A view of the industry through the
eyes of a chain buyer.
Independents Respond to Provo
To say they're not happy is an
Compiled by Mike Hartnett (December 18, 2006)
Note: The following are responses by independents who were
given an advance reading of Provo's defense of the way it handled
the sales and marketing of the Cricut. To read Provo's
comments to which the following are responses, read click on "Vinny
Da Vendor" in the left-hand column or click HERE.)
Bob Ferguson, Ferguson Merchandising (Ben Franklin), Redmond, WA
Huh, what she say?
I would only tell you that perception is reality and the
perception in the market is Provo does not take care to value their
independent customers. All the fancy words of a "Communications
Director" do not change that perception. They completely
bungled this program as far as the independent retail world is
concerned and to use another old concept, memories last a long time.
Gobbledeglotz is gobbledeglotz not matter how it is spun into a
position. The answer regarding the MAP initiative is technically
correct, but the fact is they sold the program to many independents
that purchased based on the explanation that the item would not be
discounted by anyone, or the items would not be sold to those people
who did discount. Them's the facts!
Of course they will not stand behind some salesman's word to a
customer that the item will not be in the big discounters or be
discounted if it is. The cop out is, "We can't be held
accountable for anything that our sales people tell our customers 1
1/2 years ago." Again, people have long memories.
The sad thing is this is not like selling used cars. Business
relationships are built on mutual trust. I can only say to Provo,
good luck on reconnecting with those that have been made to
Karen Bremer, The Red Bee, Tustin, CA
I totally agree with Bob's response. That interview with the
"communications guru" made me laugh out loud. I just
attended the EKstravaganza event put on exclusively for
independents by EK Success and was blown away by the effort they
make to educate and encourage their Elite independent accounts (the
pending Martha roll out excluded, of course). The buzz among
retailers there was that no one was ever going to buy from Provo
I personally called Provo yesterday to find out what would happen
to me (a fine? jail? firing squad?) if I advertised my remaining Cricut
stock below the price I signed my life away to protect, and after
being transferred, called back, and admonished like a small
schoolgirl, was basically told that I would lose my account. Nary a
tear came to my eye. My reps were in yesterday too, without an
appointment, to try and salvage anything left from their livelihood.
They were screwed and they are mad at Provo.
May this be a lesson to all manufacturers short sighted enough to
fish for the big fish at any cost. Cuz when Wal-Mart is done, so is
Lisa Kanak, The Cropper's Corner, Frederickburg, VA
Whether or not the piece of paper retailers signed is a contract
is a matter of semantics. The understanding of those reading the
paper is that we would agree to abide by the MAP in relation to Cricut
products, or face the consequences. We could not be a retailer of
the product without signing the paper.
The advertising restrictions are put in place to protect the
value of the machine – and thus create a fairly even playing field
for everyone selling it. Michael's, AC Moore, and I all had the same
restrictions. Also, we are also all craft stores with a similar
customer base. Wal Mart is well outside the craft store mold, in
that it is a store our customers go to shop anyway. They are known
for carrying cheap products – or products at cheap prices.
The fact that the larger stores violated the MAP on more than one
occasion – without repercussions – was a major ding to the
independent's faith in Provo Craft. However, the straw that broke
the camel's back was placing the Cricut in Wal Mart. By
placing the Cricut in that marketplace, Provo devalued the
item and rendered the MAP completely worthless.
It is downright laughable that Provo is now attempting to pawn
the Wal Mart debacle off as some sort of planned marketing strategy.
While the general principle of appealing to "the curious"
is valid and very important to the long-term health of the industry,
that is NOT who will buy the Cricut.
Your curious crafters enter with staples – stickers, paper,
albums, basic tools, and maybe a starter set. The initial outlay for
supplies is probably around $150-$200 in total. They will "see
how it goes" and then start purchasing more.
It is the rare "curious" customer indeed who will walk
in and spend $179-199 for one machine for a craft in which she may
or may not be interested. They might justify that for a basic sewing
machine – but for a tool that cuts paper into fancy shapes and
alphabets? I'd like to see the focus group, or market research on that – but I'm betting it doesn't
So, the question is, "Who is buying the Cricut at Wal
Mart?" They are the already-crafting-but-on-the-
fence-for-buying Cricut consumer. They are people who already
shop at A.C. Moore, Michael's, etc., and are looking for the best
price. They are the ones who were interested in the machine but were
waiting for Christmas (or the price to come down) to make the leap.
These were the same people that walked into my store on Black Friday
for demos, and then drove across the street to Wal-Mart to purchase
it. Instead of making $70 on the machine, I put on my best smile,
made someone happy, and sold some paper.
Regardless of how quickly the Wal Mart decision was made, Provo
Craft did not act as any type of "partner." They sent
everyone a letter reiterating the MAP policy, and told everyone they
needed to make sure they had enough product for Christmas; that was
it. There was plenty of time to notify stores. Wal-Mart does not
operate on a Fed Ex timetable when it comes to buying.
With respect to the mentioned "LSM" program, it sounds
like too little, too late for the stores that are now faced with the
prospect of having to sell the machines at a loss just to get them
off of the floor. And, unfortunately, Provo has lost the trust of
hundreds of independent stores through this process. Any "LSM"
program relies on trust in order to be effective. That trust has
been shattered through Provo's inaction with the enforcement of the
MAP, and the undercutting of the perceived and real value of the Cricut
machine by placing it in Wal Mart.
Provo acted irresponsibly and is now trying to repair the damage
to their reputation and their company. The LSM program is a band-aid
that probably is being developed on the fly, without much thought or
consideration. There are too few people in this industry who truly
understand grassroots marketing, and how to go about it. And from
what I've seen, they aren't at Provo Craft.
Mike Dolan, Scrapbook 911, San Antonio, TX
First, I do not think that "unexpected demand" is the
appropriate title, but unexpected quality is a better explanation.
As you may know, at the Summer 2005 CHA show, delivery was scheduled
for the first quarter of 2006, but because of technical glitches,
this did not occur. In fact, it wasn't until October 2006 that we
received the final Cricut that had been ordered in the summer
Since Thanksgiving, I have contacted over 50 authorized Cricut
dealers to see if their opinions about this issue are similar to
Scrapbook 911's. I have tried to incorporate the comments I have
received into this note.
It really does not matter if the Minimum Advertised Price policy,
or MAP, is called a contract or an acknowledgment. We, along with
many stores, placed orders for a high-priced item solely because of
the assurances made by Provo Craft that the Cricut would not
be sold at national retailers for a discount price. Had we known
that consumers could easily buy this machine at a chain for less
than $200, we would not have placed an order.
This is echoed by the majority of stores that I have contacted. I
am disappointed that Ms. Davis did not answer your question
"Have you stopped selling to any retailers who violated the
MAP?" I am not aware of any retailer who was discontinued as a
dealer, and we do not believe that the policy is enforced.
To give you an example, I reported a violation about a website
that was selling the Cricut for $239.99. I even walked the
customer service rep through the steps to add one to her online
basket. The Provo Craft rep said that issue would be forwarded. The
bad news is that the website was cricut.com, or Provo Craft. As of
today, you can still buy one for less than the $249.99 MAP price
directly from Provo Craft. I know that a small retailer in Louisiana
called Provo Craft the week after Thanksgiving and told them she was
going to sell all her Cricut items on Ebay (which she did).
Even after reporting herself, her store is still listed as an
authorized dealer. So much for enforcement.
As to shipping, we along with many small stores were told
shipping was based on when the order was placed. The response by
Provo Craft that weighing all the considerations of business needs
during a time of high demand can be better said as Provo can get a
check for a large number of machines from Michaels, who is their
largest customer, and QVC, before going through the hassle of
sending units to the 100 authorized small stores.
I think Provo Craft had a very good idea of how many units had
been ordered at the summer CHA show, so where is this unexpected
As a side note, when the Cricut was being sold on QVC, I
called and complained that Provo Craft stated that you must be a
brick-and-mortar store in order to sell the Cricut. A few
days later, Provo Craft told me that QVC has a storefront in the
Mall of America, which I called. They did not know what a Cricut
was, but suggested that I go online to find it.
Pricing: I can understand why Provo Craft will not discuss
pricing in the article. I think that the discussion about pricing
may be heard in a court room, and the legal staff does not want to
provide any details to potential plaintiffs.
Wal-Mart: The decision to sell to Wal-Mart is Provo's choice.
They have the choice to sell to their established retail network, or
to Wal-Mart. Unfortunately, it can't be both. We learned of this
decision from a customer in late November. Provo Craft had ample
time to send a letter to its dealers. In fact, we received a letter
from Provo Craft dated October 26, 2006 which started with the
phrase, "Due to recent events...." I can't imagine that
Provo Craft didn't know about selling to Wal-Mart on October 26th,
Appointments at the Summer CHA: Again, the lawyer-speak of what
may or may not have happened is best left to the court room.
Competing with chains and new product lines and the upcoming CHA
show: I have no issue with competing with a chain store on an item
that retails for less than $9.99. I think 98% of what I stock falls
into this bucket. In fact, Michaels says it best in their Securities
and Exchange Commission filings:
"We believe customers tend to choose where to shop based
upon store location, breadth of selection, price, quality of
merchandise, availability of product, and customer service. We
compete with many different types of retailers and classify our
competition within the following categories. Small, local specialty
retailers. This category includes local "Mom & Pop"
arts and crafts retailers. Typically, these are single store
operations managed by the owner. These stores generally have limited
resources for advertising, purchasing, and distribution. Many of
these stores have established a loyal customer base within a given
community and compete with us based on relationships and customer
We do have many customers who could save a few pennies or a
dollar or two on a Provo Craft trimmer by purchasing it at a chain
store, but come to our store because it is more convenient, and we
have built customer loyalty. However; they have and will continue to
go to Michaels in order to save $50 or $100.
As to the new product, based on the comments I have received from
other stores, the sentiment is, "Fool me once shame on me; fool
me twice, shame on you." In other words, Provo Craft has lost
its credibility with its small customer base, and these stores do
not plan on visiting the Provo Craft booth as there is a lack of
Education: Our store offers a class for $2 that is titled
"Make Your Cricut Sing." This 90-minute class
instructs customers on how to use all of the features of the
machine. Yes, it is our hope that customers will buy other Cricut
cartridges and such, but at the last class, 60% had bought their
machine for less than $200 at a chain, and had purchased additional
cartridges from a chain as well. We think Local Store Marketing is a
great idea, but we have yet to receive any in-store marketing
materials from Provo Craft, like the window sticker, the display
stand, etc., that we see at Michaels, Hobby Lobby, etc.
New customers: The comment by Provo Craft is right on the mark;
however; the only way to increase the customer base is to advertise
in non-traditional craft publications. How about People
magazine? An ad that says here are our great products, and see a
local store near you, or look it up on our website would be
fantastic. Will it happen?
At the end of the day, we have decided to no longer be a Cricut
dealer. This sentiment is shared by a large number of small
stores who like us, who called Provo craft and cancelled all future
orders. I was lucky enough to sell one of my 10 unsold machines to a
foreign national who thought is was a bargain at $249.99 because
they are over $500 in Mexico City, but I still have over $8,000
invested in unsold Cricut products.
Distributor (Name Withheld)
Provo Craft is doing nothing more than angering their best
customers. Wal-Mart may have bought the Cricuts, but who buys
things day in and day out? Now we face our customers who think we've
increased prices and are completely bewildered that we are offering
the Cricut at $249.99.
(Note: Care to join the debate? Email CLN at firstname.lastname@example.org.
To read the Provo's original comments, click on "Vinny Da
Vendor." To read previous "Benny" articles, click on
the titles in the right-hand column.)