If one had to describe the state of the gift industry in 2008 in one word, that word would be 'challenged.' This has been a difficult year for business overall and especially for the gift and decorative accessories industry. Independent retailers are struggling against competition from big box stores, chains and the Internet for a shrinking portion of the consumer's discretionary spending. They are challenged to hold onto their niche by providing a merchandise mix and service to attract customers and stand up profitably against their larger competition.

Vendors are struggling against the weak value of the dollar, rising costs of doing business and a shrinking retail customer base. They are challenged to hold down prices and maintain quality, while consistently producing fresh, new, salable lines.

Trade show managers are struggling against increasingly aggressive competition from each other and the Internet, an encroachment on their exhibitors and buyers from other industries' shows, and fewer buyers at market due to rising travel costs and a decline in the number of independent retail stores.

Yet, as dire as the news reports may seem, the industry continues to forge ahead. Its strength lays in its foundational elements: entrepreneurial independence, creativity and an occasion-driven base that consistently drives sales. Those sales tally up quite respectably.

In 2007, Gifts & Decorative Accessories tackled the formidable job of attempting to put a price tag on the overall size of the gifts and decorative accessories industry. Using data available from reliable, vetted sources such as the U.S. Department of Commerce and others, as well as our own retail group's research department, we reported in our first State of the Industry Report an impressive number — more than $360 billion dollars at retail. That figure, however represented a sales universe that included far more retail outlets than what we regard as our gift and home decor retail sales channel. Because of the private and often entrepreneurial nature of our segment of the industry, exact figures are difficult to obtain. Nevertheless, the figure is eye-opening, and certainly a significant portion of that number comes from our gift channel.

For part of this year's report, our researchers went back to their resources to see what difference a year has made. We focused on three product categories to show what they represent in terms of consumer spending over the period of 1990–2008. The categories are: jewelry and watches; china, glassware, tableware and utensils; and greeting cards.

The timeline is interesting: Over the period charted, sales in both jewelry and the china/glass categories more than doubled. Yet sales of greeting cards only grew by about half, indicating the change in how we communicate, with electronic media more — email and e-greetings — and hand-written words less.

Putting those categories into greater perspective, consumer spending from 2000–2008 on jewelry/watches and china/glassware each increased by 33 percent over the eight years, while spending on gasoline, fuel oil and other energy goods increased by a dramatic 128 percent. That larger portion of the consumer dollar spent on a necessity such as gasoline, means fewer dollars to spend elsewhere on such things as jewelry or gifts.

While the outlook remains tense and difficult times still lay ahead, the industry remains steady and hopeful, knowing that people will celebrate birthdays and Christmas, get married, set up homes and have babies. These speak to the core of the gift industry and what drives it.