A view of the industry through the
eyes of a chain buyer.
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.)
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:
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
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
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.
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
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
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
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
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.
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.
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 firstname.lastname@example.org.
To read previous "Benny" columns, click on the titles in
the right-hand column.)