Three or four dollars can buy yards of gift-wrapping paper rolled around jumbo cardboard tubes. So why are people -- lots of people -- plunking down $8 to buy two sheets of Sparkle Leaf Taupe paper at the Container Store? Wrap a package with the paper, then trim it with wired French ribbon, and pay another $12. Stick a gift tag on the package and there goes another $1, at least.
Again, why would today's cash-strapped shopper, the one we constantly hear is worried about his stock portfolio -- or her job -- pony up that kind of money when every supermarket, convenience store and outlet that ends in "mart" is offering cheaper paper?
The theory, especially telling in tough economic times, goes like this: When shoppers must downsize the gift, they feel compelled to upscale the package.
Even in good times, if that package happens to sit under a Christmas tree for days, some of those shoppers want it looking elegant -- enough so that they often coordinate their wrapping paper to go with the colors of their living room, the folks at Hallmark Cards Inc. report.
And the fact is, good times or bad, there are a lot of Americans affluent enough to buy high-quality wrapping paper. The Dallas-based Container Store hopes to corner a good chunk of that crowd.
Every fall the company clears the rows of plastic waste bins and rolling carts from the center of its stores and moves in a mini-store of wrapping paper, tissue, ribbon, gift tags, cookie tins and more. From this environment, the retailer expects to sell more than half a million rolls of gift wrap this holiday season at the 28 stores it has scattered across the country. At $4 a roll, that would be a minimum of $2 million. But many Container Store papers cost more than that. By any count -- the privately held retailer does not disclose sales figures -- it's a lot of paper and a lot of money.
The paper it sells, along with the gift tins and totes, should make up more than half of the chain's sales in December, said Sharon Tindell, the company's executive vice president of merchandising.
"A lot of customers buy the wrap first and think about the gift later," Tindell said. "It's about pattern and quality and giving customers something pleasurable, something where they don't see the image of the box through the paper."
For Toni Clem, the pleasure factor is big. The public relations specialist doesn't mind spending $5 to wrap a gift worth $3. She also doesn't mind driving 100 miles from her home in Paris, Tex., to the Container Store in Dallas to buy paper, bows and ribbon.
And Clem is proud to say she's an "equal opportunity" wrapper. No matter what the gift or whom it's for, she will use the same high-quality paper.
"Some people might say it's a decadent waste of money," Clem said. "But if you're going to go to the trouble of wrapping a present for Christmas, the presentation is a huge part of it. Every gift should be presented with warmth and affection."
But why does the fancy stuff cost so much?
Russ Haan learned firsthand when he and his business partner, Mike Oleskow, began breaking into the gift wrap business. Their Phoenix company, Max & Lucy, started out making flat sheets of retro-chic papers , printing them in small quantities and selling them to boutiques.
They got a fair return on their investment. But when they ventured into "continuous rolls," he said, the production costs were staggering.
"We were mortified by the cost of the manufacturing," Haan said. "It's just paper, for God's sake."
First, setting up the printer for one pattern can cost up to $4,000 because every color on the paper requires an $800 film and metal plate combo, Haan said.
Then the printing costs themselves are high because only six companies in this country are equipped to print continuous rolls, he said. In the flat-sheet business, thousands of companies can do the printing.
Add to that the cost of the paper itself, salaries for print shop workers, cardboard tubes, shrink wrap, labels and storage.
And when it's time to ship the product, Max & Lucy might sell 3,000 rolls of a good holiday wrap, but piecemeal, usually a dozen rolls at a time, to specialty paper stores, mom-and-pop operations and even the Container Store. Each time it ships those rolls, it pays for it.
Compare that with the manufacturer who works with a mass-merchant discounter. Its shipping costs are less onerous because it can unload 10,000 rolls at one pop.
"That's one reason consumers pays more" at a Container Store or other specialty merchant, Haan said. Jumbo rolls of Max & Lucy paper, 30 inches wide by 10 feet long, can retail for anywhere from $7.50 to $8.95. By contrast, the eight-yard-long rolls of stylish Martha Stewart holiday wrap sold at Kmart stores go for $3.99.
Another reason: special effects. To give color more dimension, manufacturers are turning to metallics, pearlessence and holographic images, said Jay de Sibour, president of the Color Marketing Group, a trade association.
"These effects don't necessarily make the price prohibitive," de Sibour said. "But they are a factor."
And if the paper or design work is done overseas, it shows up on the price tag. Caspari, maker of much-higher-end wrap, does its printing in Europe and applies a layer of gold bronzing powder that rubs off ever so slightly on the hands.
One roll contains two sheets, each 40 inches by 28 inches, for $5.75.
Vincent Seeno, director of research at Business Trend Analysts, said consumers can expect to see more Casparis and Max & Lucys emerge because the industry has plenty of room for more players.
"The margins for gift cards are shrinking," Seeno said. "But for gift wrap, they're expanding and the industry is a promising one."
Just how promising? About $5.25 billion worth of promising. That's how much consumers are expected to spend on paper and tissue this year, according to a report Seeno plans to release next year. The number could reach $6.1 billion in 2005 in an industry that has been growing at an average annual rate of 4.8 percent since 1999.
The industry is large enough that Peter Appert, a Goldman Sachs analyst, uses it to forecast holiday retail sales. The idea: The more gift wrap retailers order, the better they expect the season to be.
This year, Appert believes the season will fall "somewhere between ho-ho and ho-hum," based on his survey of retailers and gift-wrap makers. Appert claims an impressive record. His says his surveys have found a 98 percent correlation between retail and gift wrap sales for the past 16 years.