irreverent, thought-provoking analysis of the industry.
The Big News Stories of 2004
Some good, some bad, all of them interesting.
by Mike Hartnett (December 20, 2004)
1. Scrapbooking. It dominated the news once again this year
2. Associations. The industry's trade groups worked together
as they never have before. After more than a year of meetings and
lawyer wrangling, the Hobby Industry Assn. and the Assn. of Crafts
& Creative Industries merged into the Craft & Hobby Assn.
The two shows now are the CHA Summer and Winter shows.
The National NeedleArts Association and the International
Needlework Retailers Guild co-sponsored a joint show in Columbus in
June and will again next June. Meanwhile, the Int. Model Hobby
Manufacturers Assn., the Model Railroad Industry Assn., and the
Radio Control Hobby Trade Assn., formed when the hobby companies
left HIA, are talking merger.
The exception is the sewing industry, which has increased its
shows (and therefore vendor and buyer confusion) to four for 2005.
3. Yarn. It continues to be the hottest category in the
industry, thanks to a) an incredible media blitz; a movie star
telling a national magazine that she (or even he) loves to knit has
become so commonplace it's barely "news" anymore; b)
attractive new yarns; and c) more fashionable, youthful projects.
The result: a new, younger generation has discovered knitting which
has created the best kind of problem to have: keeping up with
4. Home party plans. While the new plans have not yet
affected the industry the way Creative Memories has influenced
scrapbooking, there is hope that they will attract a new wave of
consumers to crafting and painting. A. The Creative Living Network (www.mycln.com),
supported by Duncan. B. In Home Art supported by Dewberry Designs
C. The Purple Tree (www.purpletree.com)
– see report in the 12/20 issue. D. Others include The
Longaberger Co. (www.longaberger.com)
and Big Yellow Box (www.bigyellowbox.com).
5. Friends Lost. Once again we've lost too many fine people.
Kurt Adler, Pat Catan, Edna Clapper, Ron Gelb, Bob Herman, Catherine
Kay, Michelle Kershaw, Marvin Kulkin, Oscar Kummerlowe, Bob Misterka,
Robbie Rapoport, Gerry Rogers, Thelma Sbar, Edie Shugarts, Nancy
Valliere, Bob Watkins, Thea Workman, and the wonderful Katherine
6. Industry Stocks. A.C. Moore, Jo-Ann's, and Michaels (whose
stock split) are showing nice increases in their stock prices for
the year. Hancock's stock has fallen, Wal-Mart is basically flat,
and Rag Shops' stock is no longer traded since the company was sold.
There will be a complete report in the next issue of CLN,
when the year is completed.
7. Mergers & Acquisitions. Chartpak acquired Frances
Meyer ... Dimensions bought Inkadinkado ... Interweave Press
acquired Fiberarts from Sterling Press ... Janlynn bought
Sanook Paper and Stamps Happen ... Loew-Cornell was acquired by
Jarden Corp. ... AccuCut purchased DayCo ... Peterson Partners
acquired the last 20% of the shares of Making Memories. It had
acquired the first 80% in 2003 ... Art Store was sold to Dick Blick
... Magic Scraps joined Advantus' Craft and Hobby Division ...
Wichelt Imports acquired Gay Bowles Sales ... Autumn Leaves bought
Foofala ... Pumpkin Masters became a division of Rauch Industries
... Party America bought Party Concepts ... Paper Adventures was
sold to ANW/Crestwood Inc., owner of The Paper Company.
8. Economy. Oil prices rose about 40% this year, cutting into
consumers disposable income. Import prices and interest rates are
edging up, and the weak dollar, which has lost a third of its value
vs. the Euro this year, has helped U.S. exports and drastically hurt
imports from Europe.
9. Imports. As is true in most every industry, we're seeing
more and more of our products being produced in the Orient,
particularly China. The only things that may slow this trend is the
overloaded infrastructure at U.S. ports and rail lines, and if China
allows its currency to float.
9. The decline of "crafts" and other categories. While
yarn, beads, and memory remain big sellers, a number categories that
helped define a "craft" store have had less than stellar
years: basics, needlework, decorative painting, florals, etc. The
bright spot has been Plaid's Donna Dewberry's One-Stroke. One
industry observer thought the loss of tv shows such as Aleene's
Creative Living and Martha Stewart and Crafts magazine
changing to Paper Crafts has hurt a number of categories.
Another factor may be companies in these traditional categories
devoting at least some of their creative energies to scrapbooking
rather than concentrating on their core products.
10. Wal-Mart. The juggernaut continues to grow, but 2004 has
not been easy: a multitude of lawsuits, including the largest sex
discrimination case in history; a disappointing Christmas thus far;
numerous communities fighting against opening new Wal-Marts,
particularly supercenters; being blamed for so much out-sourcing to
the Orient. Although the business media once again named Wal-Mart
the most admired company in the U.S., the result of all of the
publicity has been a relatively flat stock price.
11. Miscellaneous. Martha went to jail, and made millions
when Sears and Kmart announced their merger ... Frank's Nursery,
once the Michaels of the industry, declared bankruptcy again and
died ... Rag Shops was sold to an investment company ... Garden
Ridge and KB Toys filed for bankruptcy ... Toys R Us is considering
selling its toy stores.
PT II: SCRAPBOOKING
1. The year saw an explosion of retailers selling scrapbook
supplies, from drug stores to Linens N Things, Toys R Us, Best Buy,
Marshall Field's, Bed Bath and Beyond, Kohl's, Sears, PetSmart,
Costco, dollar and close-out chains, and other non-industry stores
– and of course additional independent scrapbook stores.
2. A growing number of independents are encountering cash
3. The evolution toward cardmaking – a very positive sign
to keep scrappers returning to our stores, whether or not they have
any photos to scrap.
4. There has been a virtual explosion of vendors, products,
trade shows, retailer groups, web sites, and consumer shows. The
danger, of course, is that all of the scrapbook pies will be divided
into pieces too small for companies of all types to make a profit.
5. The digital camera explosion is the great unknown. Will
enough consumers continue to print their photos for scrapbooks? Will
the new photo kiosks and online photo services lure customers to the
stores that offer them? Or will digital cameras make photography so
easy that more consumers will take more photos – and thus need to
6. Reacting to complaints from independent retailers, some
vendors are selling their products, particularly paper, in smaller
amounts – a healthy sign for storeowners.
(Note: To read previous Business-Wise columns, click on
the titles in the right-hand column. To comment (on or off the record) on any of the issues mentioned
above, email Mike Hartnett at email@example.com.)