A life-giving but demanding category needs special care and attention for best results

At a time when every category in the Christian retail market is under scrutiny to ensure that it is performing at a level that warrants the store space it occupies, many have looked to gifts as their saving grace—and rightly so.

With book sales increasingly spread across various retail sectors and music sales taking a heavy hit from online purchasers, gifts have helped many Christian retailers keep their doors open by providing products with the potential for big returns from little investment, and which have not yet been cornered by mainstream retail.

But as the retail market continues to change, so too do the best practices required of Christian stores. Although there are many similarities between Bibles, books and gifts, producers, distributors and retailers also note that there are significant different demands in selling gifts.

Among the challenges: domestic/overseas sourcing, packaging, returns, margins, merchandising, product life spans.

“Not recognizing these differences can be fatal for a business,” said Gary Foster, founder of Gary D. Foster Consulting, and a longtime industry adviser. “This has a lot to do with why publishers seldom produce gifts, and gift companies rarely publish books. However, retailers don’t have the luxury of neglecting either. They need to offer both to their customers.”

For stores where gifts are doing well, dedicating more space and dollars to the category is a given. But as gifts get more attention, some wonder if losing an emphasis on books is ultimately detrimental to their store and its ministry.

“It’s hard to say where the tipping point is, but I don’t feel the majority of my stores are pushing the envelope yet,” said Matt Dickerson, a sales rep for Dicksons. “Everything we do is to bring us to the Word of God, and if a store dilutes its ministry by having too many gifts, then we are failing as sales representatives and buyers.”

Dickerson encourages stores to create a synergy between categories. “I find most of my stores are cross-merchandising well, thus bringing books/Bibles and gifts together,” he said. “This makes for attractive displays and helps get the customer looking for gift ideas to consider books as well.”

The debate regarding which category in the Christian bookstore has more ministry value—and therefore warrants better positioning in store—is not a new one. “It has gone on for at least 35 years that I am aware of,” Foster said. “Frankly, many bookstores have been able to remain in the ministry/business of selling books and Bibles because they also sold gifts. It’s not a matter of either/or, but one of balance and meeting the needs and desires of customers.”

Although books and gifts need to be viewed and handled differently, Foster said those involved with the creation, distribution and sale of Christian products tend to not have the “front of mind” perspective that books are gifts, too. “We typically view books as books first and not as gifts first. Shoppers do not make this distinction,” he observed. “Frankly, they view virtually everything in a Christian bookstore as a potential gift.”

According to industry research, 61% of Bible buyers purchase them as gifts, while 32% of Christian shoppers give books as gifts—compared with 28% of the general population.

“All of these categories are vital and well-shopped in our stores,” said Michael Hupp, who has spent more than 30 years directing retail merchandise teams with Family Christian, LifeWay and Berean stores as well as Kirlin’s Hallmark stores.

MINISTRY EMPHASIS

Now leading Christian Market Consultants, Hupp noted that the ministry value of items like jewelry, home décor, apparel and decorative accessories is “not only underrated in our industry but relegated as inconsequential to a Christian life,” when nothing could be further from the truth. More people are blessed by greeting cards each year, on a case-by-case basis, than by a book because of the volume that is purchased and sent every year, he said.

Of the 7 billion greeting cards sent by Americans a year, DaySpring estimates are that more than 5% have a religious or inspirational message.

Bible, book and music items come in only so many variations, but the non-uniform sizes and compositions of gifts make them unique in their marketing, ordering and merchandising demands. Gifts are very subjective in their appeal, while books and music are usually generic, according to Ken Shirek, sales rep for Magi Marketing, one of the leading Christian gift rep groups.

“Books are almost always driven by advanced marketing—the best-sellers are promoted before release, which generates a desire to buy,” he said. “Gifts are not so driven publicly. We throw them out there and hope they catch on.”

That’s a little unnerving when most gift vendors maintain a “you buy it, you own it” philosophy, Shirek said. While most publishers allow returns of product unsold, most gift companies do not allow returns, making the buying/inventory process for gifts a “roll of the dice.”

Among the reasons that gifts can’t be returned is that re-stocking is labor-intensive. Also, most gift items are packaged in boxes, often with protective wrapping or tissues covering the product inside. Packaging and boxes are often damaged or destroyed by the retailer when removing the product for store display.

“To then send a product to another store after it has been returned and resold but with inferior packaging wouldn’t be acceptable,” Shirek said.

Vendors accept returns of product that is damaged or defective and not the fault of the retailer, and they take back products shipped in error, also paying for return shipping. Meanwhile, vendors who do accept general returns may charge a re-stocking fee of up to 20% of the wholesale value of the items to help cover the labor cost.

Non-returnability is only one in a list of possible reasons that most gifts in the Christian industry come directly from the manufacturer and not—unlike books and music—distributors.

Although STL Distribution North America carries more gifts than other distributors, Rick Regenfuss, vice president of sales there and a former independent retailer for nine years, admits that gifts are not the company’s sweet spot.

“The complexity of gifts—think nonstandardized categories, wide variety of sizes and shapes making bin locations tough, no industry-wide ONIX-type data communication or bar-coding—make it a different ballgame than good old books and Bibles,” he said.

REGIONAL DIFFERENCES

Regional differences in consumer tastes also mean that gift inventories vary more between Christian stores than do books. That there is less uniformity in what gifts retailers need probably also makes it harder for distributors to know what to stock, observed Rick Lewis, owner of Logos of Dallas with his wife, Susan.

While it might appear to be more labor-intensive to have to order direct from suppliers, many retailers don’t see it that way. “This is not a problem to us, it’s just how it’s done,” Susan Lewis said. “Gifts are time-consuming, but I think they are worth it.”

Customer preference makes gifts a hard category to manage for Marilyn Hood, owner of two Sweet Spirit Christian Bookstores in Marietta, Ga., with her husband, Frank.

“Knowing how many of a particular size and color to stock is a shot in the dark,” she said. “How do I tell my customer who wants a different color tote that it may take a month to get the order when people are used to waiting two to three days for a book?”

But despite being a challenging category, gifts are doing well at Sweet Spirit. The reason—more flexibility with pricing.

“We have the highly recognizable things such as books and music at a normal suggested retail,” Hood said. “But we’ve found that with gifts outside of the Christian market, there is some margin to play with.”

General market gift companies frequently offer closeouts in order to bring in new lines. Hood recently bought plaques for 50% off the wholesale price. She paid $2.50 for a $5 wholesale plaque, retailing it for $9.99, or $10.99 to cover freight.

The key, Hood offered, is to shop trade shows and develop good relationships with sales reps to get knowledge of specials. She also networks with stores in different states to find out what’s selling for them. Many secular companies sell Christian items that general market stores might not be interested in stocking. “The downside of that is that you have to order often to get the deals,” Hood said.

Improving margin is a must, and gifts are a good way to accomplish this. “Someone taught me years ago, to take your mark-ups where you can,” Susan Lewis said. “For me, it’s all about ‘perceived value.’ Sometimes we use keystone, sometimes we add 50 cents above keystone, or occasionally we take a more generous mark-up. You need to consider your freight costs, gift boxes, damages, theft and many other factors.”

Lewis also countered a common argument that gift orders often come with errors. “We have more errors on book orders than we do on gift orders,” she said.

At Dicksons, after backorders are filled, the company has a fill rate in excess of 95%, Dickerson said. A more common problem is damage in shipment, with vendors usually quick to offer a credit.

When Lewis orders seasonal product at gift markets, the companies combine orders to be shipped from their country of origin. “When they can do their orders in bulk, they often pass on free freight as an incentive,” Lewis said. “Some will also give December dating for Christmas product purchased at the January or June markets.”

Gifts are one category where two heads—or companies—are better than one. Gift sales reps can prove to be a store’s greatest ally—especially at a time when trade shows are waning. “Sales reps are an invaluable resource with gifts,” said Jan Stanley, gift buyer for Sonshine Book & Gift Shop in Lake Jackson, Texas. In addition to product knowledge, “they also tell how other stores have done with it, what the sell-through is and suggest alternatives if something that you need is not available to fill the need.”

As a result of rep help, Stanley said, “we haven’t been to a trade show in years. We just don’t need to.”

EFFECTIVE DISPLAYS

Making gifts a successful category requires a store to “make a commitment when buying,” Dickerson said. “Dabbling with a little of this or a little of that makes it hard to display and oftentimes the product just gets ‘lost’ on the shelves. I like to see a buyer get excited about a product category or design and buy in depth, so that the display makes a statement.”

Like other categories, the gift department has been impacted by the downturn in the economy. At Sonshine Book & Gift Shop, where gifts—not including wall décor, cards, jewelry and apparel—occupy 60% of the floor space, overall sales thus far in 2009 are comparable to those in 2008, but gift purchases were down 7% from between February this year and last.

“Our merchandise at Christmas was second to none among home décor stores in our county, and at the end of the season our shelves were bare,” Stanley said. “These are very uncertain times and what people see on TV makes them nervous. People are holding onto their money.”

Gifts—with the exception of dishes, platters and candles—often fall into that category.

“Eighteen months to two years ago, customers were very loose with what they bought and picked up odds and ends,” Hood said. “People are coming with specific needs today. ‘I need a birthday gift for my friend,’ or they have a coupon. People are still buying, but where they were spending $50 for a wedding gift, now it’s $25.”

Donna Baker, gift buyer for Dightman’s Bible Book Center in Tacoma, Wash., reported gift sales holding steady, but said the economy has forced her to tweak her sales strategy. “Gifts that sell are in the reasonable-to-inexpensive price range. I am staying away from large, expensive wall art.”

Bucking this trend is Robert Spooner Galerie, whose average selling price has gone up a net 15% since the start of the recession.

“The higher end is selling the best for us even in this downturned economy,” said Bob Spooner Jr., adding that “gift” or “gallery” in a store name goes a long way in making customers shopping for fine products feel like they’ve come to the right place.

“(Customers) want to spend their money on something lasting, rather than smaller ‘gifty’ items that will possibly end up in a garage sale later,” he said.

MAINSTREAM CHOICES

Christian stores willing to try mainstream products have been finding success. Keith Schwartz, owner of Divinity Boutique, told of a mall-based store operator who became a distributor for Ganz’s “Webkinz” plush pets when his business was down.

“He created revenue, increased store traffic and created a reason for consumers to enter his store,” Schwartz said. “Many of these people were new customers who would not shop in a Christian bookstore.”

In similar vein, last year New Day Christian Distributors began building relationships with mainstream suppliers such as Fisher-Price, Mattel, View-Master, Crocs and Jibbitz. “(What) we have found, through working with these companies, is that there are Christians who work with these companies who want to see the Christian marketplace succeed and want their products to be a part of that market,” said Michael Turner, New Day’s director of special products and markets. “These companies are willing to design new products specifically for the Christian marketplace.”

Christian stores must look for avenues that will set them apart from mass merchants as well as other secular stores, according to Peter Trovato, vice president of sales and marketing for Kurt S. Adler.

“An important way to do this is to create unique displays,” Trovato said. “Mass merchants have many stores to deal with, and each store within the chain must look the same, thus they use plan-o-grams and templates. Independent Christian stores have the advantage of being able to spend time and effort on creating beautiful and inviting displays that are unique to their store.”

Logos’ Susan Lewis said individuality means keeping your community in mind. “Shop for items which fit your community,” she said. Her customers enjoy products made by community artists with unique gifts, especially crosses and jewelry.

Knowing the customer also requires stores to anticipate their needs. Divinity Boutique is offering ream rolls of Christian-themed gift-wrap in the hope that stores will want to wrap items as a free service. Divinity’s Schwartz said gifts are the only category where a consumer cannot get the breadth of assortment online or at a big-box retailer. “In my opinion, the stores that will survive in this economy will be changing their product assortment to 50% gift product,” he said.

“The complexity of gifts ... make it a different ballgame than good old books and Bibles.”

—Rick Regenfuss, vice president of sales, STL Distribution North America

GIFT TOP SELLERS FOR 2008

From church supplies to gourmet to stationery, the inspirational gift market opens up wide-ranging possibilities for today’s Christian retailer to increase store traffic, deliver add-on sales and support church ministries. Take a moment to consider the possibilities by examining some of last year’s best-selling $10-$30 gifts in the broad categories below.

Albums

Baby Girl baptism aluminum album (Dicksons) $13.99

Apparel

2008 VBS Power Lab iron-on transfers (Group Publishing) $12.99

Book & Bible Accessories

Bible highlighting kit (G.T. Luscombe Co.) $12.99

Church Supplies

Communion cups (Standard) $19.99

Games/Toys

VeggieTales steadfast pirate ship (Dicksons) $29.99

Gourmet

2008 VBS Jerusalem Marketplace large herb and spice kit (Group Publishing) $12.99

Home Décor

Reusable plastic candle holder (Emkay Candle Co.) $22

Jewelry

Christ’s Story beaded bracelet (Roman) $15

Kitchen & Dining

Parable custom tea for one (Brownlow Gifts) $25.94

Miscellaneous Gift

Sparkle dome holy family with angel (Dicksons) $12

Stationery/Cards

LuxLeather memo block (Christian Art Gifts) $12.99

Wall Décor

Nativity cross (Dicksons) $10

Lists based on sales data for Jan. 1-Dec. 31, 2008, provided by Christian Books & More Gold and used with permission.

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