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Hallmark Cards, Inc.

 


Address:
2501 McGee Street
Kansas City, Missouri 64108
U.S.A.

Telephone: (816) 274-5111
Fax: (816) 274-8513


Statistics:
Private Company
Incorporated: 1923 as Hall Brothers Company
Employees: 19,600
Sales: $3.4 billion (1995 est.)
SICs: 2678 Stationery, Tablets & Related Products; 2679 Converted Paper & Paperboard Products, Not Elsewhere Classified; 2771 Greeting Card Publishing & Printing; 3952 Lead Pencils, Crayons & Artists' Materials; 3999 Manufacturing Industries, Not Elsewhere Classified


Company Perspectives:


Hallmark aspires to enrich people's lives and enhance their relationships. Beyond products and services, the company funds the Hallmark Corporate Foundation, which benefits human service, education, health and arts organizations in the communities in which Hallmark operates. In partnership with Boys & Girls Clubs of America, 4-H Youth Development Education and Girl Scouts of the U.S.A., the Foundation produces "Talking with T.J.," a video series that helps youngsters develop essential social skills. Additionally, Hallmark sponsors Kaleidoscope, a creative workshop for youngsters.


Company History:

Hallmark Cards, Inc. is the world's largest greeting card company, creating 21,000 different designs each year in more than 20 languages, and distributing them in more than 100 countries. In addition to the Hallmark flagship, the company also markets cards under the Ambassador and Expressions brand names. Over the years, Hallmark has branched out into other areas of the stationery business, including writing paper, party goods, gift wrap, and photo albums, as well as into such giftware as plush toys, mugs, jigsaw puzzles, and Christmas ornaments. The company's Binney & Smith Inc. subsidiary specializes in personal skill development products, including Crayola crayons, Magic Markers, modeling material, creativity software, model kits, and art supplies for professionals and students. Hallmark also creates family-oriented television programming through its Hallmark Entertainment, Inc. subsidiary. Even with the firm's diversification, the greeting card remains Hallmark's mainstay--so much so that often Hallmark has been mistakenly credited with inventing it.

Early History

Hallmark was founded by Joyce C. Hall, a native of Norfolk, Nebraska, who as a teenager ran a postcard company with his older brothers. In 1910 Hall, still only 18, left the family business he had founded after a traveling salesman convinced him that Kansas City, Missouri, would serve him better as a wholesaling and distribution center. Almost immediately after arriving in Kansas City, Hall set up a mail-order postcard company in a small room at the Young Men's Christian Association, where he remained until his landlord complained about the volume of mail Hall was receiving. The new company was named Hall Brothers, a name justified the following year when Rollie Hall came to Kansas City to join his brother in the business.

At that time, picture postcards were all the rage in the United States, with the best ones imported from Europe. Very early on, however, Joyce Hall came to believe that the postcard's appeal was quite limited. They were novelty items rather than a means of communication and, with the leisure time needed to write long letters diminishing and the long-distance telephone call still a rare phenomenon, people would need a shorthand way of reaching each other by mail. Greeting cards suggested themselves as a viable alternative, so in 1912 Hall Brothers added them to its product line.

The outbreak of World War I bore out Hall's contention. The supply of postcards from Europe dried up, but domestic products were of inferior quality and their popularity waned. Greeting cards stepped into the breach. In 1914 Hall Brothers bought a small press and began publishing its own line of Christmas cards. In 1915 a fire destroyed the company's entire inventory, putting it $17,000 in debt, but Joyce and Rollie Hall rebuilt the business. In 1921 they were joined by their brother William Hall. By 1922 Hall Brothers had recovered to the point where it was employing 120 people, including salespeople in all 48 states. Also that year, it diversified for the first time and started selling decorative gift wrap.

In 1923 the company formally incorporated under the name Hall Brothers Company. Over the next two decades, it would attack its market aggressively through advertising. In 1928 Hall Brothers became the first greeting card company to advertise nationally when it took out an ad in Ladies Home Journal. In 1936, with the national economy emerging from the worst of the Great Depression, Hall Brothers went on the attack again, introducing an open display fixture for greeting cards that Joyce Hall had developed with the help of an architect. Previously, cards had always been kept under store counters, out of customers' sight and usually in a disorganized state. In 1938 Hall Brothers advertised in the broadcast medium for the first time when it began sponsoring "Tony Won's Radio Scrapbook" on WMAQ radio in Chicago.

When the United States entered World War II, the company pitched an appeal to friends and loved ones of military personnel with the slogan "Keep 'em happy with mail." Hall Brothers would find its most famous and enduring slogan in 1944, however, when it started using the tagline "When you care enough to send the very best," which had been suggested a few years earlier by sales and advertising manager Ed Goodman. After the war, a staff artist created the company's logo, consisting of a five-pointed crown and the Hallmark name in script letters. Hall Brothers took out a copyright on the logo in 1949.

Expansion in the 1950s and 1960s

The company established another landmark in advertising on Christmas Eve 1951, when it sponsored a television production of Gian Carlo Menotti's opera Amahl and the Night Visitors. This was the first of the famous Hallmark Hall of Fame series, which two years later presented a production of Hamlet starring the noted British Shakespearean actor Maurice Evans. That broadcast marked the first time the entire play had ever been seen on U.S. television. As Joyce Hall himself once said, "Good taste is good business."

Also in the early 1950s, Hall Brothers began opening the first of thousands of retail shops specializing in Hallmark cards. In 1954 the company changed its name to Hallmark Cards, Inc., having already used Hallmark as a brand name for 31 years. In 1959 the company introduced its Ambassador Cards line to tap into the lucrative market presented by shoppers at mass merchandisers such as supermarkets, discount stores, and drugstores. The next year Hallmark introduced its own line of party decorations and began featuring characters from Charles M. Schulz's "Peanuts" comic strip on its products.

In 1966, Joyce Hall retired as president and CEO of the company he had founded. Handing the reins to his son, Donald Hall, Joyce Hall nevertheless remained active in company affairs as chairman until his death in 1982. Joyce Hall was not only a wealthy and successful businessman when he died, but also a member of the French Legion of Honor and a commander of the British Empire. He had been friends with British Prime Minister Winston Churchill and with U.S. Presidents Harry Truman and Dwight Eisenhower. For the latter Hall Brothers custom-designed an official presidential Christmas card in 1953.

One of Donald Hall's first important moves as CEO of Hallmark was to acquire Springbok Editions, maker of jigsaw puzzles, in 1967. The next year, the company broke ground on the Crown Center, a $500 million retail, commercial, and residential complex intended to revitalize an area near downtown Kansas City and financed entirely with company funds. Hallmark created a new subsidiary, Crown Center Redevelopment Corporation, to oversee it.

1980s Acquisitions

In 1979 Hallmark acquired Georgia-based lithographer Litho-Krome Corporation. In 1981 the company formed a division, Hallmark Properties, to create and administer licensing projects. This division went on to create Hallmark's Rainbow Brite, Purr-Tenders, and Timeless Tales character merchandise, and also oversaw the company's licenses for Peanuts and Garfield cartoon characters.

After his father's death in 1982, Donald Hall added the chairmanship to his duties as CEO. In 1984 Hallmark acquired Binney & Smith, the Pennsylvania-based maker of Crayola crayons and Liquitex art materials. In 1986 Donald Hall retired as CEO and handed the post to president Irvine O. Hockaday Jr.

In 1987 Hallmark, after being a prominent advertiser in the broadcast media for many years, became an owner as well when it acquired a group of Spanish-language television stations from Spanish International Communication. The next year, it added another station purchased from Bahia de San Francisco Television. Also in 1988, Hallmark acquired a Spanish-language network, Univision, and amalgamated all of its holdings in a subsidiary, Univision Holdings. Based in New York, the subsidiary ran the nine full-power stations under the name Univision Station Group.

During the mid-1980s small greeting card companies began competing for Hallmark's market position with a diverse array of cards that became favorites. In the mid-1980s Hallmark fought back with its Personal Touch and Shoebox Greetings series. Many of these cards, however, bore a resemblance to rival designs that some found too striking. In 1986 Blue Mountain Arts, which produced non-occasion cards featuring poetry and pastel illustrations to produce a concentrated emotional effect, sued Hallmark for copyright and trade dress infringement and unfair competition. The initial decision went against Hallmark, which appealed ultimately to the Supreme Court. When the Supreme Court refused to hear the case in 1988, Hallmark agreed to discontinue its Personal Touch line. Financial terms of the settlement were not disclosed.

1990s and Beyond

Hallmark's biggest challenge during the early 1990s was confronting its continuing loss of market share to the number two and three companies in the greeting card industry, American Greetings Corp. and Gibson Greetings, Inc., respectively. From 1990 to 1995, it was estimated that Hallmark's market share fell from 50 to 45 percent. Some industry experts even suggested that American Greetings would overtake Hallmark sometime between 1999 and 2004.

The reason for Hallmark's decline rested in the very backbone of its empire--the specialty card and gift shops that sold the Hallmark brand, which by the early 1990s numbered more than 10,000. Over a long period, these shops had fallen victim to changing buying patterns in particular among women, who still bought 90 percent of all cards sold. Pressed for time, more and more consumers were opting to purchase cards at one-stop shopping outlets--supermarkets, drugstore chains, and large discounters--such as Wal-Mart. In the early 1970s more than half of all cards were sold in specialty shops; by the early 1990s only about 30 percent were. American Greetings and Gibson, which did not have such extensive ties to the card shops, were able to recognize the trend and shift to accommodate it. Hallmark, however, was in a bind. Continuing to rely so heavily on specialty shops would do nothing to halt its market share decline, but it could not simply abandon the shops for the discounters; doing so could bankrupt many of them, not something a company as paternalistic as Hallmark could seriously consider.

One strategy was to diversify away from greeting cards even further. In 1990 Hallmark acquired Willitts Designs, a maker of collectibles, but then sold the company only three years later. Likewise, Hallmark's venture into Spanish-language television was abandoned in 1992 at a loss of $10 million when Univision was sold to Grupo Televisa. Cable television was Hallmark's next foray with the 1991 formation of a Crown Media Inc. subsidiary to which was added Cenom Cable in St. Louis, through the purchase of a controlling interest for $1 billion. In 1994 this venture too was cast aside when Hallmark sold Crown Media to Charter Communications Inc. for $900 million.

During this period Hallmark also updated its product line, offering a more high tech approach to card purchasing. In 1991 the "Personalize it!" in-store kiosk was introduced (later called Touch-Screen Greetings), through which customers were able to create computer-generated personalized greeting cards. The following year Hallmark filed suit for infringement of its kiosk patent against American Greetings and its Creata-Card kiosk. The suit was settled in 1995 with each company receiving a worldwide, nonexclusive license to use the technology; no other details on the settlement were provided at that time.

Moreover, in 1994, Hallmark developed recordable greeting cards in partnership with Information Storage Devices. Initially retailing for $7.95 each, these cards allowed the sender to record his personal message, which would then play back each time the card was opened. The following year, Hallmark moved into the burgeoning area of online marketing by offering its greeting cards on America Online. The company planned additional such ventures for other online services.

In the face of declining profits brought on by the declining market share, Hallmark went through a series of reengineering and restructuring efforts in the early 1990s in an attempt to hold costs down. United States and Canadian operations were consolidated and a 1995 restructuring brought together for each Hallmark card brand its administrative, marketing, and product-development function.

Additional diversification moves were taken in the mid-1990s in the field of entertainment. In 1994 Hallmark acquired RHI Entertainment Inc. for $365 million. RHI was the television production company responsible for Hallmark's Hall of Fame productions. Hallmark thus acquired the world's leading producer of family-oriented entertainment, which it promptly renamed Hallmark Entertainment, Inc. and set up as a subsidiary of Hallmark Cards. Then in 1995, Hallmark purchased a 9.9 percent stake in European broadcaster Flextech for $80 million. Flextech and Hallmark will create a family-oriented cable television network, the Hallmark Entertainment Network, which was slated to commence operations in Ireland and the United Kingdom in 1996.

Given the uneven success of Hallmark's noncore ventures, greeting cards remained the company's most important endeavor. New promotions of Hallmark cards in the mid-1990s included a "sneak-a-peek" advertising campaign, comprising a series of commercials in which someone is caught looking at the back of the card he was just given, just to make sure it was a Hallmark. The company also announced plans to introduce a new brand name in 1997, Expressions by Hallmark. Heading into the 21st century, Hallmark was a market leader at a crossroads. According to some analysts, the company's decisions regarding its distribution options would likely go a long way toward determining future success.

Principal Subsidiaries: Binney & Smith Inc.; Crown Center Redevelopment Corporation; Graphics International Inc.; Hallmark Entertainment, Inc.; Hallmark International; Halls Merchandising, Inc.; Litho-Krome Co.; Hallmark Cards Australia Ltd.; Binney & Smith (Canada) Ltd.; Hallmark Canada; Hallmark Cards Inc.-French Branch; Hallmark Cards GmbH (Germany); Hallmark Cards Ireland Ltd.; Hallmark de Mexico, S.A. de C.V.; Spanjersburg (Netherlands); Verkerke Reprodukties, N.V. (Netherlands); Hallmark Cards NZ Ltd. (New Zealand); Hallmark Cards Iberica, S.A. (Spain); Hallmark Cards Ltd., European Div. (U.K.); W. N. Sharpe Ltd. (U.K.); Valentines of Dundee, Ltd (U.K.).





Further Reading:


Chandler, Susan, "Can Hallmark Get Well Soon?," Business Week, June 19, 1995, pp. 62-63.
Fitzgerald, Kate, "Hallmark Alters Focus as Lifestyles Change," Advertising Age, October 25, 1994, p. 4.
"From Someone Who Loves You," Economist, August 10, 1991, p. 63.
Hall, Joyce C., with Curtiss Anderson, When You Care Enough, Kansas City, Mo.: Hallmark, 1979, 269 p.
Hirshey, Gerri, "Happy Day to You," New York Times Magazine, July 2, 1995, pp. 20+.
Howard, Elizabeth G., "Hallmark's $4 Billion Formula," Kansas City Business Journal, June 16, 1995, p. 17.
Kinni, Theodore B., "The Reengineering Rage," Industry Week, February 7, 1994, p. 11.
Schiller, Zachary, and Ron Grover, "And Now, a Show from Your Sponsor," Business Week, May 22, 1995, pp. 100-02.
Stern, William M., "Loyal to a Fault: Its Brand Name is August, Its Profits a Wow! But Hallmark Cards Had Better Get with It--Now!," Forbes, March 14, 1994, pp. 58-59.
Weiner, Steve, "Do They Speak Spanish in Kansas City?," Forbes, January 25, 1988, p. 46.
Young, Gordon, "Card Sharks," Utne Reader, May/June 1993, p. 132.

Source: International Directory of Company Histories, Vol. 16. St. James Press, 1997.




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