Creative Leisure News - "Benny da Buyer"

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

Comments on the Future of Independent Bead Shops

Are chain stores the problem, or is it something else?

Staff Report (April 18, 2011)

(Note: The April 4 issue of CLN asked the following question, "Are Bead Shops Next?" and invited readers to respond. Here is the article and the responses.)

ARE BEAD SHOPS NEXT?

CLN heard disappointing reports about the bead shows in Tucson, although it is more difficult to obtain accurate numbers because, unlike CHA, TNNA, or NAMTA, there are a number of bead events going on simultaneously. The weather was a real problem, too. But the gloomy reports raise the question of whether there's a parallel between beads and scrapbooking. Consider:

A hot new trend hits the country, inspiring hundreds or thousands of enthusiasts to open shops. Because the chains' bureaucracy is so cumbersome, the independents thrive because of their superior selection, service, and knowledge. Chain stores are way behind the trend and must scramble to catch up.

That is not an easy or quick thing to do. A former Michaels' president once told CLN, "Making a major change is like trying to turn around a battleship in a narrow stream."

But eventually the chains wake up and begin offering a much greater selection, lower prices, etc.; they become much, much tougher competition.

The number of scrapbook stores has declined. Will we see the same with bead shops? Or can the industry somehow avert that eventuality?

Why Some Bead Shops Fail

No, chain stores will not be the death of independent bead stores. There is no way they can offer the services, the selection, and inspiration that a good bead shop can. I love having a Michaels store just a few miles down the road from my store.

They have such poor quality, are overpriced, and have zero service or knowledge. People get started on their beading hobby there but will eventually find my shop as a better source.

What is killing off small bead stores are the "wholesalers" where anyone can buy many of the same items a store has, at cost. I don’t believe any of the other “craft” categories have the same problem, where stores are competing with "wholesalers" for the same customer dollar.

I know many bead shops that have closed recently or are about to close. The main reason is customers now shop online at discounters. But I think that is just an excuse. The main reason small shops close is that the owners burn out. They get tired of working for no money, don’t understand how to truly run a business, were too small to start with, and can’t maintain sales in a difficult climate.

Most wholesalers now sell direct to customers. Sure, you need a vendor's permit, but those are cheap and easy to get. Sure, you need to hit a certain dollar value, but now groups of beaders shop together to meet those minimums -- it’s all very organized. It's very difficult for bead shop owners to find products that are not available wholesale.

Jewelry making has been around a very long time; people will always be making and wearing jewelry. It’s like clothing, or shoes. Not so sure about sticking photographs in a book with fancy labels. -- Cathy Lampole, That Bead Lady, Newmarket, Ontario. www.thatbeadlady.com

Bead and Scrapbook Shops

(Note: The author, who asked to remain anonymous runs a multi-category store in the Northwest.)

Our bead sales have increased every month for over three years. Bead sales in fourth quarter of 2010 were up over 110% from previous year. In our community four bead stores have come and gone. My feeling is bead stores operate very differently from scrapbook stores or quilt shops.

Let's compare scrapbook stores to bead stores. Bead store owners have been beaders forever, have a certain type of beading that they love, and in many cases, their stores reflect it. Scrapbook store owners love scrapbooking and all it stands for; they want the newest, most interesting products available. The bead industry, while it offers constant new looks and products, finding them at your finger tips and at right prices is very difficult; that’s why big box stores can't figure it out. Scrapbook stores are offered new product everyday of the week via email.

Also, all scrapbook stores pay similar prices. In the bead world prices can vary wildly; for example, a bail for which we used to pay $0.30, now costs $0.07. This example can be repeated over and over. The bead industry is a very uneven playing field, and constantly takes a lot of research and digging for new sources and better prices, and importantly, new products.

New products and innovation are key.

Will bead stores numbers decline? Probably, in today's retail environment, Beading has always been a roller coaster industry; we are probably ending another cycle. Does it have to be? We don't think so. We think beading sales will continue to grow for 2011-2012. Our customers are excited; they may come in for findings, but are wowed with new products, things they've never seen.

"What Amazon Did to Book Stores"

I think the total number of bead stores is maybe 2,000 or fewer in the U.S. It's a rough niche to create enough revenue to make it without a dominant trend.
Bead stores are left to selling pretty much commodity goods, against large-scale retailers with direct buying sources. Hobby Lobby has added tripled its bead section in the last two years, providing no service or classes, but every day selling most items at 50% off.
The amount of instruction and service in a bead store is huge; you have a lot of new entrants to train and classes are a must. There are some great stores out there that do a wonderful job with classes. The Bead Monkey is one; she’s done really well. (Editor's note: The Bead Monkey has two stores in the Minneapolis area. Visit www.thebeadmonkey.com.)

Yes, the number of bead stores is declining, but of course what constitutes a bead shop can be a closet store in a very small retail space.

Every bead store owner I’ve talked to says that the first quarter was very rough. The chains and major Internet suppliers have been a big impact on local stores, kind of like what Amazon.com did to small independent book stores. – Homer Hills, HHH Ent.

(Editor's note: An employee of a Borders bookstore, soon to be closed, posted a sign at the front door: "No restrooms. Try Amazon." To see the sign, visit HERE.)

Independents vs. Chains

I don't think there will be a decline [in independents]. The chain stores have brought in beading supplies, but they can't carry the variety that an independent store does. And every bead store carries a different inventory; there's not a lot of overlap except perhaps on basic materials for stringing and findings. Therefore, the customer shops at many different stores for the variety. In addition, the independent bead stores offer a lot of different classes on techniques and projects, which keep the beaders interested. They also can move with the trends very quickly. -- Linda Lachance, Northern Pine Designs

(Note: To join the conversation, email your thoughts to CLN to mike@clnonline.com.)

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