irreverent, thought-provoking analysis of the industry.
What's Happening Out There?
Some grim answers, and gas prices is only one
of the culprits.
Compiled by Mike Hartnett (September 5, 2005)
(Note: Last month in an email newsbrief, CLN noted
the mostly bad news I had heard lately and asked, "What's going
on out there?" Here are some of the responses. Comments
relating specifically to scrapbooking can be found by clicking on
Memory, Paper & Stamps in the left-hand column or by clicking HERE.)
A Well Established Independent.
To put it simply, things are not good out here in retail craft
land. Not many people will share actual numbers, but the information
from those who will is pretty consistent – sales are flat at best.
Even with good sales in yarn, beading, scrapbooking, and a few other
small areas, it is not enough to make up for the significant drops
in the big picture. I know that in our primarily "blue
collar" community the cost of gas is having a major impact –
especially when coupled with large families, big distances, and
virtually no public transportation!
(Mike's comment: When I visit the Peoria-area stores, I
see customers in the paper-craft, stamp, yarn, and bead aisles, but
not many customers anywhere else.)
An Industry Consultant.
A war I don't want – and am suspicious of – makes me anxious
subliminally. I don't trust big business; they cheat and lie and the
officers live big off the money I either invest in them or support
with my business. Auto business is way up; that money comes from
somewhere in the budget that is already down because of gas prices.
Housing prices are off the charts and people are investing in
expensive housing. That money comes from somewhere in the budget,
(Mike comments: To illustrate that point, is a new study
by the Public Policy Institute of California and reported in the San
Diego Union-Tribune which indicates that 20% of people who have
bought homes in the past three years are spending more than half –
half! – their monthly income on mortgages. And almost a third of
those earning $30,000-$60,000 are spending more than half their
income on housing. The situation is worse in California than in most
places, but still....)
What suffers? Leisure and incidentals. What gains: I spend it on
what is of value, what I absolutely need, and what makes me feel
Most retailers today do SO much by the numbers that they lose
track of who there customer really is. They are afraid to trust
their gut along with the numbers to make decisions.
Target is the exception. It gives me value, fun, quality, and a
new look almost every week somewhere in the store.
A Needlework Designer/Distributor.
It is not just the price of gas keeping consumers home, it is
what fuel costs are doing to the price of necessities. Even Wal-Mart
is starting to feel it.
Also, costs are increasing to their suppliers. The rock and the
hard place are on a collision course to the point where publishers
and manufacturers will no longer be able to tolerate "expense
leveraging" and the retailers will have to find something
besides price to compete on; most have long since given up on
quality and customer service should be more than just a person at
the door saying hello.
As a family with ingrained habits, our household shopping list
has not changed substantially in many years. Each year the cost
climbed a bit, something close to the CPI. But in the past 16 months
our household expenses are up more than 35%; trust me, our income
Our industry sells niceties, not necessities, purchased from
disposable income. Working families have fewer extra dollars, and
those who thought they had good incomes from dividends and other
parts of their retirement portfolio have less income and higher
expenses. All this means less disposable income.
A year ago I thought nothing of jumping in the car every
afternoon and heading out to the farmstand for "just
picked" vegetables for dinner, and stopping by my local
supermarket for the entree. Now I consolidate those four to six
trips a week into maybe two. That means at least two times I do not
impulse buy. And even with that cut out of the budget, our expenses
are still up 35%, not counting the gas to get there.
(Mike's comment: Interesting thought! How often is the
difference between a store's profit and loss the impulse purchase?
Fewer store visits means fewer chances to get that impulse buy.)
All of the chains have been making their stores progressively
less pleasant places to shop. As a consumer. I find it increasingly
unpleasant to navigate the aisles.
More and more resets seem to include moving the aisles a few
inches closer, thinking no one will notice. Or increasing the height
at which merchandise is placed. My mother, who relies on a electric
cart, is so frustrated she prefers to do without rather than under
go the unpleasant experience. Either she spends half her time trying
to back out of an aisle because two push carts – much less two
electric carts – cannot pass in the aisles. Or, she cannot reach
the items she wants because she cannot reach over about 6 ft. and
things are now often as high as 8 ft. with no sales help around to
(Mike's comment: Federal law requires stores be accessible
to the handicapped, but says nothing about products being
As recently as a year ago, it was not uncommon for me to take a
day each week to visit the chains just to see what was happening.
Often this meant spending $$$. Now I visit more like once a month or
Now we cram all necessity errands into fewer (some weeks even
one) trip; there is no time to side trip to my local shops to see
what's new and impulsively buy. In fact, I don't usually even get to
the "craft aisles" strategically placed as far from the
entrance as possible because I have neither the time nor the spare
cash to fight my way back there.
This change in shopping means spending about the same amount per
visit, but it is one trip, not six; that means at least 80% fewer
dollars spent. And if my neighbors are any indicator, this is more
common than we retailers really want to think.
Crafters now are talking more about using their stash instead of
building it. If they aren't in the stores, they aren't buying.
Consumers are not in stores for more reasons than the cost of
getting there. High gas costs are certainly an issue, but so are the
prices of necessities. Traditionally, during bad times consumers
visited and spent money in craft stores because they needed an
escape, not a claustrophobic experience in a poorly maintained store
where you trip over trash in the aisles.
E-commerce and Store Owner.
What is going on? I'm in two businesses: crafts and teen apparel
(don't ask me why). My online craft business is down a smidge (maybe
5%) after five years of growth. I thought it was because I took too
long to implement a website redesign and my customers were tired of
technical problems. But maybe not.
I've been able to hold the line on outbound shipping costs. (My
prices are up somewhat because my suppliers have higher expenses,
but that usually raises sales rather than decreasing them unless a
$1 increase in a kit affects a purchase decision.) Overall I don't
think gas price is a large part of my particular issues.
Seems that Michael's is still doing well, but perhaps they're
just getting a bigger piece of a shrinking pie.
On the other hand, the teen apparel business is going
gangbusters. Up 30% from prior year, and that's in my store that's
been open five years. The local newspapers were commenting that teen
oriented businesses were doing very well for back to school, partly
because there were no more "must have" electronics
purchases soaking up available spending money. Kids were buying
clothes instead of desktop computers, cell phones, or MP3 players.
Clearly the increased gas prices have not stopped spending on teen
I don't know how many of the target customers for crafts have
teen-aged kids. Maybe they're spending it all on the kids (the baby
boom "echo"). We certainly can't blame it on the
electronics business, or my teen apparel would be suffering also. Or
maybe crafts are pretty low on the household-expense totem pole, and
the craft fund is going to gas money and there's no connection
between what's happening in my two businesses.
I guess I'm glad I'm not alone in my craft woes, but it's not too
good for the industry as a whole. I don't really want to assume that
the whole idea of making it yourself is drifting out of fashion, but
it's possible. My 96-year-old grandmother can't get a grip on a
needle any more. (I'm thinking about introducing her to punch needle
for something to do.) But as we all get older and more infirm, large
numbers of crafters just fall away, like my grandmother. Sobering
I did hear on the CBS news last night about this trend towards
soft sales. It is not only the craft industry. Wal-Mart and Target
even reported low sales, low traffic. They were interviewing people
coming out of Wal-Mart.
Yes, Higher gas prices does mean people do not have the extra
money to spend on hobby or home related items. They are too busy
trying to keep their car going, buying food for their family, and
paying higher utility bills of the Summer.
If gas prices remain high, then this will continue to keep all
extra money to a minimum. Putting children back in school during the
third quarter could also translate into softer sales for the craft
industry, but will help Wal-Mart and Target.
I just returned home from a week's vacation with my family and
thought I'd share the observation my husband and I made. So far, gas
prices haven't seemed to inhibit the number of people traveling. We
left our home in Iowa to travel to a resort near Chicago, then made
a circuit through Illinois, St. Louis, Lake of the Ozarks, and home.
At every gas station along I-80 and I-70 (and we have little kids so
we stopped at more of them than we actually filled up at!), there
were cars waiting in line to even pull up to the pumps. Traffic on
the interstates was always busy all the times of the day and
My husband drives all over the Midwest regularly for his business
and he feels the number of people on the road is higher than any
summer in the past 5 years.
Maybe people are simply putting their gas purchases on credit and
it will affect behavior later when they have to pay the bills.
(Mike's comment: Ok, we've read lots of reasons why sales
are flat or down. Now then, what should we DO to improve business?
Email your thoughts to CLN at email@example.com.
To read previous Business-Wise columns, click on the titles in the