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Your Business Commentary

Mike's often irreverent, thought-provoking analysis of the industry.

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Are We Losing Our Core? Yes and No

Readers respond to an intriguing question.

by Various CLN Subscribers (March 7, 2005)

(Note: 

In the previous Business-Wise column, Mike Hartnett cited how the industry seemed to be flocking after the hot trends memory, yarn, and beads while allowing other categories to languish, or even disappear from certain stores. That might make sense in the short run, but what effect will that have long term? Mike wasn't sure if this was a serious problem or was he simply not adapting to the industry's ongoing evolution, and asked readers to respond. Here are some of them.)

Yes, it's a problem.

It seems to me as if the cause of this is to think that a craft shop must make the same amount of money from each square foot of the store. If this is the thinking, then that's reason enough for them to switch over to only the crafts which are hot at the moment.

Unhappily, this does not take into account two very important factors which are, I think, givens in the craft market: The first is that all crafts are cyclical. Memory is very hot right now, as is knitting, and beading isn't doing too badly. But other crafts like paper mache just aren't on the radar screen at all.

But every craft is cyclical and one way to tell when a cycle is going to take a downturn is when "everyone" is doing it. This is true of almost anything: stocks (when your mom buys it, it's time to sell); fashion (when everyone is wearing something, the trend is over); and food (remember wine coolers?). This is not a bad thing necessarily, but just part of the industry.

So I'd say memory and knitting are about to turn. When a craft goes into the down cycle, several things happen; retailers who bet too heavily on this craft go out of business, as do manufacturers. Manufacturers who stay with their core, even if they add some trendy things, are in much better shape. Same with retailers.

However, when the cycle goes down, some of the people who took up the craft when it was trendy continue to do the craft. I started needlepoint in 1970, right at the beginning of the needlepoint boom. And I've done it ever since.

Those people who stay loyal to a few crafts have to be at the core of any retailer's business, and are especially important for the general retailer. Crafts stores, especially the small ones, are not "drop in" stores; they are destination stores, even if the destination is in the same town.

People will go out of their way to shop at a store which carries materials for their craft. They will drive, they will make a day of shopping, and, if the retailer makes it easy, they will shop by phone and email.

This is why getting rid of unpopular crafts is so bad. If I do miniatures and find that Store X no longer has a miniatures department, I will not go back. I will find another destination store where I can take my business. Even if it is something as simple as glue, or needles, or ribbons; if I can't find it at a local store, I find another place or another method, or just make do.

The store has lost a sale, and most likely has lost a customer.

The question for shops has to be, not what's hot now, but what things can I carry which will cross crafts while still devoting some space to all those departments which are no longer hot. Knitting would be a good example. When "nobody but grandmothers" knit, what did retailers carry? Baby yarns, some basics, and crochet cotton. If decoupage isn't hot right now, then carry scissors for close cutting and books of clip art (both good for memory), and basic glues and varnishes (home improvement people).

The ardent decoupager will find things at your store and will continue to visit, if only occasionally. Then when decoupage becomes hot again, they will visit you more often. Don't carry varnish and they won't come back when their crafts becomes hot.

BTW, I think decoupage might actually make a bit of a come back. The way crochet is an extension of the knitting marketplace, decoupage is an extension of the memory marketplace. Many of the same skills could be used to apply the same kinds of things (cut-outs, patterned paper, etc.) to furniture and household accessories. In fact, I saw a decoupage book at my local bookstore yesterday, I was so surprised. Janet Perry, Napa Needlepoint, janetp@napanet.net

What's happening to painting?

I read your Business-Wise column with great interest. I too went to a trade show (Frankfurt) with the same mission you did: find out what is happening globally and where the trends are sending us. As a predominantly fine art wholesaler, I was amazed to see the extent of crafting, scrapbooking, and cardmaking in the Creative Building. Without going every year, I may be at a disadvantage to speak knowledgeably about the changes that I saw. But the majority of the booths had the emphasis on beads, tiles, stickers, papers, and accessories for scrapbooking; fine art seemed to be a sideline in my opinion.

I hear what you are saying about discontinuing everything but what sells and the fear of cutting your own throat to save your neck. We are in a scary time; imports from China in our fine art sector are rampant. Quality still remains poor, in my opinion, but for how long? The general feeling that I got from the manufacturers that I am dealing with was gloomy. High discounting, low turnover, and a poor, soft Xmas showing. Technology is what sold over the holidays, not art supplies.

I did not attend CHA but have heard back from many that went. Attendance seemed to be steady, scrapping is back with a vengeance and in Canada we never really had the full impact years ago. So now it is scary to jump on this band wagon again.

I enjoy reading your column because it gives me a great insight. Keep up the great work. Birgit Cooper, President, Heinz Jordan & Co. Ltd., 416-663-9702

Why some things cost more, others less.

There are times when you scare me with how close your commentary reflects my thinking. Were you standing behind me someplace when I was attempting to explain to a small indie stitching shop owner that unless crafts, and particularly those she specializes in, stay in the chains, her customers will die and nothing will bring new blood into the fold?

You published this excerpt in your last newsletter: "It's certainly true that manufacturers have a lot less pull in the marketplace than they used to. But they haven't lost it to Wal-Mart and Target. They've lost it to you and me. The real transformation of the past 30 years is the rise not of the American retailer but of the American consumer.... That's why Wal-Mart is so tough to negotiate with, and so relentless in its quest for lower prices and lower costs. American consumers now consider it their due to have access to a wide variety of cheap, reliable goods. Their allegiances are fickle; brand loyalty is in fast decline." - James Surowiecki, in the 2/14 & 21 edition of the New Yorker

Wow! I have said the same thing for about 10 years, but I have always felt that nobody really believed it but me. We as retailers can't go whining about Wal-Mart; that store is just responding to the sharks (our customers) who are exceptionally efficient foragers. As long as Wal-Mart can exploit labor and extract nearly every penny of profit from the manufacturers and distributors it works with, business will continue to shift to the Wal-Marts of the world.

Too bad. I wanted to buy a kite to decorate a wall in my store this weekend. I haven't bought a kite in years. When I was a kid, you could buy a paper and balsa kite at 7-11 for 19 cents (this was 1964 or thereabouts). There would be a big square box by the checkout with maybe 100 rolled up kites inside, and lots of designs to pick from. If not there, you could run down to the TG&Y, or perhaps Woolworth's. Park in front, run in, pick a kite, run out. (Actually, we walked or rode bikes to those places no driving since we had only one car).

Today after scratching my head, I went to Target with my daughter to buy the kite, since I could think of nowhere else I had seen a kite lately. The store was huge and newly remodeled. Lovely. I got my daily exercise walking all the way back to the toy department where I had my choice of five styles of $6.00 kites. Now I know there's been inflation, but my hamburger meal that cost about $1 back then only costs about $4 now, but that kite has gone up a whole lot more from 19 cents to $6.

We as consumers did this to ourselves. We have driven down prices on lots of high-demand items. Conversely, the other stuff that is not in such demand, but not really that much harder produce, that we used to be able to get for a reasonable price, is now astronomically high.

I hear all the time from customers via phone and email complaining that their local specialty shop is charging $4 for a little skein of thread. Of course, they have to, because the consumer is buying all the other stuff at Wal-Mart (or wherever) leaving the retail store to pay rent using $4 skeins of specialty thread.

So what's to do about it? Nothing. There are more people who want the lowest prices on the most products than there are people who want a larger selection of merely reasonably priced products. So our populace is now divided along income lines: you want something unusual, be prepared to pay triple what it should cost (if you can get it at all); you want a commodity, shop at Wal-Mart (or Target or whatever discount club you like).

I hated having to go to a huge store and walk through the parking lot and then the store and then the huge checkout line for a kite I could have gotten in about 2 minutes when I was a kid. I just don't see any way around this result, given the nature of consumers. Catherine Bracken, www.discountneedlework.com

Chains making things worse.

Here's my take on the show (off the record):

Other than seeing a lot of old friends and acquaintances, the CHA show was a disaster! For those of us not in the "hot" categories, you could count the number of independents we saw on one hand and the majors were simply not interested in cross stitch.

We do business with Michaels, A.C. Moore, and Jo-Ann's and their buyers didn't even drop by to take a peak at the new things we had to offer. Of the majors, only Hobby Lobby made an effort to come by. Even though we run the risk of losing some exposure and seeing some of our foreign accounts, we can't justify going back to CHA.

Next year, I'll take the $7,000 I spent to exhibit and have some face-to-face meetings with the buyers prior to the show. It's the [chain] management's fault for not insisting that their buyers do their jobs. One of the buyers was overheard to say that she was "bored and just wandering around" when greeted by a vendor.

I hope you are right about counted cross stitch coming back. The only way it's going to happen is for it to start at the grass roots level. The chains (other than Hobby Lobby) have pretty much decided that they are not going to make any effort to help. Name Withheld

Change is good, not worrisome.

Yes, dear Mike, I think you are not adapting to the evolution of the craft industry! What was our core yesterday is not going to be our core tomorrow.

I've been in the industry even longer than you have -- since 1956 when I produced the annual MIA (Model Industry Assn.) trade show in Grand Rapids Michigan. That show was entirely model airplanes, model cars, model boats, model trains and Hazel Pearson!

Through the years the MIA became the HIAA, then the HIA, now the CHA. Each name change reflected the changing of the core. I do feel that today we are undergoing the greatest change ever, as are the lives of most of our consumers. Trends in crafts have always had their first stirrings of change at the consumer level.

Our future is going to be different, but it is nothing to fear. It will evolve, and the industry will continue with a new face and new faces. And it is the more dynamic because of that. Jean Leinhauser, Creative Partners

(Note: To read previous Business-Wise columns, click on the titles in the right-hand column. To add your thoughts to the ongoing debate on the health of the industry, email them to mike@clnonline.com on or off the record.)

xxx

 

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