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A Letter from America
The state of the craft industry in the U.S.
by Mike Hartnett (November 3, 2008)
(Note: Great Britain's trade magazine, Craft Business,
asked CLN to write on the state of the U.S. Craft industry.)
Greetings from the other side of the pond! As I write this from
my home office in Central Illinois in late October, the U.S. is
shell-shocked by the economic earthquake. No one is sure how the
bail-out will work, or if it will work at all. We keep waiting for
the economic dust to settle to see what the industry landscape looks
like, but the earth keeps moving.
What is clear is that the consumer is frightened. Housing prices
have plummeted and food prices have risen. Access to credit is
difficult, and everyone's retirement investments are dismal. The end
result: consumers are cutting spending at the most critical time of
the year for retailers.
The U.S. craft industry had already been suffering from an
unsettled year for two reasons:
1. Price increases for raw materials due to rising oil prices
hit the industry during the first half of the year. One major U.S.
vendor received a 20% increase, and then was slapped with another
25% increase three months later. Oil prices have since dropped, but
not the price of many raw materials.
2. Scrapbooking, the strongest, longest-lasting trend in the
industry's history, appears to be fading, although still quite
strong. I say "appears" because many independent retailers
have shut their doors. Unfortunately, many consumers opened
scrapbook shops without the necessary retail expertise or capital.
When business slows down, they go out of business, hurting the many
small vendors who relied on them for their livelihood. When
scrapbook businesses close, that gives the impression the category
is fading. However, it could be that the business is simply moving
to the remaining retailers. The savvy survivors are expanding into
cardmaking and other memory-related products.
The U.S. craft industry has traditionally done well during tough
economic times, but usually a recession coincided with a hot trend.
There was a bad recession during the early 1980's, but consumers had
recently discovered counted cross stitch and somehow found the money
to give the industry a huge boost.
This time, there is no trend that is that enticing to many
Signs of hope.
Sounds pretty grim, doesn't it? But it appears that consumers are
doing what trend analyst Faith Popcorn once called
"cocooning," spending much more time at home. They need
something to do with their increased at-home leisure time, and
crafts is the perfect solution.
Furthermore, craft stores offer the perfect answer to the dilemma
of buying Christmas cards and gifts. If ever there was a time craft
stores should be showing consumers how to save money by making
Christmas cards and gifts, it's now.
Another trend: Wal-Mart appears to be easing itself out of our
industry, which should be a huge boost to craft chains and
independents. (Wal-Mart has 4,000-plus stores in the U.S. alone and
employs more people than the U.S. has in its armed forces.) Wal-Mart
has already eliminated needlework, and as it remodels its stores,
it's eliminating fabric and condensing the craft department in favor
of an expanded electronics section. (It separated scrapbooking/card
making from crafts and combined it with party goods, adjacent to the
greeting card section.)
The Jo-Ann chain has already benefitted from Wal-Mart change and
thus far has had the best results of the U.S. chain stores. The
results from the other chains are mixed, at best.
Hancock Fabrics has emerged from bankruptcy – the only retail
chain to do so since the U.S. Congress tightened bankruptcy laws a
few years ago.
Hancock should benefit from Wal-Mart's withdrawal from fabric, as
should Hobby Lobby. (Hobby Lobby is privately held and does not
disclose its sales and earnings, but founder David Green, who
started Hobby Lobby with one shop in the 1970's, was named by Forbes
magazine as one of the richest men in the U.S., with a net worth of
The new management at A.C. Moore, a chain with 100 or so stores
in the Northeast, is struggling to implement new inventory-control
systems, just as Michaels did in the 1990's. The result thus far has
Michaels' situation is more complicated. The company with
1,000-plus stores was sold to two private equity firms, Bain Capital
and The Blackstone Group, which borrowed $4 billion and now expects
Michaels to service the debt. (Retailing is hard enough without that
(Note: The article had a limit of 800 words. Obviously
there was much more that could be written. Anything you'd like to
add to this summary? Email your thoughts to CLN at email@example.com.)