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Your Business Commentary

Mike's often irreverent, thought-provoking analysis of the industry-- with an occasional guest columnist.

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Why the Consumer is Bored

Reactions to Bob Ferguson's analysis of the industry.

by CLN Subscribers (December 15, 2008)

(Note: If you haven't read retailer Bob Ferguson's article, "Why Industry Sales Are Down," click on the title in the right-hand column, and then read these reactions.)

Is a New Trend the Answer?

This is a math issue that we are dealing with. The financing of a new trend. Does the industry wait and hope for a group of small companies to begin a new trend in something? This could take awhile; in this economy, this isn't necessarily a good idea.

In this more mature business of chain stores with concerns about adding new vendors (not to mention concerns about adding a small vendor), it seems the industry's larger companies need to work together. New trends need to start and continue – at all types of stores.

Bob is absolutely right. Staples are ... staples. They are staples because their "need/use" is established and the consumer knows what to do with them.

Really new products are iffy. The consumer has to be enticed to "try it" and the proper support (at all levels) has to exist. Essentially the manufacturer has to teach the consumer, in all ways, what to do with the product. Instruction repeated, in all forms, equals success and a staple may be created.

One of the problems with a new product is that the manufacturer incurs significant expense, which has to be allocated to product cost, to make the new product successful. Often after the new product has been accepted, competitors enter the field with lower cost versions, at greatly reduced price. The "duplicator" can offer lower cost product because they don't necessarily have to spend on development of instruction. That job was done by the innovator.

The exception to the rule is if the new product "solves a problem" that the consumer already has, or the product's usage is so obvious that little education is required. Not often do these come about. (Goo B Gone is a good example of this type.)

On trends, which the industry is hungry for right now: It takes more than one company to successfully introduce a trend. When several companies introduce a category, there are enough product volume and educational resources to make a statement. This was the case in cross-stitch and scrapbooking. They grew from many small companies.

There is also a pattern to growth in these categories:

1. Initial consumer interest and excitement. It offers something new that people understood and found a use for in their homes. Something that could be easily taught.

2.
"Gathering of new product," similar to gathering nuts in the winter. We all want to be prepared for anything/everything that we love to do. Heaven forbid we get snowed in without supplies.

3.
"I think I have enough." Time to start working with what I have. Retail sales slow down. It takes something really exciting to make the now established customer want to buy more. Sales slow down, significantly.

4. Lastly, "well the walls are full....the backlog of photos etc. is under control....and I'm bored and what else is there out there to work on". In this spot, we are losing independents.

Granted there are many other reasons why we lose sales/independents, but the real issue is that the consumer has moved on and is looking. It seems we're at that point, as Bob says, bored consumers.

The trend doesn't go away, it just downsizes to the basics – which hopefully, become staples.

What's next? I don't think the answer is in "one company" trends, but in groups of companies cooperating together to introduce a viable, consumer friendly trend. – Karen Lichwalla

Make Customers Happy.

You wrote at the end of Bob's excellent column "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? "

I think there are many answers to this. One we see in the "Vinny Da Vendor" column – the rigidity of many vendors and stores in the industry. You see that in the needlework shop owner who won't sell threads for a canvas bought elsewhere. In the bead shop, the owner who says "Why would you want to do THAT?" when a person comes in with a non-standard idea. In the rubber stamp shop, the owner who can't see a use beyond stamping for the blanks in the shop. The shop owner who doesn't want to look outside the comfort zone to find new customers.

The end result of this is that the consumer pays in so many ways. She doesn't innovate, she doesn't go back to that store, she doesn't try that craft but another. And this ripples throughout the industry. If she was an artist looking to branch out, she looks at another idea. If she was a consumer wanting to try a new hobby, she tries something else, or goes and reads a book – and those sales are lost forever.

One reason why crafts stores have traditionally had up-ticks in hard times is that they make people happy. Consumers receive the joy of creating something and they have the satisfaction of giving something unique as a gift. They have the virtuous feeling of saving money. All this reinforces crafts.

While you might have bought a lipstick when you were feeling blue when times were flush (cost $9-30), now you buy a skein of yarn (cost $3). You got a pick-me-up from something lovely, for a lot less.

But if the store doesn't make you happy, why bother? If the store doesn't inspire, why try a craft?

When I think about this, I think about Target. I mentally call Target a happy place. I can go there and spend an hour or two just looking and not buying a thing. At the end I am refreshed and happy because the colors are bright, the store is clean, and I feel welcome. Target gets my business over its competitors because it makes me happy.

Contrast this to the late (and non-lamented) Kmart in our town. It was dark, it always looked dirty (this probably was due to the tan and brown linoleum floors), and the stock was always a mess. Even if I wanted something only Kmart had, I wouldn't go there. I might drive 20 miles to go to another Kmart, but I wouldn't go there.

Do you want to be a Target and make people happy and inspired and coming to your store, or are you the drab, depressing store? – Janet M. Perry, Napa Needlepoint, www.napaneedlepoint.com and www.nuts-about-needlepoint.com

True for Home Sewing, Too.

I read with great interest Bob's assessment of industry sales and the independent craft business. As a veteran of the sewing industry and a product of an independent environment, I think Bob hits the nail on the head. Every product, whether a $10,000 sewing machine or a $2.50 spool of thread, has features from which the consumer can derive many benefits. A smart manufacturer will invest in its customers by providing training to teach how to use the feature and by providing programs to help the shop owner create demand for the product (education, education, education). "Show me how this benefits me and makes my life better, and I will buy it, not based on price but based on how it enriches my creativity and self-satisfaction."

Eighty-seven percent of all sewing machines sold are $399 and below. This tells us that these are mass-merchant machines with a handful being sold at the independent level. Education is the marketing that takes that 13% of the market and reinvents their desire and motivates these enthusiasts to constantly invest in the tools of their trade – teaching them to outgrow their sewing machine and step up into a more highly featured machine. More importantly, constantly bringing this elite group back into the store, building the relationship with the owner that translates into trust and sales.

I know you need to sell a lot of wiggle eyes and pom-pom makers in the craft industry to equate to the sale of a machine, but the principals are the same: create a desire, teach them what to do with it, and they will buy. – Nancy L. Jewell, Manager, New Business Development, Sewing Products, Coats & Clark

True for Beading, Too.

"What happened to project sheets, madeups, instruction booklets, and traveling teachers?"

Here in my bead shop, That Bead Lady, Newmarket, Ontario, it is a full time job to keep up with store display samples. We have a day once or twice a month when the staff stops tubing and packaging and they all sit and make new samples.

Customers actually say, when they come in the door, "Thanks, I just came in for inspiration".

Yes, it is key! We also have colour story displays, which are simply trays with assorted beads and findings that work together. (Lots of customers have trouble with colour.) Often we are replenishing these trays daily with goods that would be otherwise lost in the store.

P.S. We have a Michaels about 10 minutes from us; customers tell me the staff there knows zilch about beading, and often sends them to us. My customers only shop there when they have a coupon. Isn’t this what you have been talking about, Mike?

What happened to project sheets? The Internet. In my business, you can find dozens of web sites with projects. However, beginners don’t know that yet, so we still need in-store handouts for the newbees.

P.P.S. A couple of ideas for the scrapbooking stores who are having difficulty: Stop calling yourself a scrapbook store. There are many of us crafters out there who have absolutely no desire to glue photos in a book with stickers around it.

However, I would be thrilled to learn how to use paper products in my jewelry crafts. Almost every one of my customers sells her finished jewelry, and there is nowhere to buy or make nice gift tags, or price tags, or displays.

The other thing I have been looking for, with the whole "greening" thing happening, is cloth bags my customers can embellish, with beads maybe; nice bags they can use here at the store. – Cathy Lampole, That Bead Lady, www.thatbeadlady.com

True for Scrapbooking, Too.

Great article today from Bob Ferguson. I know I’ve sent you emails before, but I want to clarify who we are. We’re a small manufacturer in the scrapbook realm, with seven years under our belts. We’re actually doing pretty well, as we’re keeping it small, and not trying to become Michaels' next new vendor. We also do 13-15 consumer shows a year. For us it’s a marketing tool, because we teach classes at the shows, and are using it to build our brand name. We also have a booth where we’re typically the only booth on the floor offering a free make-it/take-it. Some booths charge up to $10.00 just to do a make-it/take-it. (They’re not make-it/take-its, they’re mini classes. More on that later.)

I agree to a point that there are no new concepts, project sheets, and demos are sorely lacking. But I have some thoughts on other things:

Teaching Classes: Classes aren’t filling, and are rarely meeting minimum numbers at the independent retailers. Last class I taught at a retail location, I had six students (my minimum), and didn’t make any money off the class. As a small manufacturer, that doesn’t bother me because I know the store sold a lot of product after the class, and the store owner has since re-ordered. That for us is the goal.

Demos and make-it/take-its WORK! They really do! Something as simple as a card that goes together in 2-5 minutes can sell $10.00+ per person of product. The key is, you need to have the product in stock! If you run out, stop doing the project, remove the sample from view, and do something else that highlights another product.

We choose and design our make-it/take-its based on what product we want to move, and it works every time. For stores, we’ll ask them what part of our line is a slower seller, and again, we’ll design it around that.

Many times, these projects are done by store employees who don’t understand up-selling. It’s the independent owner/store manager's responsibility to teach and encourage the up-sell. Many times it’s an employee who frankly doesn’t care. They are the un-lucky person who’s been stuck behind the demo counter for the day. Whoever is there needs to understand this is an opportunity! An opportunity to work on their presentation skills, encourage customers to see a product in a different way, and generally make connections with the customers.

Another case in point: My business partner (aka Mom) and I are also quilters, and just yesterday, five of us got together and were working on quilt projects. Being a Sunday, there were only a few options for open quilt stores to visit if we needed something, or just wanted to shop. At the one we chose, they had a wonderful Tree Skirt project sample hanging up, with a sign attached saying "Kits Available". We asked about the kit, and they said it was $44.95, but they were out, and might have more in about two weeks. TAKE THE SAMPLE DOWN! I saw that, I wanted it, but was unable to buy it. Unfortunately, this happened with three different projects hanging in the store, and, this happens to be a store with a very well respected quilt kit mail order business.

One thing I think independents forget is to making these demos and make-it/take-its track-able. Sure, you can look at the bottom line at the end of the day, and see if there has been a bump in sales, but does that really tell you what you want to know? If you had multiple demos going on, which ones worked, and which didn’t? Which presenters were more successful at educating the customer, and encouraging them to purchase? One way we track it is by giving the customers who make-it/take-its a coupon. Usually our make-it/take-its use one large-ticket item, like a $21.99 punch. We usually give out a 25% off one-item coupon, knowing that most everyone will use the coupon on the punch. If they do, we’ve done our job of educating the customer on the products, helped them make a cute project, and moved some punches!

If a store is doing an event, where they have multiple demos and make-it/take-its going on, make the coupons completely different in the sale items/prices, or even print them on different colors of paper. Have the demonstrator write their name on the back, or something to tell who taught the demo. And if it’s an all day event, let your demonstrators switch projects! You probably should have had a staff/demonstrator meeting to go over the projects anyway, so they should be cross trained in all the projects. Let them switch every couple of hours, because they’ll get really sick of saying the same thing over and over. Repetition makes the spiel stale; freshen it up with a fresh face! – Angie Warhurst, Boxer Scrapbook Productions, www.boxerscrapbooks.com

Clean Instead of Sizzle.

We are seeing what we gave up on: an increase in basics and a demand for new colors and new styles. It was there all along. It never went away, we made it go away.

I was in the brand new, fancy Michaels some months back. My wife and I walked and looked and looked. I said when we left, "Very nice, but no fun."

It is a very nice, clean, fancy store. But there were no ideas, no sizzle, no "WOW! I want to do that!" It was just clean and neat. I don't think you need to be messy, but where is the "I can't wait to get this and try it!"?

Somewhere in all the industry's growing up we substituted clean for sizzle.

Something else that sticks in my craw: About 9:30 am the Friday after Thanksgiving, I went with my wife to Jo-Ann's. We went past Circuit City, more traffic than I have seen in years, walked past Hancock's and Ross, to Jo-Ann's.

Hancock had big sale signs everywhere and things marked "50% off!" But only one clerk at the check-out counter and a huge line. Ross had signage galore, two checkouts, and lines galore. Jo-Ann's had lines BUT you would take a number at the cutting table and they had a FULL staff of seven people cutting. When we were leaving there was a line, but every checkout was staffed. – Name Withheld (A manufacturer)

All the Same.

I went on a "fact finding" trip on the state of business to Dallas yesterday: the consumer is BORED; they are all seeing the same stuff, and seeing stores trying to GIVE it away.

This year is a turning point I think; innovation will have to come in order for the industry to make it.

If you get a chance read the book Outliers by Malcom Gladwell. It's excellent – especially about the rise of the garment business in the U.S. – Bead Manufacturer and Retailer

We Need a New Category.

I read this all the time in CLN: the championing of "innovation" and "new." But Bob says it perfectly: no one is going to buy it if they don’t know what it is/does. I rack my brain to come up with new ideas, but over and over again the tried and true seems to do better. I don’t know if we can come up with a new product; I think the innovation in the craft industry will come from a new category.

I totally agree that it's a shame we compete on price, that cost is what we use to drive traffic to the stores. But unfortunately, that’s the reality of the situation; people want inexpensive over innovative (at least in crafts; consumer electronics are different). But that’s why Wal-Mart has become the biggest retailer in the world.

But I like what he said about "What's new?" Everyone is looking for something new. Last Year Michaels spent millions bringing in Martha Stewart to their scrapbooking department; she's not a big seller, mainly because she had nothing new. Her scissors were the same as the rest; they just cost more and had her name on them. And they won't let you use a coupon!

At the same time, it's hard to create new products when you're a small business in a credit crunch! So maybe we should look for more ADD-ONS. Smaller things, like our vintage pieces people can add to our existing line of merchandise. – A former Michaels employee, now managing an independent bead shop.

(Note: Care to add your thoughts to the discussion? Email them – on or off the record – to CLN at mike@clnonline.com.)

xxx

 

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