Innovative Retailer – Card Factory

Brought to you by Retail Insider and PCMS

The Name: Card Factory 
The Place: Around 650 shops all over the UK and headquartered in thrifty Yorkshire.
The Story: Thrifty is the key word here – as it says on Card Factory bags “If it’s the thought that counts, why do others charge so much.”  In 1997 Dean Hoyle and his missus opened a card shop, perhaps they were fed up with having to pay £4 for a card with a few stars stuck onto it and a ‘made by hand’ label to justify the price. Who knows. Most people are. Either way, success followed and Card Factory has expanded at a quite astonishing rate ever since considering…

Considering what? That its core customers are not high spending punters but people who appreciate Card Factory’s value led proposition.

Do you mean C1/C2/D/E’s? Yup. According to retail sources Card Factory tends to locate in less affluent towns and cheaper suburbs, in the capital for example you won’t find it anywhere near Covent Garden but jog off to Peckham  or Shepherds Bush and you certainly will.  However, they’re doing something right because sales for 2012 were a hefty £265m.

I’m surprised those pesky private equity firms haven’t tried to snaffle it up: Well, unsurprisingly they have. In 2010 Charterhouse paid around £350m for the group which is a whole heap of greetings cards. And a recent report in the Daily Telegraph suggested that it might be up for sale again very soon and this time at the half billion mark.

And the secret is? I have one word for you. Vertical integration.

Part of the secret of its success.

That’s two words: Just listen. Card Factory designs, sources and prints its own cards and that in a nutshell is its innovation. Over the years it has bought a whole host of card wholesalers and designers and this one nifty idea is what enabled it to say ‘Yah Boo’ to Clinton Cards, which just collapsed under the competition even from its lofty position at the premium end of the market.

Aha. Saved by its value-positioning: Quite. 10 birthday cards for a pound is an offer which only a shop not reliant on suppliers, like poor old Clinton Cards was, could make. But they have spotted a new trend now.

Which is? Personalisation. In 2011 they bought which sells everything from named chocolate bars to engraved champagne flutes. It’s early days but the company is on record as saying it is ‘relatively pleased’ with progress so far. And Card Factory’s own website has recently become a transactional one too despite some retail sources thinking the High Street was the best place for it.

So, you can now buy your 29p budget card online: The card range online is still limited but expanding.
Some cloud must be darkening Card Factory’s horizons surely? Umm. The worst thing you can find said is that as the business matures the astounding run of doubling of growth each year in the early 2000’s cannot possibly continue. And indeed it has become much more single digit in recent years, but the stores continue to open apace.

I’ve thought of a cloud – OK, online specialists must be considered a threat to Card Factory but it all comes in great seasonal waves with cards and the company seems to be able to ride those waves remarkably well. It has been said that it is the very low average spend which keeps the company resilient.

Can they go abroad? Republic of Ireland possibly but there isn’t much brand recognition which could make it problematic elsewhere. But it seems that the company has more expansion planned in the UK first before it reaches saturation point. Ireland as a whole is a new market. The first shop only opened in Northern Ireland in 2011 but they already have 20 there.

It seems to have come a long way in a very short time: Yes guv and I put this down to steady management, the founder is now the chairman and the other directors have mainly been on board for a good few years. The management team was not disbanded after the buy-out, they just carried on doing the biz and that was a good business decision.

Well, I shall never again pay £4 for a card with a bit of ribbon and glitter on it that took some artistic sort five seconds to make: That’s right my friend. Bring your £1.29p and go straight to the luxury range in Card Factory. They’ll never know the difference.

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