Quality and value are keys to growth for category, say suppliers

Despite the challenging economy, the inspirational gift market remains a bright spot, according to suppliers who see opportunities for growth.

While the slump in the housing market has meant fewer new homes to decorate and accent, and job losses have made consumers more cautious about spending, gift companies remain optimistic.

Among the pluses they point to are stores’ recognition that gifts can make up for dwindling music and book sales and a shopper emphasis that trumps price point—their desire for value.

Although some suppliers have introduced lower prices for some of their products to attract budget-conscious buyers, they maintain there is still a market for higher-priced items.

“I don’t know that we have necessarily seen end-user customers become more price-point conscious,” said Grant DiCianni, president and CEO of Tapestry Productions, home of his artist father Ron DiCianni. “What we have seen is customers become more value conscious—meaning they want either a good deal or high quality/substance for the price.

“What we have seen is that the retailers have become more price conscious, claiming that it is customer driven.” But that was not born out by the business’ direct-to-consumer division, which had found customers “who will gladly spend the money on products that are both ministry driven and excellently crafted,” he said.

That view was echoed by Carpentree’s marketing director, Sherry Morris, who said that the company believed “there will always be a market for quality Christian gifts. Christians are consumers, and consumers want the most quality and value their dollars will buy.”

At the same time, the company has also seen an increase in demand for gifts that retail for under $30. “But because we focus on offering artisan quality and high perceived value, we have also noticed an increase in the demand for items that retail under $75.”

Stalling house sales have prompted some changes at the company. “We have begun to design products with a definite refocus on home-décor functional gifts,” said Morris.

“New home starts have slowed and may have decreased the need for large art to decorate homes, but people always see to spend money on functional gifts and home-décor gifts that offer encouragement and/or inspiration,” she said.

Quality still counts

As his company marks 75 years in the inspirational market and a runaway success with its impulse buy Faith Bands, Swanson Christian Products Vice President of Operations John McKinney Sr. noted that higher prices do not necessarily mean lower sales.

“A high ticket item will sell—if the value proposition to the consumer is present,” he said. “If the price is perceived to be good for the quality of the item and the customer desires or needs that item, it will not deter them from making the purchase. People are willing to pay a higher price for items, if they feel the quality and need to purchase is worth the price.”

Sales of high-end journals at gift book publisher Ellie Claire have continued to grow, reported Carlton Garborg, company president.

“Although customers are seeking out the lowest possible price on consumables and everyday purchases, when it comes to gifts for their friends and loved ones, they still shop for products with high quality and high perceived value.”

Customers will always look for gift items that offer both, he said. “Even in today’s economy, they are willing to pay for it.”

Though it had become more significant in recent times, price point was only one element in a product’s overall “value proposition,” McKinney said. As well as quality, other factors included convenience and safety. Looking ahead, “the real issue is, when will the price element shift to other elements? When that occurs, the ability to offer and increase your higher dollar sales occur.”

In jewelry, “people are doing less discretionary spending,” said Bob Siemon, president of Bob Siemon Designs (BSD). In its 40th year, the company recently introduced new lines at lower price points and also rolled out a new mini countertop display case for BSD lines that costs a fraction of the company’s flagship standing display case.

The cheaper lines are in lower cost metals such as 100% lead-free pewter, though the company continues with its quality fine jewelry.

“Quality has always been our highest company value,” said Siemon. “Too often in the fine jewelry marketplace, lower cost products can mean lower quality and lead to a bad shopping experience and a disappointed customer.”

Show Off Arts has run specials on some of its higher-priced items and introduced some less expensive lines, including plaques retailing for $14.99 that “incorporate the art our customers love, just at a lower more accessible price,” said Annette Atwood, president. “Customers still want to give gifts for special occasions, they just seem to be spending less on the specific gift.”

At Alexa’s Angels, founder and CEO Beth Lang said that “we have come to notice that while low-ticketitems are preferred in a down market, customers are still willing to buy products that are either functional or meaningful.”

Due to the high cost of sterling, the company has moved away from higher price points and  focused more on rhodium-plated base metals and “more affordable components.”

Changing the mix

When Aurelio Barreto observes that “gifts are clearly the bright spot with a promising future” for the Christian products world, he does so from two vantage points—as a supplier with his C28 clothing and accessories lines and a retailer with a small chain of stores bearing the same name.

“Music is downloaded, and books are available at Amazon—you simply cannot survive on those two categories any longer,” he said. “But changing the merchandise mix more to gifts is working well at our stores. We have increased our jewelry assortment as well and have seen major increases in that department.”

C28 has seen success with value pricing and its two-for-$30 offer on its T-shirts “is working well,” said the founder and CEO.

Swanson Christian Products’ efforts to help retailers have included introducing a closeout program and offering its core product lines at an everyday wholesale discount of 60%.

“This was an effort to generate sales while at the same time provide some relief to our accounts,” McKinney said.

He attributed those and other changes at the company to its having seen sales drop less than 0.5%, “thereby positioning us for a quicker recovery,” when many businesses, he said, were seeing double-digit falls.

Observed McKinney: “Understanding, embracing and adjusting to sales trends and value-proposition variances is the key to surviving challenging retail economies. ...

“Like many other companies, we were faced with the choice of either backing off and hoping we could get through it, or seeking proactive strategies which would position us better for the future.

“Many businesses simply slowed their purchases, reduced staff, cut advertising and hoped for the best. We choose to impact the future, rather than react to it.”

McKinney encouraged retailers not to back off their gift departments “because these products generally offer a much higher level of margin and profitability for their stores than other categories. The selection of gift product is extremely important. ... The keys for success at the retail level are understanding and acting upon relevant gift-buying trends.”

With that in mind, he offered some gift retail tips, including focusing on lower-priced or sale features closer to the front doors or traffic walkways and offering free gift-wrapping services.

“Merchandise specific products at your point-of-sale area,” he said. “These items should be low retails, with potentially high impulse-purchase power. Think of your point-of-sale area like a grocery store checkout with all of the gum, candy bars and magazines—all high-profit/high-turn products.”

For Morris, “merchandising is critical in a slower economy. Enticing customers ‘in the blink of an eye’ and offering a variety of price points is critical in themed displays.

“Also, it is important for retailers to buy multiples of lower-end gifts and then offer them in more than one type of display to capture the dollars needed to make these items pay.”

As part of its efforts, Alexa’s Angels has lowered minimum-order requirements, offered special buys, extended terms—“pretty much anything we need to do in order to help and keep their business,” said Lang. She recommended stores offer gift-registry programs, gift-wrap services and look into personalization opportunities.

“I think the changes that have occurred in our industry recently will be more permanent than we have seen in the past,” she said. “The consumer’s shift toward a ‘less is more’ attitude is here for a very long time. I don’t think price point is necessarily the issue—finding value is.”

Looking ahead

DiCianni expressed concern that some stores have become too timid about gifts in response to what he called “fictional pressure.”

He cited a chain that decided not to carry Tapestry products because, it said, they cost too much—“yet they direct-refer their customers to our Web site when they go into the store looking to buy the prints.

“We know that because the customers tell us when they order from us. Wouldn’t that seem to negate the argument of the chain?

“As a result, we have less sales through the Christian bookstores than we should have because so many owners are almost afraid to buy at certain price points.

“They’d rather risk nothing and send the people to us than to service those customers themselves and realize the revenue.”

DiCianni stressed the need for stores to “know the lines you carry—and what can be special-ordered. So many of our accounts faint in shock when they find out they can special-order different sizes from us. Had they looked at our catalog, they would have known that from day one.”

Some suppliers also underscored that the economic woes the country has been experiencing also provide some opportunities.

“In the midst of this tough economy, it seems that the sale of inspirational gifts are on the upswing,” said Atwood. “It seems that people are looking for messages of hope in this difficult time.”

Through its seven-plus decades, Swanson has seen other tough retail seasons, McKinney said.

“However, as a general rule, during these times we have observed that both Christians and non-Christians tend to migrate to a more faith-based mentality in looking for answers.

“For those distributors and retailers that can make the necessary adjustments to provide to the consumer what they are looking for, at the right price and at the right time, successful navigating through this period of time becomes a little easier.”

• Prev
• Next