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A view of the industry through the eyes of a chain buyer.

Printer Version

What the Industry Needs 

Creativity, common-sense pricing, and much more.

by Bob Ferguson, Ferguson Merchandising (January 2, 2006)

(Note: The 1/02/06 issue of CLN contains a Special Report: "Issues Facing the Industry in 2006." Prior to publication, CLN sent a working draft of the article to various industry veterans for their input and comment. Most of the responses are published in the Business-Wise column, but Bob's response was so thought provoking on so many topics that it deserved its own space. Bob owns a Ben Franklin store in Redmond, WA that is considered one of the most successful independent stores in the industry.)

Beads.

It is a huge category, but today if you look inside any craft store, the bead selection is identical. We are fishing from the same pond, as usual; so the only thing for the chains to do is discount because you know they are not going to produce ideas that will impact the business.

The only way to bring more of the bead business into our stores is to innovate and set up shop-within-a-shop concepts that reflect the same kind of attention to detail and innovative merchandising done in the small, independent bead shops: loose strands, seed beads in vials that are priced like the small guys do it, creative displays, and most important, ideas, ideas, ideas for the consumer to see and work with.

A lot of people who get into the bead crafting world find they can get their best stuff either direct from the Fire Mountain's of the world [Fire Mountain Gems] or at bead shows. That is one of the reasons why craft stores struggle with the whole concept. They don't know who their customer is and are not willing to take the risk beyond the packaged effort for fear of the unknown. Of course it works against them, since that lack of risk taking or lack of time to investigate and implement puts them in the same category of bead shop as the thousands of other craft stores with a bead department: boring!

CEO's.

The only thing Jo-Ann's can do to right the ship is hire [Michaels CEO] Michael Rouleau for $50 million a year and let him have at it. He is truly one of a kind. They would find the 50 mil a huge bargain in the big scheme of things, since he is first and foremost a retailer and not a bean counter. The man has vision, as does [A.C. Moore's] Jack Parker. When the suits take over and begin paying more attention to Wall Street than their stores, creativity is over because the focus of the vision becomes enhancement of the value of the stock, not the profitable productivity of the individual stores.

Rouleau has never lost sight of the fact that in order to be successful you first have to sell merchandise at a profit. He is a retailer first!

Along with this, it is easy to see why the Recollections stores have not expanded beyond where they are. They have not come up with an efficient and profitable way to control their inventory. Inventory turn is the key to making a profit in the scrapbooking business. That and innovative presentation of new ideas (there is that word again); so far Recollections is good at being innovative, but their inventory is not conducive to a strong bottom line.

Decorative Painting/Cross Stitch.

You say that the two categories need new designs that attract younger customers. In the case of cross stitch, I believe you are right, but in the case of decorative painting, I don't think anyone is there yet, and the younger people are still very much afraid of doing the kind of things their mothers and even their older sisters did just a few years ago.

The entire industry still tries to make it too complicated to paint and, much like the custom-picture framing industry that tries to keep its status as an exclusive thing available to "those who can afford it," there is a good old girl's network that teaches painting as a studied art form and not one of simplicity.

Of course there are a few exceptions, but one can only do the one-stroke method on certain things without then launching into the more complicated and boring "techniques" routine that turns off those younger consumers.

We are seeing a lot of interest in cross stitch on the part of many of our consumers, but like many other endeavors, we retailers are looking for instant gratification, and when the one new design that was introduced does not get a big response, the entire line is labeled as just another attempt to resurrect a dead horse.

Again, like beads, it's necessary to have a commitment to space, inventory, creative ideas (that word again) and most of all, current knowledgeable people on staff to be able to excite and inspire the consumers is paramount.

Ha, try getting that idea across in a chain store.

Home Dec.

How about Home Dead? We look at it this way:12-15 years ago when we got into the home dec business, we stood out and were unique in almost everything we showed to our customers. Today it is all about copying what Pottery Barn or others like them did last year, and guess what? The customer response is predictable "Been there, saw that last year"! That, coupled with the fact that Target, World Bazaar, Cost Plus, Linens and Things, and a hundred others are all featuring the same looks and are out there shooting each other with one thing: price.

Is it any wonder that craft stores are just minor bit players in the home dec business with little hope of regaining what was their initial forte?

In order for us to attract consumers today in the home dec business, we have to be unique, full of innovation and ideas that are not just like the ideas that the corner gas station has displayed.

Merchandising.

What is that to most craft stores? "Make our stores more interesting" you say. Yep, you and 11,003 other industry folks say that is the answer and you are absolutely right on the button.

How to implement that is the big issue! Walk into most CRAFT stores today and just try and find any CRAFTS! How about readymade scarves, ponchos, hats and socks, or massive displays of pre-framed art or bags of bows and ribbons or shampoos or battery operated toys, or checkouts full of candy bars, lampshades, and pet collars.

Successful, profitable merchandising is all about category dominance. How many craft stores do you know that dominate anything in their markets? Beads, not! Yarns, not! Picture framing, not! Home dec, not! Candles, not! Seasonal decor? Not a chance.

And crafts? What crafts? Yes, perhaps scrapbooking is a dominant category in a craft store's sphere of influence, but what else? Oh, we do seem to dominate in the percentage off business: 30% bores the consumer, 50% is becoming the new 10%.

Today, stores across the world unload their Christmas offerings at 60-off beginning about December 1st. That becomes boring as soon as another store discounts everything left in the cookie jar at 70% and 90% off. We are even bit players in the percent-off game.

You said a mouthful when you say that too many stores are becoming boring. Lighting creative fires in consumers today is left to the newspaper ads that scream 70% off. How does that creativity grab you?

Pricing.

As to retailers lightening up on pricing, I am not so sure that the vendors have not done it to themselves, and it is the vendor community that needs to change.

Michaels, Jo-Ann's, et al are not asking for anything more that what they see and know that Wal-Mart and others of that type are getting. When a major vendor began to sell to Wal-Mart, I said that it was the beginning of the end of its dominance in its category. When I am selling the product at $1.49 and I see Wal-Mart advertising it at 66 cents, then as a chain store I do the only thing that looks reasonable: I ask for the same deal as Wal-Mart.

Maybe I get it and maybe I don't, but I ask, demand, and get close. As an independent, I don't have that kind of clout, so I do one of two things, I ignore the new competition and the now new dominance in the market based solely on price, or I do what a smart retailer has always done, I say goodbye to the line that has now gored my ox and I give my customers alternatives.

Begin the funeral march for that vendor's dominance because now the pipeline is so full of that 66-cent product that the consumer is quickly bored with the whole thing and begins to do something else.

Yarn.

Ahhhh, knit, yarn, and all those scarves. Yes, thousands tried and successfully learned to make scarves last year. It was the fashion item of the year and of course we smart retailers said, "Well, this is probably a one-year wonder and we need to get them going on larger, more challenging projects."

Well, I am here to tell you that the consumer does not want more challenging projects. Larger yes, but challenging, not! We show them ponchos, sweaters, felting, etc., etc., and those all involve technique; but the newly minted scarf-maker says technique hell, just show me how to take this simple little effort to make a scarf and make something bigger like a pillow top or a throw (not grandma's afghan); but don't give me more technique. I don't have time to take a class to learn how to make a hole for a neck or do a sleeve or even make a hat or a sock.

The scarf gave me pleasure and fulfillment and was a good use of 2-3 hours of my valuable time. Don't tell me to come to a class and learn the 8 or 9 or 12 other things I need to know to make a sweater; what is wrong with just taking yarn and making a scarf, only make it as wide as I want it and as long as I want it and call it a throw?

Ahhh, aren't we smart? We have either continued to upgrade the consumer into making those more complicated and time-consuming projects, or we have told them we will sell them all that beautiful yarn for them to make last year's scarves, but we will sell it for 50% off last year's prices.

The results of all that effort? Yarn sales are down pretty substantially among larger stores that were really "into" the yarn business last year, and have been doing the last year's dance or have discounted until the consumer is bored.

Younger Generation.

Wish I could speak to the issue of how to attract the hip, young customer, but I am too old to "get it"; I will have to ask my young customers, but I cannot find any of them because all the ads they saw for the craft stores this week all told them they could buy last year's yarn at 50% off, or my tired old poinsettia bushes at 66 cents each, or the latest in innovative packages of beads from Westrim or Cousins at 50% off, and they all took their zillions of dollars and went looking for innovation and ideas.

(Note: CLN welcomes any and all comments regarding the issues raised here and in the Special Report. Email your thoughts, on or off the record, to CLN at mike@clnonline.com. To read previous "Benny" columns, click on the titles in the right-hand column.)

xxx  

 

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