ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, June 5, 1996 TAG: 9606050034
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: CLEVELAND
SOURCE: ASSOCIATED PRESS
PERSONALIZED GREETING cards haven't performed well for card companies. The main culprit? Time consumption.
It seemed like a good idea - give people the chance to personalize their own greeting cards. But computerized card-making kiosks that sprang up in stores around the country haven't caught on quite as well as card companies hoped.
There will be fewer of the machines this year as American Greetings Corp. and Hallmark Cards Inc. look for ways to make them more popular and profitable.
``What maybe this is proving is people just don't have the time,'' said Marianne McDermott, executive vice president of the Greeting Card Association, a trade group.
``Time is such an important factor now. With the basic, traditional card, someone has already designed a message. Probably that's the way people want to go. But people also want choices.''
Curtis Nelson, 43, of Cleveland spent about 30 minutes at a CreataCard machine recently at a suburban mall to make a card for his girlfriend after a spat.
``My only real complaint was it seemed to lack enough of a selection and detail in the graphics,'' Nelson said. ``Too much of it is too cute. It needs to be more serious and still more creative.''
Cleveland-based American Greetings introduced the CreataCard kiosks in 1992 and began placing them just about everywhere. Hallmark followed with its Touch-Screen Greetings machines the following year.
American Greetings now expects the number of its CreataCard machines to drop from about 10,000 in 1995 to about 7,500 this year. Hallmark anticipates the number of its Touch-Screens to decline from 2,700 to about 1,500.
American Greetings, the largest publicly held greeting card company, said its fiscal 1996 earnings declined about 23 percent to $115.1 million as it took a $52.1 million charge against earnings to write off overvalued CreataCard assets. Hallmark, with sales last year of $3.4 billion, is privately owned and does not report its earnings.
``As difficult as this past year has been on all of us, it has been a terrific learning exercise,'' said John Klipfell, president of the CreataCard division.
Among the lessons: Just because a CreataCard kiosk is in a store doesn't mean everyone wants to try it.
``With all the rush to the market with a new product and limited experience, we really hadn't invested as we should in terms of research,'' Klipfell said. ``Last year we really began that in a major way, looking at every aspect of the transaction.''
The company's recent market research found that women 40 and older - the most common purchasers of greeting cards - tend to buy cards off the rack. Young adults, who are more at ease with computers, were more likely to try a CreataCard kiosk but became disenchanted with the slowness of the process - about eight to 10 minutes from start to finish.
``The units are roughly the same speed they were in 1992, but people's perception of speed and tolerance to wait has changed over that time,'' Klipfell said.
The higher cost of a personalized card made at a kiosk wasn't a factor, Klipfell said. The typical cost of a CreataCard product is $3.95.
So American Greetings will put its machines where young adults gather and spend time and money - shopping malls and mass-market retailers.
Meanwhile, prices are coming down. Hallmark recently cut its Touch-Screen card price from $3.50 to $2.95 and began sales at about 100 test sites at $1.95.
The price cut and the introduction of Warner Bros. cartoon graphics are showing early signs of success, Hallmark spokeswoman Adrienne Lallo said.
``But the technology is changing so rapidly, and it's a little difficult to anticipate what's going to become a hit with consumers,'' she said.
American Greetings is redesigning its kiosks to make them more appealing and efficient and is also testing licensed graphics including the Simpsons.
Douglas M. Lane, an analyst for Merrill Lynch & Co., predicted CreataCard will be profitable.
``CreataCard was a disappointment,'' Lane said. ``But it's all behind them now. I don't think CreataCard in the future is going to be a significant drawback to earnings, but it may not be as big a contributor as what once was expected. Clearly, the core greeting card business is increasingly competitive, and that is an ongoing battle.''
LENGTH: Medium: 89 lines ILLUSTRATION: PHOTO: AP John Klipfell, president of American Greetings'by CNBCreataCard division, says the past year, though difficult, "has been
a terrific learning exercise." color.