the Gifts and Decorative Accessories 2019 Gift Book, 54% of households with an income less than $50K are likely to buy bath and body products as gifts during the next 12 months, compared to 44% of households with an income of $100K or more. • Five bath and body products were equally popular as gifts in the survey: skin care, 52%; hand lotions, 51%; bath products, 48%; soaps, 47%; personal fragrance, 46%. • The survey also found hand lotions (66%), bath products (61%) and skin care (61%) were the most popular gifts among women. For men, they were skin care (43%), personal fragrance (42%) and soaps (41%).

5. Paper Products Persist, But Imperiled • Although the greeting card industry is forecast to shrink through 2023, Millennials, surprisingly, have been buying cards in larger volumes, and consumers are buying more premium cards, or those costing more than $10. • The direction of the decline is even more evident with the March 2019 announcements from CVS and Walmart that they were reducing the greeting card space in their stores. • Consumers may be buying more premium greeting cards, but the Gifts and Decorative Accessories 2019 Gift Book survey found just 5% of Millennials, 4% of Gen Xers and 4% of Boomers were willing to pay $9 or more for a card.

6. Digital Gift Cards Are Increasingly Popular • The US gift card market is forecast to total $171.5 billion for 2019, and has been the #1 gift category in the NRF’s last 12 holiday season consumer surveys, or first on 60% of holiday 2018 shoppers’ gift lists. • According to Blackhawk Network, younger consumers are accelerating the use of egift cards compared to physical gift cards. 2019 research from Blackhawk found 41% of Gen Zers and 39% of Millennials purchase at least one egift card every 90 days. • By comparison, 51% of Gen Zers and 47% of Millennials said they purchase physical gift cards at the same frequency. Although only 26% of Gen Xers said they purchase egift cards, 20% of them are buying them for their children.

7. Children and Pets Love to Receive Gifts, Too • According to the Gifts and Decorative Accessories 2019 Gift Book, the largest percentage (32%) of men are most likely to buy a gift for tweeners (ages 8–12), but the largest percentage (48%) of women are buying for toddlers/preschoolers (ages 2–4) • Half (50%) of surveyed consumers in the South said they were most likely to buy a STEM/STEAM toy for a 10-year-old; games/puzzles were first among 49% of those in the Northeast; books, 46%, in the Midwest; and games/puzzles, 55%, in the West. • The survey also found that 49% of consumers said they purchase gifts for pets 2 to 4 times annually, with another 26%, once a year or less. Not surprisingly, 40% of men and 53% of women said they purchase pet-themed gifts for their pets.

8. Advertising Strategies • Selling against Amazon is a major challenge for local gift stores. A simple strategy is to offer a number of products it doesn’t. That requires some research, but it’s worth the effort because attracting shoppers with those items is likely to cause them to spend more. • Suggest gift store retailers order and create a display of merchandise targeting the gifting of friends for the holidays. Given the increase in “social engagement,” especially among younger adults, this can be a lucrative strategy. • Since more households with incomes less than 50K are likely to buy bath and body products than higher-income households, a daytime TV presence, combined with social media, may create a competitive advantage.

9. New Media Strategies • Gift retailers can create an online holiday catalog based on the 7 gift-card-shopper personas on page 4 of the Profiler. (Retailers may want to give them different names.) Retailers can ask their employees to post social media content “posing” as one of the personas. • Gift retailers who start to offer an egift card option are likely to attract more younger adults. These retailers can feature the egift option in posts for specific gift items throughout the year, and possibly offer a one-time discount for the first use of an egift card. • The greeting card industry has taken a beating, but Millennials are buying them. Consider creating and posting short videos featuring your employees presenting one or more interesting/unusual cards that would specifically capture the attention of younger adults.