Gift, Novelty & Souvenir Stores
Description
Companies in this industry operate physical retail stores specializing in gifts, novelty items, greeting cards, and souvenirs. Major companies include Hallmark, shopDisney, and Spencer's (all based in the US), as well as Card Factory (UK), and kikki K (Australia).
Countries with growing middle-class populations, such as India, are emerging markets for gift retailers. Some major US gift retailers also operate outside of the US via franchises or company-owned locations.
The US gift, novelty, and souvenir store industry includes about 22,000 stores with combined annual revenue of about $16 billion.
COMPETITIVE LANDSCAPE
Consumer spending, special occasions, and tourist travel drive demand. The profitability of individual companies depends on effective merchandising and the ability to generate store traffic. Large companies have advantages in purchasing, distribution, and marketing. Small companies can compete effectively by selling specialty products, providing superior service, or delivering a unique customer experience. The US industry is fragmented: the top 50 companies account for about 50% of sales.
Gift stores compete with a wide range of businesses because they stock merchandise across many categories. Major competitors include mass merchandisers, department stores, internet retailers, home shopping channels, warehouse clubs, and toy stores.
Retail imports surged ahead of tariffs imposed on goods from China that took effect in September 2019 and are likely to do so again in December, when new tariffs on a wide range of Chinese imports are slated to take effect, according to the National Retail Federation citing data from Global Port Tracker. While the Trump administration's trade war with China will likely lead to higher retail prices -- especially for smaller operators that have little sway with suppliers -- many gift stores have been increasing their focus on American-made goods and local handicrafts due to the rising cost of doing business with China and to differentiate themselves from their competitors.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products sold by gift stores include souvenirs and novelty items (about 60% of sales). These are followed by other home furnishings, toys, games, and hobby and craft supplies, and decorative accessories. Novelty items include gift baskets and pre-filled balloons. Seasonal decorations include decorative cups, plates, and napkins. Gift stores may also sell home accessories and provide services such as gift-wrapping and delivery.
Gift retailers include national and regional chains and independent retailers. Hallmark stores operate through licensing agreements with independent owners. The majority of companies operate a single location. Locations include strip malls, indoor shopping malls, resorts, hospitals, museums, and airports: souvenir stores may seek locations off interstates or near tourist destinations. Companies consider market demographics, neighboring tenants, visibility, traffic counts, major roadway access, and proximity to competitors when selecting new locations.
Inventory size and selection can vary. Merchandise changes constantly due to different market trends in each gift category. Many gift stores continuously add and drop product categories, as well as lines within categories. Popular categories include candles and candle accessories, greeting cards, holiday products, jewelry, photo frames, and collectibles. Some gift stores offer private-label merchandise.
While companies may buy inventory directly from manufacturers, manufacturers representatives and wholesalers play an important role because the gift manufacturing industry is highly fragmented. Many seasonal products are imports from China, and companies may use foreign buying agencies to manage imports.
Order lead times can be long, especially for seasonal items. Most companies place orders in the summer for winter holiday merchandise. Gift stores may have a right of return for certain products, such as seasonal greeting cards. Many suppliers have minimum order quantities. Buyers typically attend trade shows, also known as “market,” to review new products and make purchasing decisions. Major trade shows occur in the winter and summer.
Countries with growing middle-class populations, such as India, are emerging markets for gift retailers. Some major US gift retailers also operate outside of the US via franchises or company-owned locations.
The US gift, novelty, and souvenir store industry includes about 22,000 stores with combined annual revenue of about $16 billion.
COMPETITIVE LANDSCAPE
Consumer spending, special occasions, and tourist travel drive demand. The profitability of individual companies depends on effective merchandising and the ability to generate store traffic. Large companies have advantages in purchasing, distribution, and marketing. Small companies can compete effectively by selling specialty products, providing superior service, or delivering a unique customer experience. The US industry is fragmented: the top 50 companies account for about 50% of sales.
Gift stores compete with a wide range of businesses because they stock merchandise across many categories. Major competitors include mass merchandisers, department stores, internet retailers, home shopping channels, warehouse clubs, and toy stores.
Retail imports surged ahead of tariffs imposed on goods from China that took effect in September 2019 and are likely to do so again in December, when new tariffs on a wide range of Chinese imports are slated to take effect, according to the National Retail Federation citing data from Global Port Tracker. While the Trump administration's trade war with China will likely lead to higher retail prices -- especially for smaller operators that have little sway with suppliers -- many gift stores have been increasing their focus on American-made goods and local handicrafts due to the rising cost of doing business with China and to differentiate themselves from their competitors.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products sold by gift stores include souvenirs and novelty items (about 60% of sales). These are followed by other home furnishings, toys, games, and hobby and craft supplies, and decorative accessories. Novelty items include gift baskets and pre-filled balloons. Seasonal decorations include decorative cups, plates, and napkins. Gift stores may also sell home accessories and provide services such as gift-wrapping and delivery.
Gift retailers include national and regional chains and independent retailers. Hallmark stores operate through licensing agreements with independent owners. The majority of companies operate a single location. Locations include strip malls, indoor shopping malls, resorts, hospitals, museums, and airports: souvenir stores may seek locations off interstates or near tourist destinations. Companies consider market demographics, neighboring tenants, visibility, traffic counts, major roadway access, and proximity to competitors when selecting new locations.
Inventory size and selection can vary. Merchandise changes constantly due to different market trends in each gift category. Many gift stores continuously add and drop product categories, as well as lines within categories. Popular categories include candles and candle accessories, greeting cards, holiday products, jewelry, photo frames, and collectibles. Some gift stores offer private-label merchandise.
While companies may buy inventory directly from manufacturers, manufacturers representatives and wholesalers play an important role because the gift manufacturing industry is highly fragmented. Many seasonal products are imports from China, and companies may use foreign buying agencies to manage imports.
Order lead times can be long, especially for seasonal items. Most companies place orders in the summer for winter holiday merchandise. Gift stores may have a right of return for certain products, such as seasonal greeting cards. Many suppliers have minimum order quantities. Buyers typically attend trade shows, also known as “market,” to review new products and make purchasing decisions. Major trade shows occur in the winter and summer.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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