Creative Leisure News
306 Parker Circle
Lawrence, KS 66049
July 3, 2000
Vol. IV, No. 13
TABLE OF CONTENTS
Vendors: If you plan to unveil any new products at the ACCI
or INRG shows -- and you couldn't get the info to the trade
magazines in time for their show issues, send the information to me.
There will be one more issue of Creative Leisure News before
the shows, and I'll be happy to give a brief description of your
product. Remember to include which show and your booth number. Get
the info to me (email is fine) by Friday, July 14th.
Buyers: If you're still considering attending INRG or ACCI,
consider this: no matter the size of the show and how well the trade
magazines and Creative Leisure News may report on new
products, you will miss something if you don't attend. You'll miss
some products that could make money for your store, products your
competitors will find. Plus, you'll learn from talking to vendors,
networking with other retailers, watching demonstrators, completing
make-it/take-its, and listening to seminar speakers.
Can you really afford to miss all that?
ALEENE'S CREATIVE LIVING RETURNS
The industry's longest-running cable television series, Aleene's
Creative Living, will begin broadcasting on the Odyssey network
July 10th, and will run on selected tv stations beginning July 5th.
Odyssey, owned by Hallmark Entertainment and Jim Henson Productions,
reaches approximately 30 million homes.
The series will run 7:30-8:30 am EDT and PDT, 6:30 CDT, and 5:30
The series had been abruptly cancelled by The Nashville Network; its
last show appeared on TNN June 30th. The cancellation was unexpected
and another two month's worth of shows had already been filmed.
Tony Hershman, President of Artis, the series' producer, said the
company is close to signing deals to have the series broadcast on
additional networks and thinks collectively the series will
eventually reach about as many households as it had on TNN.
Artis, currently in bankruptcy, filed a suit in bankruptcy court
asking the judge to issue a restraining order to stop TNN from
cancelling the show. The court hearing is Wednesday.
Hershman also said Artis has presented a reorganization plan and has
been negotiating with the creditor's committee for the past month.
He expects no resolution of the plan until the television series is
Production will resume in about 45 days, although much of it will be
done on location rather than in a studio. For info about buying a
segment, call Rebecca Wilson at 800-436-7878.
RAG SHOPS: SALES UP A LITTLE,
PROFITS UP A LOT
For the third quarter ending May 27, sales increased only 1.3%, to
$22.7 million, but its net income jumped 321% to $250,000 (5
cents/diluted share). A year ago Rag Shops reported a net quarterly
loss of $78,000 (2 cents/diluted share). This quarter same-store
sales rose 2.4%.
Net income for the first nine months has increased 64% to
Officials say the increase is due to increases in same-store sales
and margins, and the cumulative effect of changes in accounting for
The company closed one store and did not open any new outlets during
the quarter, and has no plans for new stores in the near future.
Current store count is 66.
AMES: TROUBLED WATERS
Ames revised its profit estimates for its fiscal year because of
lower-than-expected sales so far this year. Officials said the
disappointing sales are "directly related to the below normal
temperatures and above normal rainfall, which has affected its
Northeast and mid-Atlantic operating area since mid-March."
Apparently it's still raining, because the company is expecting its
same-store sales for June to drop "in the mid single-digit
The company now expects earnings for the year to fall in the $1.70 -
$1.85 range. As a result of the sales/weather problem, Ames has
reduced inventory levels, lowered its planned 2000 capital
expenditures program, and reduced Selling, General and
Ames currently has 460 stores in 19 states and the District of
Columbia. Annual sales are around $4 billion.
The stock has taken a bath, dropping about $16.75/share, or 68%, in
the second quarter.
2ND QUARTER STOCKS: OK, EXCEPT ....
Most of our industry-related retail stocks performed all right, but
collectively were dragged down by Ames' disastrous slide -- most of
which occurred before the company's announcement about disappointing
sales. (See "Ames: Troubled Waters" above.) Here are the
specific changes, in percentages, from the end of March. (Dividends
were not included.)
Hancock Fabrics, +47.8% ... Rag Shops, +24.6% ... Michaels, +12.4%
... Wal-Mart, +2.0% ... A.C. Moore, -15.0% ... Jo-Ann Stores, -16.4%
... Ames, -68.4%. Collectively, these stocks, our "CLN Retail
Index", dropped 7.9% for the quarter while the Dow fell 4.3%.
(Note: Martha Stewart Omnimedia fell 15%.)
CHANGES PLANNED FOR BINNEY &
"We're thinking of changes that move us from a company with a
more traditional approach ... to starting to think about products in
terms of projects," Binney & Smith President Mark Schwab
told the Associated Press. The evolution would move towards
"Making wonderful great projects instead of just making and
It would become a source of ideas for adults, too, such as teachers
and parents. Some of those ideas can already be seen at the
company's award-winning website, crayola.com.
Binney & Smith is also planning to develop a new formula for its
Crayola line of crayons. The purpose is to eliminate talc, in
which trace amounts of asbestos had been found; the Consumer Product
Safety Commission recommended crayons become talc-free, even though
the current crayons do not seem to be a health risk.
According to the AP, the goal of the changes is to boost sales of
its non-crayon products such as craft kits. Binney & Smith had
$611 million in total sales in 1999.
(Note: Prang is also planning to change its crayon formula to
remove talc, and Rose Art has already reformulated its now talc-free
ANOTHER DOT.COM BITING THE DUST?
In a letter to vendors, Craft.com President Brad Roberts wrote,
"The current market climate for funding has severely impacted
our ability to operate our business as intended. At this time we are
undertaking the due diligence necessary to try to complete an asset
sale of a majority of the craft.com business to an interested third
party. If this transaction can be completed in the next two weeks,
we would have a limited amount of funding to be able to pay back
some of our past vendor claims."
CLN has learned the basic problem is the same one that sunk
CraftShop.com: inability to gain a second round of funding.
In our last issue we reported Craft.com sent an email to registered
users eliminating all membership and customer loyalty programs and
was staging a big sale.
HIA PROMOTES FAMILY CRAFTING
HIA is sponsoring a two-week family crafting promotion from
September 9 to the 23rd, incorporating Grandparents Day on September
10th, the Society of Decorative Painters' Paint Out on
September 16th, and a Family Craft-In on September 23rd.
It's a followup to HIA's successful Cherish the Moment
promotion in March and part of the branding campaign, Crafts.
Discover Life's Little Pleasures.
Logos, posters, bumper stickers, buttons, and stickers, and kits
with step-by-step specifics for promoting the Family Craft-In
are available or will be soon. Call Susan Brandt at 201-794-1133 or
USING THE WEB TO BOOST IN-STORE
A great example of how a vendor's website can help boost interest in
a store's inventory is Friendshipwear.com website, launched by DMC
in late 1999 to support its Friendship Wear kit line for
The site allows girls to input their hair and eye color, as well as
their skin tone, and receive a personalized list of the 10 colors
that look best on them. Girls can also find bead colors that match
their personality traits, print instructions for free friendship
bracelets and other projects, send e-postcards to their friends, and
more. Officials say the goal is to give teens a fun online
experience, while educating them about color and promoting the Friendship
The line includes eight themed kits -- Glow In The Dark, Smiley
Faces, Sports, Flowers, Animals, Music, Hearts, and Friendship. Each
Friendship Wear kit contains instructions for making four fashion
accessories, like bracelets, rings, zipper pulls, etc.
Does it work? The site tripled its traffic in May, to more than one
million hits. "Friendshipwear.com is a great example of
creating a new brand name through a combination of strong online
content and a unique bricks-and-mortar line of kit products,"
said DMC's General Manager-Internet Division Yosi Heber.
"By highlighting information about the kit line on the
Friendshipwear.com website, and inserting mini brochures about the
website into our Friendship Wear kit line, we've been able to
successfully cross-promote both together."
RANDOM THOUGHTS, RANDOM QUOTES
(Note: I receive numerous calls, emails, and faxes about all
sorts of things that don't lend themselves to full-blown,
fact-verified articles or columns, but hopefully will make
interesting reading and food for thought.)
1. I'm hesitant to say industry sales are up, down, or flat
until I've heard from a wide enough variety of manufacturers and
retailers in a wide enough variety of categories. But I've heard
enough lately to say this: sales are pretty flat. One manufacturer
said, "Sales were so strong for so many months, there was bound
to be a cooling off period."
2. Brick-and-mortar and e-commerce might be different, but
consumers are the same. Frustration with service remains a turn-off,
no matter where a customer shops. According to eMarketer, 32% of
online shopping carts were abandoned because of frustrations with
the checkout process and/or the lack of customer service. In a study
of 125 e-commerce companies, Jupiter Communications found that 46%
took five days or more, did not respond at all to customer emails,
or didn't even post an e-mail address. That sounds like customers
walking out of a store when they can't get their questions answered.
3. The concept of an all craft-hobby cable tv network is not
dead, we're told.
4. A craft manufacturer told me how he'd spent an entire
week, and $15,000 in legal fees, dealing with a sexual harassment
complaint in his factory. Turned out it was a lovers' quarrel and
has been resolved. I wondered if retailers realize all the goofy
expenses vendors have, when they pressure vendors for lower prices.
Then I realized retailers have the same sort of non-productive,
expensive hassles. And THAT was brought home in the July 3rd issue
of Business Week which reported that at any given moment,
Wal-Mart has 10,000 legal cases pending! (Given Wal-Mart's size, the
company probably has 500 customers a week slipping on wet spots in
5. Sara Nauman from Hot Off The Press writes, "Walking
the floor at the National Stationery Show really drove this point
home to me: girls are in. Whether it's a journal, notepad, pen set
or other accessory, the focus is definitely on girls. Bright pinks
and blues; plenty of neon colors; and bold, funky patterns convey
girl-powered energy. A big part of this was related to
journal-writing, which also leads to scrapbooking. A survey reported
by Photo Marketing magazine stated that teen girls consider
taking photos to be very important, even ranking it in the top five
cool things to do. It beat out dating, which was #6, if you can
6. Recently some U.S. vendors complained that some retailers
are taking their products and having similar items made overseas.
Obviously the retailers' goal is lower prices, but isn't there a
danger of sacrificing long-term productivity for short-term profits?
If such practices drive out of business the original vendor, who
created the concept/product in the first place, then who will be
here to create new products in the future?
7. Sometimes a retailer can try to say too many things in one
message and convey a completely different idea. A friend attended
the huge Bentonville/War Eagle craft show and sent us a photo of a
sign in front of one of Wal-Mart's new, smaller Neighborhood Market
stores. The sign read: "Welcome Crafters ... Slim Fast Six Pack
$4.88." Hmmm, does this mean the store manager thinks crafters
8. "I get a kick out of some of these retailers," a
vendor told me. "They discount the price of my product, then
complain to me that their margins are too low. Did I miss a meeting
where they decided on the price to customers?"
9. I think it was 1990 when I first starting following
Michaels' stock. Then it was about $3 and change. Since then, it's
shot past $44 and sunk down to $10. Now it's higher than ever. Think
of the money lost and made by investors during that time! Investors
should be applauding Michael Rouleau.
10. It seems more and more of our vendors are branching out
into other markets -- toys, school, home centers, stationery, gifts,
etc. Why? Not enough craft customers, they tell me.
11. Our very best to Greg Davis of Fiberstok who is taking
time off due to illness. "I will miss the friendships developed
over the past ten years," Greg wrote. "The art and craft
industry is the nicest group of people I have had the opportunity to
work with, in my thirty-year career. I know I will never find a
group as friendly." Charlie Rice replaces Greg as General
12. A call from a long-time supplier to the chains raised an
interesting point: he thinks chains are suffering now because of
turf battles among a chain's buyers. A new product with big
potential but crosses categories sometimes falls through the cracks
because of wrangling by the buyers. Anyone else out there feel that
13. A letter from an industry pro in Australia reveals lots
of changes in the local knitting market. Coats Paton sold its
Australian handknitting business to Country Spinners, better known
as Cleckheaton. This follows the news that the Myer Grace department
store operation is withdrawing from handknitting. Now a new tax
system starts this month.
14. I asked Pete Rutley, the new sales VP at Allstate, for
his impressions of his first SILK show: "It was a great
show for Allstate, but we did hear that others were a bit
disappointed at the traffic. Our showroom was busy from morning to
night, every day. It was a great learning experience for me."
15. Pete added, "Also, there is is a bit of a shake-out
in the Silk Industry going on." We're heard that same shake-out
report-prediction from others, too.
DOT.COM'S PROBLEMS: AN
In our last issue we described the downfall of CraftShop.com, which
prompted this (edited) reply from Bob Ferguson, owner of one of the
industry's best stores, in Redmond, Washington:
You pointed out that perhaps consumers needed more time to become
comfortable with placing orders. Why would they place orders at all?
Crafts is in no way a consumables business. There is no demand for
craft products. Retailers have to create a demand.
There is little brand recognition. Most craft consumers will buy
what they "see" -- if they feel if it's a fair value and
will produce the results they see in finished goods or models.
With these things in mind, why would a consumer place an order
online? To be motivated to buy craft products, consumers must see
the product in its finished form. They must see how easy (or
difficult) it will be to make a project or use a product. They need
to see the successes of others in order to make a decision to buy.
When purchasing home decor craft components, color is critical to
the purchasing decision. Consumers do not believe the color they see
on most websites is a true rendition -- and certainly not close
enough to know if what they see matches their "treasures."
Nowhere on the Internet can a consumer get this needed
"motivation to purchase".
You suggested perhaps prices were not low enough. Today's craft
consumer is not motivated by price but first by ideas, then hands-on
demo, then color and texture, then availability of enough product to
complete a project, then by just good, old fashioned, impulse. THEN,
somewhere down the line, the price becomes an issue of normally
The fact is, it is impossible to make a dollar selling retail craft
components on the Internet. The average craft item retails for about
$2.00. The average purchase in most large volume craft stores is
around $20.00 -- and that includes the high-volume, high-ticket
frame shop and all the high-ticket, home dec products most craft
stores specialize in today.
A simple math test explains why a stand-alone craft website, not
representing a brick-and-mortar operation, cannot make any money.
Fulfillment, which includes receiving orders, pulling stock,
processing credit cards, packing, and shipping -- as well as the
vast related costs of putting up and maintaining a website, cannot
be successful for a $2.00 average unit price or a $20.00 average
Think of the inventory involved with those 40,000 SKU's. Even when
using a contract fulfillment center, someone has to get a return on
It is easy to chalk this note up to the rantings of a
dyed-in-the-wool, traditional retailer, but in the world of good
business practice, it is still traditional to set out with a
business plan that is designed to make money the old fashioned way:
"buying and selling merchandise at a profit". The value of
one's stock then follows.
(Editor's note: Is Bob right? Are the dot.com's a hopeless cause?
You're more than welcome to add your opinion to the discussion. Send
email to email@example.com.)
TRENDS, I. Hot Off The Press reports paper (vellum, tea bag
folding, and paper quilting); sophisticated jewelry (wire-wrapping
and stretch-cord jewelry); polymer clay; candle making; and rubber
stamping continue to grow.
TRENDS, II. In the June 12th edition, Time magazine
devoted two pages to the still-growing scrapbook, photo-preservation
TV. The 5th series of More Than Memories will be sent
to PBS stations this month. The series is hoted by Julie McGuffee
and Julie Stephani, Editor of Krause Publications' Arts &
Crafts magazine. In addition to Krause, sponsors are Accu-cut,
EK Success, Fiskars, Hot Off The Press, Jangle.com, Memory Makers,
Creating Keepsakes, Xyron, and Pioneer Photo Albums.
LICENSING. Viking signed an agreement with Universal Studios
to create embroidery designs for the new movie, The Adventures of
Rocky and Bullwinkle, which opened last Friday. The designs will
be for use with the Husqvarna Viking sewing and embroidery machines.
STOCK. Southwest Securities and PMG reiterated their coverage
of Michaels at Buy, with a price target of $53 ... Robertson
Stephens initiated coverage of Wal-Mart at Long-Term Attractive
... Tucker Anthony Clory downgraded Ames to Hold ... Merrill
Lynch reiterated its coverage of Wal-Mart at Near Term Buy.
EMPLOYEES. Arthur Andersen's 8th annual Survey of Small
and Mid-Sized Businesses found owners believed finding and
retaining qualified workers (61%) was by far their most serious
challenge, followed by regulations (35%), economic uncertainty (29%)
and keeping up with technology (28%).
GERMANY. The government is investigating whether Wal-Mart is
selling selected merchandise below cost -- a no-no in Germany,
reports Chain Store Age.
NEW BUSINESS. Industry pros Angus Mackie and Lisa Julson have
formed UC Digital, a consulting company offering market research,
business planning, assistance in securing pre-IPO financing,
E-commerce consulting, and online content and community development.
SHOWS. The Memory Trends show is August 16-17, with
educational programs beginning August 14th, at the Riviera Hotel in
Las Vegas. It is trade only. The show is sponsored by Craftrends/Primedia.
For more info, call Pat Kobishyn at 516-596-3937 or email
firstname.lastname@example.org. For discounted hotel rates, call
800-634-6753 by July 14th.
TOYS. Consolidated Stores's board voted to either sell its
toy chain, KB Toys, or spin it off to its shareholders in the next 6
to 12 months.
MARTHA. A survey by Illuminations (a candle company) found
that 51% of respondents felt stressed watching Martha on tv, New
Woman magazine reported.
QUOTATION. "[Wal-Mart has] been turning more to
manufacturers than in the past for margin growth." -- Paul
Kelly, president of Silvermine Consulting (in Ad Age
B2B. Tomorrow, Independence Day, GoliathFalls.com goes live.
Affiliated with Promotions Unlimited, it's a business-to-business,
e-commerce site specifically for independent retailers. The crafts
portion of the site is months away, but some departments are up and
running. Much more in future issues.
COMING SOON. HomeDecorShowcase.com will sell finished works by the
industry's best, most well known decorative painters. It goes live
on August 1st, but for a preview, or to learn how your work can be
sold, surf to the site. The project is being led by popular industry
veteran, Bill Neu. Call Bill at 815-544-5941 or email email@example.com.
MEDIA. CraftClick.com has launched an impressive new "e-zine",
Crafting Today. Go to craftingtoday.com.
PHOTOS. Kodak has started an online photo-finishing service,
PrintatKodak, which will provide prints for photo-sharing sites and
DATA. A study of 2,198 Internet users by PeopleSupport showed 63% of
those who shop online more than once a week are women.
CANADA. New e-commerce site for hobbies and toys: Kidstoysplus.com.
TAXES. The European Union has proposed forcing companies based
outside the region to charge value-added (VAT) tax on services
delivered over the Internet to customers in the 15-nation EU, CNN
LEGISLATION. President Clinton is expected to sign the Electronic
Signatures in Global and National Commerce Act this week. The
bill will make electronic signatures legally binding. Proponents say
it will greatly increase e-commerce; opponents worry about security
... Meanwhile, a coalition of retailers, real estate agents -- and
even teachers ard firemen -- are pressuring the Senate to "take
the first steps toward a uniform tax system under which Americans
would pay for shopping in stores and on the Internet alike,"
reported the Wall Street Journal.
THE CREATIVE NETWORK: JOB OPENINGS
The only personnel recruitment firm specializing in our industry has
the following job openings. For more information, call 360-834-0802;
fax 360-834-0702; email firstname.lastname@example.org; or check
Atlantic: Product Manager (school, home, office supply) ...
Channel Marketing Manager (school, home, office supply).
Mid Atlantic: Buyer (soft crafts) ... Administrative
Assistant ... Sales and Marketing Manager (craft).
New England: Assistant Art Director (art-posters) ...
Production Manager (understand pre-press) ... Graphics Department
Manager ... Product Manager (home dec accessories) ... Production
Planning Manager ... Sr. VP Marketing.
North Central: Designer/Product Development - 9 positions
(gifts) ... Budget/Staff Accountant ... Marketing Assistants ...
Customer Service Supervisor ... Copy Writers (direct marketing
materials) ... Product Manager (direct marketing experience.) ...
Licensing Coordinator ... National Sales Manager (gifts) ...
Distribution Supervisor (2nd shift) ... Database Administrator
(Oracle) ... Art Director (catalog/newsletter, etc.) ... Art
Director (web/e-commerce) ... Creative Director (gifts) ... Copy
writer (gifts) ... Sales & Marketing Manager (quilt-needlework).
Pacific: Dir. Product Development (gifts).
South Atlantic: National Sales Manager (gifts) ... Dir.
Product Development (gifts/toys).
South Central: Product Development Director (home dec
accessories) ... National Sales Manager (home dec accessories).
CREATIVE NETWORK: JOBS OF THE
Position: Sales & Marketing Manager ... Location:
Illinois ... Description: Increase sales within channels of
distribution -- quilting, needlework, books. Facilitate growth with
key accounts, distributors, and catalog companies. Creativity will
be a key; find new ways to reach customers and to promote new and
existing products. Create monthly promotions for key accounts.
Position: Craft Buyer ... Location: NY/NJ ... Description:
Plan, evaluate, and purchase merchandise to create a strong product
mix and good margins; supply new merchandise and keep basic
merchandise flowing; provide effective merchandising programs to
attract and retain new customers; consistently improve departmental
offerings to achieve long-term growth.
For more about these positions, contact The Creative Network at
THE CLN RETAIL INDEX: 4TH OF JULY
A. C. Moore (ACMR). Last*: 6 3/8 ... Change**: -15/16
Ames (AMES). Last*: 7 3/4 ... Change**: -1/16
Hancock Fabrics (HKF). Last*: 4 1/4 ... Change**: -1/8
Jo-Ann Stores (JAS.A) [a]. Last*: 7 ... Change**: -1 11/16
Michaels (MIKE). Last*: 45 13/16 ... Change**: +4
Rag Shops (RAGS). Last*: 2 17/32 ... Change**: +13/16
Wal-Mart (WMT). Last*: 57 5/8 ... Change**: +3 3/4
CLN Retail Index. Last*: 131.344 ... Change**: +3.5%
Dow Jones Index. Last*: 10,447.89 ... Change**: UNC
* June 30 ** from June 16 [a] voting share Note: Prices are
exclusive of dividends
Earlier we talked about manufacturers and retailers being besieged
by lawsuits, sometimes ridiculous ones. Below are some silly
instructions on products -- probably insisted upon by the
manufacturers' lawyers to avoid lawsuits from consumers:
1. On a helmet-mounted mirror used by U.S. cyclists:
REMEMBER, OBJECTS IN THE MIRROR ARE ACTUALLY BEHIND YOU.
2. On a bar of Dial soap: DIRECTIONS: USE LIKE REGULAR SOAP.
3. On Marks & Spencer Bread Pudding: PRODUCT WILL BE HOT
4. On Sainsbury's peanuts: WARNING: CONTAINS NUTS.
5. On an American Airlines package of nuts: INSTRUCTIONS:
OPEN PACKET, EAT NUTS.
6. In some countries, on the bottom of Coke bottles: OPEN
7. On a Sears hairdryer: DO NOT USE WHILE SLEEPING.
8. On a child's superman costume: WEARING OF THIS GARMENT
DOES NOT ENABLE YOU TO FLY.
9. On some frozen dinners: SERVING SUGGESTION: DEFROST.
10. On a hotel provided shower cap in a box: FITS ONE HEAD.
11. On Nytol sleep aid: WARNING: MAY CAUSE DROWSINESS.
Note: Creative Leisure News is published on the first and third
Mondays of each month; your next issue will be Monday, July 17th.
Remember: it's the last pre-ACCI and INRG issue, so send us info on
new products you couldn't get into the trade magazines' show issues.
Have any rumors you need checked? Company news or comments on
industry issues? Call Mike Hartnett, in confidence, at 309-925-5593;
fax 309-925-9068; or Email to email@example.com.