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Is Santa a patriot? He is this year. If you go to a store run by American Greetings Corp. (AM ), you'll see him on a Christmas card tucking miniature American flags into red, white, and blue stockings. Another card features a snowman waving the flag under the slogan "God Bless America."
While Christmas cards may seem like they've been the same forever, that couldn't be further from the truth. They are precisely calibrated to the national mood. The greeting card business, in essence, is the zeitgeist business. At 99-year-old American Greetings, the Christmas lineup is revamped every year, with slightly different shades of red and green and hipper colors tossed in -- blues are hot now. "We are very focused on making sure we are ahead of trends," says Zev Weiss, 39, the fourth-generation chief executive of the Cleveland company. Jeffrey, who's his brother, is president.
To meet that challenge, the Weiss brothers create an environment that keeps the company's 400-plus artists, writers, and creative types inspired. After all, in a slow-growth business, constant renewal of design is what helps the company retain about a 35% share of the market, while Kansas City (Mo.) archrival Hallmark Cards Inc. leads with more than 50%. Analyst Jeffrey S. Stein of KeyBanc Capital Markets expects AG's sales to grow just 2% for the year ending in February, to $1.95 billion, even as productivity improvements drive up net income about 23%, to $116 million. AG's sales remain less than half of those at privately held Hallmark.
At American Greetings artists are encouraged to look inside and out for inspiration. The company's creative reference library stocks some 10,000 books and provides 300 magazines, ranging from Martha Stewart Living to ultrahip publications such as style periodical Zink, plus a bevy of animation magazines. To stay ahead of consumer tastes, AG relies on feedback from its 500 company-owned stores and powerhouse retailers such as Target (TGT ) and Wal-Mart Stores (WMT ). Target, for instance, likes "fashion-forward" items such as gift wrap with holographic images and cards with lots of embellishments. In contrast, Wal-Mart's slightly older clientele warms to more traditional goods.
For Christmas themes a creative director travels to trade shows in Germany and England, checking out consumer sentiment in such seemingly far-flung areas as home décor. He even shops in luxury stores such as Harrod's. "Europe is a traditional source of fashion and design," says Vice-President Richard Hunt. Black and silver, now popping up in AG's Christmas lines, made their mark in Europe first.
At headquarters artists can pick up creative vibes in a secluded room where the décor changes four times a year. The interiors have ranged over the past year from sleek ultramodern to comfy hunting lodge. The company also sends its artists on regular trips to local museums and art shows, and it hosts in-house sessions with top designers and floral experts. Writers go to poetry sessions and journal-writing classes. To get everyone in the mood for Christmas, AG brought in old holiday movies a few weeks ago, showing them at lunchtime. "They help us to be inspired," says Terrill L. Bohlar, a senior photographer at the company, adding that there's no penalty at AG for experimenting, including doing work that may fall short.
Recognizing that many of the artists do creative work outside the office, the Weisses accommodate them. They urge staffers to exhibit their off-hours efforts -- nudes, portraits, and other formal work -- in a gallery at headquarters, where the selection changes every three weeks. There's even an annual company-sponsored show at a Cleveland gallery.
Above and beyond supporting its artists, the company sucks all it can out of market research to help it get inside the heads of potential customers. For a few years its research with consumers has turned up a passion for such "feminine icons" as shoes, lipstick tubes, and hats, says Tina Benavides, a vice-president in the creative division. "This is part of a return to glamour," she says. Thus, one AG card reads: "Gloves and hats that match, a trendy scarf that ties -- Christmas is a special time when girls accessorize!" Indeed, the female target is no accident: Women buy more than 90% of all greeting cards. AG's offices sport big banners with a photograph of a woman signing greeting cards along with the slogan: "It's all about her."
If the company is to stay on the cultural pulse, American Greetings clearly can't ignore the war in Iraq. That explains the patriotic Santa and snowman. Another card, addressed to "someone special who's serving our country," depicts a Christmas tree surrounded by stars. The message inside reads: Thanks for protecting "the greatest country in the world -- a land of infinite opportunity and choices." On the other hand, perhaps befitting the company that has traditionally created the White House Christmas card for Democratic Presidents (Hallmark does the honors for Republicans), it also produces several cards that poke fun at President George W. Bush.
AG's artists will need all the inspiration they can glean to keep pace this Christmas season, since Hallmark could soon be the least of American Greetings' worries. Like every other communications business, AG is feeling the hot breath of technology. The company's artists now retool AG's products -- and create new work -- for DVDs, cell phones, and e-mail. The Weisses figure that paper cards, which account for just over half of annual sales, will never disappear. But AG is committed to staking out ground in all media. No matter how it delivers, though, the company's job remains the same: to keep the messages fresh.
By Joseph Weber