Business Obits Are Often Premature

May 22, 2013

Just because a business category is shrinking does not necessarily mean it will die.
Credit Charlene Honeycutt / WKNO-FM

Just because somebody tells you that a certain business category is a dying business doesn’t mean it’s gonna die today or tomorrow. People were still making money on Blockbuster stores a decade after the announcement of their demise.

Business categories do, indeed, die. Almost always because of advances in science. Nobody’s making steamships any more.

But some categories that start shrinking aren’t necessarily dying. They’re just getting smaller.

American Greetings Corp. did $1.7 billion last year, $500 million less than fourteen years ago. Obviously, the Internet has brought major changes to the greeting card business, and those changes have made the business a lot less profitable for American Greetings and Hallmark.

While American’s sales dropped twenty-three percent since 1998, it’s profit shrank by almost seventy percent. But American and Hallmark are adapting. Unlike Blockbuster, say, greeting card makers can influence their own business with creativity and innovation in a lot of ways.

But the point is, there’s a big difference in a dying business and a shrinking business. American Greetings, for instance, is moving to take the company private again after sixty years of public trading.

Being able to manage the company for the consumer market instead of for Wall Street should extend the company's future considerably.

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