irreverent, thought-provoking analysis of the industry-- with an
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Predictions for the New Year
The industry, television, yarn, and more..
by Peter Heinsimer, Kathie Stull, Jan Kahn, and others (January
Peter Heinsimer, Westlake Associates
Overall Sales and Chains: Last year was not a great year for
industry sales at many traditional retail outlets. That could make
2007 somewhat easier regarding same-store sales comparisons.
However, with scrapbooking being flat to down, yarn still declining,
non-industry retail segments taking larger parts of the seasonal
business, and nothing dramatically hot or new in the stores, 2007
might continue to be challenging.
I think 2007 may be a year as much about marketing as product.
Some manufacturers are gun-shy about developing new lines because
some retailers are more risk adverse than previously, and many in
the industry seem more defensive and protective of markdowns, risks,
and cost containment.
Those things aren't bad, but we are a creative industry selling
products the consumer needs in order to make a finished project. If
we are not aggressive at the manufacturing and retail level,
providing value added at the point of sale, we might create a
self-fulfilling plan that could appeal to a ever diminishing
customer base. In other words, a vicious cycle: flat sales
discourage vendors from developing and retailers from adding new
products, and a lack of new products discourages sales.
At the same time, a trend has reversed itself: for the last 20
years, our chains have siphoned off business from non-industry
chains. Now non-traditional chains are siphoning off some of our
business. While this is a normal evolutionary process, it might hurt
our industry if we do not react aggressively.
The consolidation at both the manufacturing and retail level is
likely to continue; however, we do see new opportunities in both
segments. What we do not see for 2007 is as many companies, be they
manufacturing or investment firms, looking to buy into our industry.
We do see retail chains that are not presently in the business or on
the fringes seeing opportunities to continue to gain a presence in
parts of the industry.
The industry has grown substantially the last 10-15 years. During
that time many companies in the retail and supplier ranks have been
bought, and in some cases sold, by private equity companies. It is
possible, if the industry is flat to down trending, that this could
cause changes in the overall strategies of companies looking at the
industry, as well as in owners of existing companies.
Independents: The industry may offer more opportunities for
independents than it has the last 20 years. The exception might be
scrapbooking, unless ideas are developed to change the slowdown in
growth the last year or two. Customers need help and independents
are the best at this.
With the technology currently available, customers looking for a
new way to shop, and with the shake-out of independents the last few
years, we may be coming to a most exciting time for start ups.
Product/Category Trends: Licensing might continue to grow.
Martha Stewart getting more involved in the industry could provide a
great boost and a lot of publicity that on its own could drive
increased consumer awareness and demand.
As the chains direct import a greater percentage of their goods,
they will need to take more ownership in the product development
process. Suppliers will continue to turn to licenses, patents, and
other ways they can protect their creations.
The best-of-breed suppliers will continue to constantly develop
new products, programs, and concepts – some of which will be the
next scrapbooking. The biggest deterrent to developing the next
winner would be retailers and suppliers not working together to do
so. This is not an indictment of either as they do a good job
working together; it just may be more important in 2007 for 2008
products than it has been the last five or ten years.
Design Trends: Technology continues to be a huge issue. As I
say every year, the industry needs to continue to harness technology
in the products, the in-store experience, and the marketing
programs, just as it has in the back-office part of the business.
The industry has made great strides in sales and supply chain
information and customer marketing tracking.
To be successful as an industry, we need to make major strides in
the customer education areas. Some of the retailers have
successfully stepped up their effort with in-store TV: better
demonstrations and project sheets; consumer e-mail blasts; online
distribution of ads, specials, and coupons; chat rooms and customer
feedback; and online sales.
For more than 10 years I have been saying we needed to look
aggressively at the Internet as a means to build the industry and
individual companies business. While progress has been made – I
think in 2006 there was more progress in consumer efforts than
perhaps the last 10 years, there is still a tremendous amount more
we can do independently and as an industry. It is effective and
inexpensive. All we have to do is look at the impact of positive
Internet influence in other segments that are ahead of us and tap
into best of breed. This is not rocket science.
Trade Shows: CHA needs to continue the great job it's doing
to meet the majority of needs in the twice-a-year format. I think
last year, the first year with two CHA shows, went well and I assume
2007 will be even better. We have a great cross section of the best
in the industry on the board of directors, a management group that
has been in place long enough to know what to do, and an
accountability program that should lead to great results. There
still are a lot of other category-specific shows, and it remains to
be seen if they will all survive.
Media: As an industry, we need to better use technology
way to get the word out to the world. I do not see the same number
of positive press releases and e-mails directed to the media that
could help build the industry. Martha Stewart may help as her
company does a good job on press releases. This may be a real
opportunity for CHA as once the process is in place it is very cost
effective. Of course you need the right news at the right time going
to the right people; but we are a large, creative industry with a
healthy trade group like CHA, so this should be a no brainier.
Kathie Stull, KS Productions
(Note: KS Productions produces a variety of
industry-related television series (beads, needlework, scrapbooking,
cooking, kids crafts, etc.) for PBS stations.)
Television: Television continues to grow as a resource for
crafting information for consumers. The interest in crafting and
decorating shows no signs of slowing down, and those with PBS feel
that the general consumer interest in homes, redecorating, and
crafts is driving viewers to look for education.
Many shows on commercial stations are more for entertainment; PBS
has created a niche by being known for education and as the resource
for learning how to. At the national conference, the new PBS
president reaffirmed the commitment of PBS to education and
specifically mentioned how-to as a growth area. At KS Productions,
we have seen remarkable growth in carriage and viewers this past
year, and the addition of the CREATE network – the digital
how-to channel from PBS – has caused a significant increase in the
number of viewers seeing their favorite craft programs.
CREATE focuses on how-to, but features many cooking, baking,
etc. – entertaining shows. That is an area we are expanding with Bake
Decorate Celebrate and hope to continue growing.
So my crystal ball prediction is that we will continue to explore
new potential programming for PBS, PBS stations will increase their
time slots for craft programs, and PBS will continue to market
itself as a prime resource for how-to and lifestyle programming. .
Scrapbooking: Many companies have been questioning if
scrapbook has peaked and where the market is going. My take is that
scrapbookers have become crafters – they just don't know it. There
is still the expert or heavy user of scrapbook materials; they tend
to be the purist, more concerned with actual albums and photos. But
the other side of the market is the "social" scrapbooker
who is interested in not only scrapbooking with others at parties
such as crops, but also the general crafter who makes a few projects
like an album for a special event, maybe a picture frame for a new
baby, or even her holiday cards. They are really crafters and are
being exposed to painting, decoupage, beading, and many general craft
activities under the guise of scrapbooking.
Photos are still important to this customer but they are also
"scrapbooking" without photos and making 3-D craft
projects and cards. So my prediction: There will be a resurgence in
general craft activities, but it may be in our best interest to find
a new name for this new side to scrapbooking (unless we can make
"crafting" a name in vogue).
Also, we are seeing huge interest on both our website and from
consumer mail on digital or computer-based scrapbooking.
Beading and Jewelry: We have just seen the beginning of this
trend; it is a bottom-up trend starting with many home-based
businesses, designers, and small retailers. I think the chains will
make a commitment to the category, too ( most already have). My
theory is that for a craft to become successful, there must be an
artisan level to it. That way there is intrinsic value to the items
the consumer creates; artists can make and sell their creations,
museums feature designs, and finished jewelry is all over the
Last Prediction: Sewing is on the uptrend, including
quilting; and the entire art of embellishing, including threads,
fibers, and even beads, is turning this into a new market.
Overall, I feel the interest in crafting is on the uptrend, but I
do worry about how our industry will market to the consumers already
The economy has got to take a hit due to the slowdown in the real
estate sector, and that will probably hurt retail. Wal-Mart is
struggling and losing its identity. Michaels new buyers are going to
squeeze suppliers even further to try and pay down the debt.
Jo-Ann's 4th-quarter stock is the surprise of the year, but let's
see if the store merchandising improves with the new management. A.C.
Moore is in a stage of digestion stemming from their growth and the
competition.Rag Shop is progressing but still faces an uphill
battle. Hobby Lobby seems to be the exception to the norm with
I think sales will be flat in 2007 for many suppliers unless they
can find other places to sell their wares. Diversification will be
the key to survival but that's always been the case.
Investment banks are driven by one thing only – Return On
Investment, and nothing else matters. Since the number is calculated
annually and judged by pension funds and institutional investors,
they don't think much farther than that. Considering all of the
investment banks that are now in the industry, it will be an
interesting 2007 indeed!
Jan Kahn, VP of Sales for Caron International
When it comes to a prediction for 2007 concerning hand knitting
and crocheting, reports in the media say it best: "Knitting and
crocheting are in the mainstream of America." This is certainly
no better demonstrated than by the Craft Yarn Council of America's
newest member, the DYI Network, which is sponsoring a Super Bowl
Knit In on Feb. 4, and by the recent announcement that Julia
Roberts will star in and produce The Friday Nights Knitting Club.,
a new film featuring her favorite activity.
As far as the number of people knitting and crocheting is
concerned, the statistics speak for themselves: Since its launch
earlier this year, the Save the Children caps program for
underweight babies in Third World countries has received more than
50,000 knitted and crocheted caps.
It is true that the yarn industry has undergone some dramatic
changes as it has moved from fashion scarves and shrugs to the
tried-and-true projects of throws, afghans, sweaters, and items for
babies. This has certainly changed the landscape of our business. We
believe yarn is still the best game in town and our prediction for
2007 is that the drivers of the business will be basic, basic-plus,
and yes, even some fashion-basic yarns, as our consumers move to
larger, more traditional projects. We predict growing sales next
year in these core yarn categories.
(Note: To read other predictions for the year, click on Memory,
Paper & Stamps, Designing
Perspectives, and Tech
Topics. The previous Business-Wise column, "Predictions for
2007," is also still online. To add your thoughts to the
discussion, email CLN at firstname.lastname@example.org.)