Today's Gift Retailer

There's good news and better news for gift and decorative retailers: 2006 was a good year and 2007 is expected to be even better. The only bad news out there in the specialty/independent retail marketplace is really just old news: mass marketers and discounters together continue to be a relentless competitive force in the retail arena.

Gifts and decorative accessories retailers considered 2006 a good year as they tightened their product lines and shifted prices upwards. Comparing 2005's median best-selling prices with 2006's, retailers reported higher best-selling price points for 26 of 29 products tracked in Gifts & Decorative Accessories' annual survey of retailers. The price of a fictitious market basket composed of all 29 products at median best-selling price points rose to $650 last year from $520 in 2005.

And according to the eighth annual GDA Specialty Retailer survey, 29 percent of retailers expect store sales in 2007 to be higher than 2006 sales.

As they increased their prices, most retailers kept the same number of lines on the floor, with slightly more dropping a line than adding one. Almost one-half the retailers surveyed source from 40 to more than 60 different vendors.

Retailers sourcing patterns appear to be changing considerably, with the exception of reading trade magazines, which they still rely on. And while they also still attend trade shows and rely on sales reps who visit their stores, more retailers are visiting manufacturers' websites more frequently to discover new products or explore new vendors than in years past. More than 90 percent of retailers visited manufacturers' websites; more than one-third of those who do so visited a minimum of four or more times a month.

As for buying groups, survey results reported that membership in such groups had little or no impact on gifts and decorative accessories retailers responding to the GDA survey. Less than 10 percent belonged to a buying group in 2006, purchasing slightly more than one-fourth of their inventory through the group. Ten percent indicated they will join or continue to be part of a buying group in 2007.

Meanwhile, if retailers are becoming increasingly Web-savvy when sourcing product, they're not providing consumers the same level of assistance through websites of their own. Just over one-half of survey respondents had an online presence. Less than one-half of those, 45 percent, allowed consumers to make purchases on their websites. The majority used their website as an informational tool. As for the retailers who do not have an Internet site, about half are planning to add one during 2007.

When it comes to products carried, candles/accessories, greeting cards, holiday and jewelry continued to be the most frequently carried products, with at least 70 percent of the retailers carrying them.

It comes as no surprise that these same four products make up four of the five products accounting for the highest percentages of 2006 sales, with jewelry and holiday in the lead, generating 12 percent and 10 percent of gift and decorative accessory sales, respectively. Greeting cards accounted for 8 percent, while candles/accessories and collectibles each added another 7 percent. Overall, these five products picked up another percentage point of sales, for a total of 44 percent, over 2005 results.

Stores reported a median of two employees, with about one-half of the retailers staffing their stores with both full and part-time help. As for what functions store staffers performed, one-third were office or administrative workers, including store owners, managers and buyers. Sales workers including designers and both full and part-time sales people made up another three-fifths. Other miscellaneous workers rounded out the total.

The percentage of the store's total annual sales devoted to payroll costs (wages/salaries/bonuses plus fringe benefits) has risen over the years, but only slightly, increasing from 15 percent in 2000 to 19 percent in 2006. Of that, 85 percent went to wages, salaries or bonuses and 15 percent went to fringe benefits, including all payroll taxes, workers' compensation, retirement plans, group health, disability and the like.

The amount dedicated to advertising the store and its wares has remained consistent across the years, hovering at 5 percent since 2004 when GDA first asked the question.

When it comes to using space, displaying wares naturally claimed the lion's share, about three-fourths of all space, with warehousing consuming a little less than one-fifth. About one of every three stores had warehouse space off site.