Today's Gift Retailer 2005

Poker is enjoying a resurgence of popularity in the U.S., with tournaments and television shows popping up all over. Gifts and decorative accessories retailers, faced with stiff competition from discount stores and Internet sales, are playing their own brand of poker, shuffling the deck of products to turn up a winning hand. For the most part, that means adding categories.

The top five products, carried by two-thirds or more of the specialty store retailers surveyed, are candles and candle accessories, greeting cards, holiday products, jewelry, and photo frames. All except greeting cards are being carried by more retailers than in 2001. Best-selling price points have gone up for candles and candle accessories, greeting cards, and jewelry, while the best-selling price points for holiday product have held steady and those for photo frames have slipped slightly.

Seven of the 29 product categories G&DA asked about are carried by fewer retailers than in 2001. The declines are in collectibles, plush, gourmet foods, CDs/music, permanent florals, accent rugs, and handcrafted products. Collectibles, once a staple on gift store shelves, are now in just half of the stores surveyed. Retailers have also been flirting with gourmet foods over the last four years, with the number of retailers carrying the category bouncing between one-third and one-half. Currently, about one-third stock some gourmet food items.

The diversity of product carried by gift specialty stores is underscored by the fact that only two categories — candles/candle accessories and holiday products — account for as much as 10 percent of store sales. Jewelry, greeting cards, ceramics/pottery, collectibles, and personal care/aromatherapy each contribute between 5 and 9 percent of sales. The remaining 22 product categories covered by our survey each account for less than 5 percent of store sales.

Over the last four years, best-selling price points have stayed within fairly narrow ranges, though they are edging down. If a mythical consumer bought one thing in each product category at the best-selling price point, the median ticket in 2004 would be about $500, only $5 higher than in 2001 and $30 less than 2003. Tough competition from the big boxes, the Internet, and manufacturers' own stores are contributing to lower best-selling price points.

Downward shifts at upper price points are the most telling. Last year was the first time since 2001 that there was no product category with a median best-selling price point of $50 or more. Wall art, which held that distinction for several years, now rings up at $45 for its median best-selling price point, still the highest of all 29 product categories surveyed.

Accent rugs and collectibles also had significant drops in best-selling price points. Still at the top of the price scale for specialty stores, the median best-selling price for both was at least 10 percent under the 2001 level.

However, products with the highest tickets are not necessarily carried by highest number of retailers. Of the four items that have their best-selling ticket at $25 or more, only wall art is offered in more than half of gift specialty stores. Gift baskets, which have the second highest median best-selling price point at $30, are carried by only 20 percent of the retailers surveyed.

Five of the six categories that in 2004 had a median best-selling price point between $20 and $25, previously rang up tickets at $25 or more.

• Median best-selling price points for ceramics/pottery dropped to $20.50 from a high of $25 in 2003.
• Collectibles fell to $22.48 from a high of $30 in 2002.
• Accent rugs tumbled to $23 from a high of $35 in 2001.
• Tabletop dropped to $23.50 from $30 in 2002.
• Handcrafted items fell to $24 from $30 in 2003.
• Jewelry prices hovered between $20 and $22 during the four-year period. Jewelry was carried by 70 percent of retailers in 2004, compared with 60 percent in 2001.

Once again, high tickets aren't necessarily carried by the largest percentage of retailers. Among the products with best-selling prices between $20 and $25, half or more of the retailers surveyed carry collectibles and ceramics/pottery, but only one-fifth carry accent rugs, down from one-fourth that carried them in 2001. Tabletop is carried by 45 percent of retailers and handcrafted products by about one-third.

In the middle of the price-point array — products selling between $16 and $20 — home textiles have moved up the scale; the median best-selling price, $20, is double the median for the past two years. That may be one reason more retailers have home textiles in their product assortments, 35 percent now, compared with 26 percent in 2001.

And in spite of stiff competition from other channels, specialty retailers have managed to slightly increase the median best-selling price point for candles, now at $17, almost $2 ahead of the best-selling price in 2001.

At price points of $15 and below, the move has been in smaller increments. Holiday product, one of the two categories that account for 10 percent of gift store sales, has held at a median best-selling price point of $15 for three of the last four years.

More than half (54 percent) of retailers multiply wholesale cost by two or less to determine retail price. Another two-fifths use cost times two and a half.

Most retailers hold sales of marked-down goods more than once a year, with two-fifths having more frequent sales totaling four or more times a year. The median markdown for sales continues to be 40 percent, a level that retailers first revealed when asked about their 2003 markdowns.

Retailers not only constantly add and drop product categories, they also add and drop lines within categories they carry. Almost half (49 percent) buy from at least 20, and up to as many as 60 different vendors. Another 42 percent say they buy from more than 60 different vendors. Generally speaking, gift retailers carry products from two to four different vendors for each category they stock. In only two categories, CDs/music and memory/scrapbooking, was the median number of lines carried in 2004 just one. Over the last four years, the median number of scrapbooking lines has climbed to as high as three.

The biggest exception to the two-to-four-lines rule is in holiday products, where retailers choose from a median of ten different vendors.

Data for this year's report, collected during March 2005, is based on the mailed, faxed, or online responses of 139 gift and decorative accessories retailers operating 170 stores. Gift specialty stores make up more than four-fifths of the retailers surveyed. Another 9 percent describe themselves as home accessories stores, while stationery/card shops make up about 4 percent. The remaining are hospital or resort gift shops, hobby stores, or direct-to-consumer sales. Twenty-two percent have annual sales of under $100,000; 31 percent have sales ranging between $100,000 and $250,000; another 18 percent has sales between $250,000 and $500,000. The remaining 29 percent have sales ranging from more than $500,000 to almost $5 million.