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Why Industry Sales Are Down
The answers are more complex than simply the
by Bob Ferguson (December 1, 2008)
(Note: Bob and his family operate a Ben Franklin store in
Redmond, WA and has been considered for years one of the best
independent retailers in the industry. His store has survived
numerous recessions. Bob has also served on the boards of the Craft
& Hobby Assn. and Sierra Pacific boards of directors. He wrote
to CLN after CLN's report that Michaels, A.C. Moore,
and Jo-Ann reported declines in their third-quarter sales.)
Regarding your sales update on Michaels, A.C. Moore and others:
No one likes to see sales decline for anyone, even for
competitors. All the losses do not bode well for the future of the
entire craft industry if it continues like this.
From the independent side, many are seeing similar difficulties
in sales. Unlike economic downturns in the past, most craft stores
are seeing declines during this period.
Unfortunately, sales losses in many parts of our industry have
been lagging for much longer than the start of this economic
downturn. You have been reporting for quite a long time about the
loss of independent craft and scrapbook stores as well as the
economic troubles of most of our industry chains.
I have a bit of a different spin on the reasons why.
During prior economic downturns, traffic in craft stores has
always been up and sales have increased in direct proportion to the
traffic improvement. This time is much different in that first the
customers are buying more craft products and far less seasonal and
home décor products.
While we are enjoying the increased business of crafts (as much
as 30% more product in some of the craft departments), we are seeing
declines in the home décor and
seasonal products. The products from those departments usually carry
a higher price, which results in a higher total average sale. The
bottom line: more craft products sold at a less-than-average unit
price of home décor goods
results in sales declines.
A second reason why many are so hard hit is that a large number
of craft stores have abandoned what has always been their core
business. Hard crafts (i.e., painting, clay, wood, and wiggle eyes,
among others) have seen little in the way of innovation in recent
years; plus, the everyday-price-off promotions run by many chains
have run that business into the ground for many. So now, when the
consumer interest is high for those same products, stores simply
don't have much of a selection.
Finally, craft stores are suffering beyond what would be normal
for us in an economic downturn because the consumer is BORED!
If it is true that business has traditionally been good because
the first interest of a craft consumer is "What's new?"
and craft consumers want to be inspired to buy (we carry nothing
remotely considered to be "consumables"), then it makes
sense that with the dramatic slowdown in product development in the
past few years, coupled with the emphasis of nearly all craft store
marketing on price first and uniqueness, quality, and creativity
somewhere far down the line, that the consumer is BORED.
Motivation to buy craft products is normally thought to come from
the inspiration instilled in consumers through displays, models,
ease of project completion, educational concepts (i.e., classes,
demos, and craft-related activity programs). In recent years nearly
all motivation to purchase has come from price, regardless of the
fact that consumers have no inspiration to buy because they don't
know what to do with the product or don't care what the price is if
the demand is not established.
I recently was in a shoe store that had a huge sale ongoing. I
wear a size 13 and the store's selection of 13's was extremely
limited. An enterprising young salesperson enthused that the shoe I
was looking at was such a good deal that perhaps I would consider
taking the size 12 and making it work.
Isn't that by and large what many stores and manufacturers have
done by trying to sell me something even when I haven't a clue what
I would do with it?
Now manufacturers are calling daily with hot deals that they
should have been offering six months ago. My response to the hot
deals is the same as it has been: spend your money on innovation,
creativity, and stop trying to entice me as a buyer and my consumers
They and I don't give a rats arse what the price is if I don't
know what to do with it. And with the traffic down so much because
of the boredom we have all created, as well as the economic morass
we are in, consumers are not going to react to something they don't
understand. So what if I offer a crop-a-dile for 5 bucks; what the
heck is a crop-a-dile to 99 our of a hundred folks?
If our industry does not create some new interest in crafting
through some initiatives to promote the benefits of crafting, we
could be doomed to a long downward spiral. The consumer has our
number, Mike, and the ride down is not going to be pretty.
(Note: Bob raises a number of questions: Why are there
fewer new products? What happened to project sheets, madeups,
instruction booklets, and traveling teachers? What's the danger in
low prices? How do we create new interest in crafting? Send your
answers – all anonymous – to CLN at firstname.lastname@example.org.)