Archies Goes Beyond Mugs And Soft Toys To Win Over Emoji-Loving Gen Z

Archies Ltd., known for its mugs and keychains to soft toys, is overhauling the business to stay relevant, according to Executive Director Varun Moolchandani. The publicly listed company that commands half of the country's physical greeting card market is diversifying into beauty and personal care, reopening stores that were shut during the pandemic, and targeting young shoppers online.

Covid-19 disrupted brick-and-mortar retailers, accelerating the decline of paper cards triggered by digital messaging. While corporates still exchange cards on special occasions like the New Year and Diwali, it's not sufficient to sustain India's tiny Rs 200-crore organised industry.

"We have faced challenges over the years ... first, with demand shifting towards e-cards and now online," Moolchandani, the 42-year-old second generation scion who joined the family business in 1999, told BQ Prime.

Still, Archies escaped the fate of national and global peers who succumbed to their inability to adapt. One such example is Papyrus, the greeting card and stationery chain, that faced bankruptcy in 2020 and shut all its stores in the U.S. and Canada.

Archies Ltd., known for its mugs and keychains to soft toys, is overhauling the business to stay relevant, according to Executive Director Varun Moolchandani. The publicly listed company that commands half of the country's physical greeting card market is diversifying into beauty and personal care, reopening stores that were shut during the pandemic, and targeting young shoppers online.

Covid-19 disrupted brick-and-mortar retailers, accelerating the decline of paper cards triggered by digital messaging. While corporates still exchange cards on special occasions like the New Year and Diwali, it's not sufficient to sustain India's tiny Rs 200-crore organised industry.

"We have faced challenges over the years ... first, with demand shifting towards e-cards and now online," Moolchandani, the 42-year-old second generation scion who joined the family business in 1999, told BQ Prime.

Still, Archies escaped the fate of national and global peers who succumbed to their inability to adapt. One such example is Papyrus, the greeting card and stationery chain, that faced bankruptcy in 2020 and shut all its stores in the U.S. and Canada.

Survival was tough. Archies shut 70 gifting and stationery galleries—as its stores are called—during the pandemic as it reassessed business. In 2007, the company sold about one crore greeting cards, but barely touched two lakh in 2022.

In the current fiscal, Archies plans to open 20-25 stores, with a greater emphasis on cost-effective high street locations in tier II and III towns across North India. That's a departure from the earlier strategy of having a majority of outlets in malls, where rents are expensive.

"It should take a year and a half to open that many stores again," Moolchandani said.

Archies, which was incorporated in 1979 and went public in 1996, operates 125 outlets in India, with 80% of them being franchisees. That compares with 230 exclusive outlets in 15 states across 66 cities prior to the pandemic.

It competes with the likes of Ferns N Petals Pvt. and IGP.com.

Moolchandani is betting on a rebound, driven by gifting items such as custom-made chocolates, accessories, apparel, and personal care products. The company is launching expansive media campaigns and strengthening its online presence as it targets the young or Gen Z buyers. And for the first time, Archies is set to introduce its own brand mascot.

"We are looking to upping our game across social media platforms and this would be backed by heavy investments," Moolchandani said, refusing to divulge details.

In 2000, Archies tried online sales, much before Amazon and Flipkart changed shopping habits of Indians, but shut it down soon after realising it was not feasible. It gave it another shot in 2008 but e-commerce contributed less than 1% to its business back then.

The power of e-commerce in the current competitive business landscape can't be overlooked, Moolchandani said. Apart from its direct-to-consumer website, Archies sells on Myntra, Amazon, and Flipkart. "Our websites see a good traction primarily ahead of occasions, but on online platforms there is demand all through the year," he said.

It's also betting on quick commerce. It's been a quarter since the company tied up with the Zomato-owned instant delivery app, Blinkit. Currently, it is available only in Delhi-NCR. The retailer is in discussions with Zepto and Swiggy Instamart for a nationwide launch ahead of the festive season.

"Quick commerce has the potential to change the business landscape. After all, who doesn't want a 10–15-minute delivery," said Moolchandani. "We have got orders of 20,000 friendship bands, four lakh greeting cards from Blinkit just in three months. So, we need to focus and see how well it goes."

In September, Archies plans to launch its own merchandise. It has also partnered with other brands—Pierre Cardin, Ferrero Rocher, Mamaearth and McCaffeine, among others—for customised gifts, going beyond mugs to soft toys.

With these initiatives, Archies expects a revenue growth of 14-15%. In FY23, the retailer's revenue stood at Rs 98 crore, a 14% annual rise but still below the pre-Covid turnover of Rs 101 crore in FY20. It expects to close at Rs 100 crore this year.

Archies is in talks with a channel partner to expand overseas, starting with the Middle East. "As and when the deal is finalised, Archies will have a retail presence outside the country for the first time ever," Moolchandani said. The company exports paper products and bags to various regions, including Europe, America, and Africa but the business slowed down because of global uncertainty though it expects a pick-up next year.

The company hasn't given up on physical greeting cards either. No one can deny their charm, Moolchandani said. "We are focusing on bundling greeting cards with all our items, hoping the new generation will embrace this add-on to enhance gifts."