How have card retailers been affected by the coronavirus pandemic?

Coronavirus restrictions have stopped many people from seeing their friends and relatives over the past year.

But people have still been keen to stay in touch, with strong card and gift sales as people seek to give their loved ones a boost.

The Royal Mail said they were expecting a particularly busy Christmas for cards as a result, but people’s traditional shopping habits were affected by restrictions.

As a result, the sector has seen a period of rapid change as customers found new places to buy cards and gifts and traditional stores shook up their models.

Card Factory
Card Factory

Card Factory has become one of the latest high street retailers to say how they have had to react to the coronavirus crisis as customer demands shift.

Here we examine the impact of the pandemic on the sector.

– What are the restrictions weighing on card retailers?

High street card and gift shops have been among retailers deemed non-essential and therefore forced to remain shut for large parts of the pandemic.

Shops such as Card Factory, Paperchase and Clintons were shut throughout the first national lockdown, the November lockdown in England, and remain closed due to latest set of restrictions.

For the November lockdown, some stores were able to serve customers with click and collect services, but largely they directed customers online.

However, some retailers which sell cards, such as WHSmith and some newsagents, were able to stay open and sell items as they were considered essential due to postal services.

Winter weather Jan 20th 2021
Winter weather Jan 20th 2021

– Who have been the winners and losers on the high street?

Card Factory told investors on Friday that it has another month to negotiate with lenders after breaking banking covenants when trading was hammered by the pandemic.

The retailer posted positive sales when its stores were able to reopen, with 18% like-for-like sales growth in October and early November, but has been hamstrung by continued restrictions.

The company now expects to make a £10 million loss for the year, after analysts previously predicted a £1 million profit.

Peel Hunt retail analyst Jonathan Pritchard said the projected loss “is not a major blow but unhelpful nonetheless”.

Paperchase has been one retailer particularly hard hit by the pandemic, hiring administrators earlier this month after sales in November and December were poor.

The group, which has a large number of sites on city centre high streets and in travel locations, secured a rescue deal on Thursday retaining 1,000 jobs but also confirming the closure of 37 stores.

Paperchase store
Paperchase store

Clintons Cards has also been weighed down by tough high street conditions, coming on the back of a difficult spell which saw it rescued from administration in December 2019.

WH Smith performed comparatively strongly, with its retail sales at about 87% of previous levels for the 20 weeks to January 16, as its stores were able to remain open.

Supermarkets have also been able to continue selling cards throughout the pandemic, although this will have provided a minimal boost compared with the surge in grocery spending.

– Have shoppers flocked to online competitors?

WH Smith has seen robust sales in stores but has also been buoyed by its Funky Pigeon online arm, which has seen sales soar as customers bought cards and gifts from the comfort of home.

Analysts at HSBC said Funky Pigeon “performed very strongly with record sales significantly ahead of the prior year” over the Christmas period.

Its largest rival Moonpig has also seen customers flock to its platform since the pandemic first struck in March.

The group announced plans to float on the stock market earlier this month in a move valuing the business at about £1.2 billion.

Moonpig cards and gifts
Moonpig cards and gifts

In the half-year to October 31, Moonpig saw sales jump 135% to £155.9 million and expects strong growth to continue.

– What does this show us about wider retail trends?

The jump in sales at Moonpig, Funky Pigeon and fellow online player Thortful has been driven by a wider shift of shoppers towards online platforms.

The transition away from high street firms was taking place before the pandemic but has been significantly accelerated in recent months as customers were advised to stay at home.

In 2019, around 10% of all card purchases were made online in the UK, but this figure is now expected to reach 20% by 2024, according to research firm OC&C.

Other areas of the gift market have seen a rapid online boom, with direct-to-consumer flower retailer Bloom & Wild reporting a 160% surge in sales in 2020.

The company secured a £75 million equity raise earlier this month, with investors keen to tap into the accelerated growth in online demand.