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Creative Leisure News
306 Parker Circle
Lawrence, KS 66049
Phone: 785-760-5071
Email: mike@clnonline.com



Date: July 17, 2000
Vol. IV, No. 14

Printer Version


bulletA.C. Moore: Another Positive Quarter
bulletCrafts Boost Duckwall-Alco's Quarter
bulletHome Sewing To Become More "Fashionable"
bulletLittle Or Negative Change In Retail Rankings
bulletI Need A Favor...
bulletACCI/INRG Product Info
bulletRandom Thoughts, Random Quotes
bulletMiscellaneous News
bulletE-Commerce Update
bulletDot.Com's Future, Pt. I
bulletDot.Com's Future, Pt. II
bulletDot.Com's Future, Pt. III
bulletThe Creative Network: Job Openings
bulletCreative Network: Job Of The Month
bulletThe CLN Retail Index
bulletSome Trade Show Advice


In our last issue we published a letter from Bob Ferguson who believes pure e-commerce sites can't make it in our industry. This issue includes responses from CraftShop.com, Discountneedlework.com, and Artisan Network-MisterArt.com. Lots of disagreement among some very smart people.

So I guess I'll weigh in, too: I think the survival or failure of e-commerce sites will be the ultimate evidence of whether or not we're in a "new" economy. The Wall Street Journal raised that question around New Year's and cited a fascinating example:

Traditionally, the more rare something is, the more valuable it is. For example, eBay just auctioned a rare Honus Wagner baseball card. As of my deadline, bids had topped $550,000.

That's the old economic rules. But sometimes they don't apply, the Journal wrote, citing the fax machine as an example. Suppose you owned the only fax machine in the entire world. What would it be worth? Nothing. But the more plentiful fax machines are, the more valuable they are.

BlueMoutain.com, the greeting card site that had never had a penny in revenue, was sold a few months ago for $750 MILLION. That, my friends, is an example of the new economy.

Bob Ferguson supported his prediction of failure with the hard realities he's learned from many years as a successful storeowner. If we truly are in a new economy, then much of what he's learned may be moot. The success or failure of the dot.coms will tell us if he's right.
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Second quarter same-store sales rose 7%. Overall sales rose 21% to $55.2 million. For the six months ended June 30, same-store sales rose 5% and total sales rose 15% to $108 million.

President/CEO Jack Parker said, "Having clearly exceeded our expectations for the quarter, we are extremely pleased with both overall and same-store sales. Our new stores are performing very well and our additional openings continue to meet our time line."

Parker predicted the company would beat Wall Street's consensus estimates for the quarter (a 2-cent loss/diluted share). Second-quarter earnings will be released July 20th. You can listen to a conference call live over the Internet through Vcall at http://www.vcall.com.
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For the quarter ended July 2nd, sales grew 4.3% to $37.6 million. Same-store sales rose 0.8%. A company spokesperson said strong sales performances this month were led by, among other categories, crafts.

Duckwall-ALCO operates 268 discount stores in the Midwest under the names "ALCO" and "Duckwall." The strategy is to target smaller markets not served by other discounters.

The company's stock is traded on NASDAQ under the symbol, DUCK. The stock is currently trading around $9/share. The 52-week range is $5.62-$10.68.
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The Home Sewing Assn. and The Fashion Assn. (TFA) announced a strategic alliance, "It's Sew You", a marketing campaign linking home sewing with the latest fashion trends. TFA is the educational, informational, and networking resource for the fashion industry.

"TFA is delighted to partner with HSA in their initiative to engage a younger, more fashion-conscious consumer in the excitement of home sewing," said TFA Executive Director Eric Hertz. "We believe that we can work together successfully to blend the worlds of fashion and home sewing."

"We are looking to reach that younger consumer and educate him or her on the lifelong benefits of home sewing," said HSA's Executive Director, Joan Campbell.
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DSN Retailing Today's "Annual Industry Report" showed many of our industry's retailers' rankings declined, vis a vis other retailers. Sales of most craft-related chains increased from 1998 to 1999, but almost everyone's sales increased, thanks to our booming economy. The study compared the annual 1999 reports. (Note: DSN Retailing Today was formerly known as Discount Store News.)

Wal-Mart, Wal-Mart Supercenters, Kmart, and Costco kept the top four places, with Target moving up from 7th to 5th. Ames, thanks to acquisitions, rose from 30th to 27th.

ShopKo remained at 35th, as did Michaels at 43rd. Jo-Ann's dropped four places to 51st, and Hobby Lobby slipped one place to 67th. Pamida dropped six places to 71st and Frank's Nursery & Crafts fell from 81st to 91st. Frank's was one of only a handful of the largest 150 retail operations whose sales actually declined.

Garden Ridge slipped two spots to 94th and Hancock Fabrics dropped from 94th to 108th. Duckwall-ALCO fell out of the top 100, from 98th to 109th.

Zany Brainy, A.C. Moore, and Rag Shops made the rankings for the first time, Zany Brainy at 123rd, A.C. Moore at 126th, and Rag Shops at 150th.
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It is difficult to accurately judge a large trade show. Every show has vendors and exhibitors who were pleased -- and others who complained. So the more input I receive from those of you who will attend ACCI and INRG, the more reliable my "verdict" will be. I'd love your thoughts -- on or off the record -- so when you return home from Chicago or Charlotte, call or email me and I'll summarize the feedback in my next issue. 309-925-5593 or mike@clnonline.com. THANKS!
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ACCI's pre-registration by non-exhibiting attendees is up approximately 25%, to 4,000. There will be 581 companies exhibiting, including 170+ new exhibitors, in a total of 1,252 booths. The Art Glass Show, running concurrently, has almost 600 pre-registered and are anticipating a turnout between 1,200-1,500. The education sessions begin July 27 -- the show is July 28-30 -- and the Creative Business First Speakers Series is filling up fast, officials say.

Visit accicrafts.org for the latest information and registration status on the educational line-up, the interactive floor plan, and the current list of show specials.

ACTIVA. Will focus on line extensions for its Soap Expressions soapmaking line. The company has also launched a new web site, soapexpressions.com where consumers can submit and share ideas and projects. (#1308-1310).

AMACO. New books to enhance the WireForm and ArtEmboss programs.

ARTY'S. Now distributed in North America exclusively by Janlynn, the company is introducing Magic Silk silk paint by number kits.. Eack kit contains a printed picture on pure silk, silk paints and a brush, and instructions. The program contains designs in 2 sizes. (#713).

BAGWORKS. Tuff Stuff (TM) Aprons and Backpack totes. New colors in the backpack totes and other items -- butter, sage, and grape (#1621).

DANIEL ENTERPRISES (at INRG). New products under the Crafter's Pride label: A "Make It Your Way" program with towels, bibs, mugs, sippers, etc. It targets crossstitchers AND painters, stampers, crafters, scrapbookers, etc. ... A "Kit Pac" program that converts many open stock cross stitch products into complete kits as an option ... A new HangUpp towel for cross stitch ... A waffle-weave towel with 12-count cross stitch borders on each end ... Several unique stitchery items -- even one that explains how to cross stitch soap!

DARICE. The totally re-designed Tassel Master (aka Tassel Magic), featured on Aleene's Creative Living and a hot seller on QVC, is available, thanks to a licensing agreement between Darice and Bond America/CC Product Co. The line will continue to be shown on Carol Duvall and other TV craft shows. The new design makes beaded fringe and bullion jewelry from embroidery floss. DMC. At INRG, it's showing its 2000 edition of its "Collector's Edition Holiday Ornament" kit. Includes all the necessary supplies and is packaged in a reusable keepsake box.

DIMENSIONS. New products include GlassArt stained glass kits, additions to the Daydreams needlework line, and new paint-by-number designs for the Paintworks line. (#2908)

FAIRFIELD. Is offering Hot Shot Color Forms -- a line of 12" x 16" pillows in four bright colors covered in a sturdy fabric consumers can paint, stamp, glue embellishments, stitch, etc. ... Nu-Foam is being marketed as a safe alternative to foam. It's a cushion made of compressed layers of polyester with performance results better than conventional foam products. Available in 9 precut square sizes, 4 slab sizes, and 5 rolled sizes. 800-243-0989.

GRACE PUBLICATIONS. The very latest books include Gazing Balls for Home & Garden (painting on gazing balls) and Have a Seat which features 40 designs for corded chairs. (Note: A gazing ball is a shimmery ball usually seen on holders in people's yards.) Plus, books for kids, soapmaking, macrame, wire projects, and glass painting. (#1102)

HERR'S. Returns to the show with a booth at #9102. "We look forward to seeing all our old friends and customers, and making new friends and customers.".

HOT OFF THE PRESS. Brand new books on polymer clay, wrapped wire, tea-bag folding, and stretch jewelry ... Paper Pizazz from licensed artists such as Janie Dawson, Annie Lang, and Genene Cotten ... vellum papers: 8 new designs in bulk form, plus painted and colored vellum papers. (#2002)

JANLYNN. Offering 10 new designs Tuckables singles in a new take-along tray. Kits include all necessary materials. (#520-620)

JUNE TAILOR. Fusible Batting eliminates the tedious process of basting a quilt ... A Quilter's Life in Patchwork is a book with a CD and two sheets of printable fabric that can be run through an inkjet printer. The CD allows the consumer to click on quilts in the book and design them in her favorite color scheme -- then print the design and use it to buy appropriate fabric.

KRAUSE PUBLICATIONS. Will showcase its extensive book list and preview its Fall releases, including books on painting, needlework, kids crafts, etc. The editors of CNA, Arts & Crafts, and Great American Crafts will also be available. (#5008)

LAKE CITY CRAFT. Is offering an attractive new storyboard poster designed to show consumers how easy quilling is.

LENDERINK TECHNOLOGIES. Unveils new real wood veneer floor mats as well as place mats and wall tiles. The company is also working with ArtSeeds! which will launch its new clear art stamp system. Call 616-887-8257 or fax: 616-887-7910. (#9118)

MAKE 'N MOLD. Introducing new candy making kits in Dino, Smiley Face, Halloween, and Christmas themes. The innovative packaging shows consumers the fun of candy making while maximizing limited shelf space, and therefore increasing sales volume. (#613-4)

SEW EASY TEXTILES. Consistent with the growing trend toward "no-cut" laces and trims, Sew Easy is launching a complete range of Venice Lace and Embroidered Eyelet Lace put up {precut 1-4 yds.} on bagged mini-cards. Attractive prices and margins, and shrinkage resistant. There are full, no-cut programs on ruffled and flat laces in most categories, including Christmas and Halloween. (#717-718)

STEARNS. New batting products: Mountain Mist GOLD is 50% cotton, 50% polyester batting ... Mountain Mist GOLD-FUSE is fusible, "baste-free" batting ... Mountain Mist TEMPLATE and STENCIL MATERIAL opens a new realm in creating stencils for painting, decor, and quilting. Design computer images or download motifs, then print on an ink-jet printer and cut. Call 800-345-7150 or email mountain.mist@stearnstextiles.com. (#2012)

TEACHTRAIN. Want to improve your teaching skills, or those of your store clerks? Stop by #9802 to learn about an innovative program designed to help store personnel and other individuals who teach and demonstrate. Email teachtrain@hotmail.com
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1. The big news in the publishing world is the new Harry Potter book; consumers had ordered more than a million copies before it went on sale July 8th. It's a guaranteed sellout; yet Crown Books is selling it at 40% off. I understand the concept of loss leaders, but still....

2. A longtime industry friend said, "The biggest problem the suits (men) in the ivory-tower offices have in our business is thinking our consumers are stupid."

3. How ubiquitous is Wal-Mart? The University of North Carolina was searching for a new basketball coach and called Notre Dame coach Matt Doherty on his cell phone to invite him for an interview. Where was Doherty when he received the call? Shopping at Wal-Mart.

4. "I just finished walking through some craft stores in Dallas," a long-time craft retailer told me recently. "Boy, they're all starting to look alike."

There's a reason. Retailers want the best sellers and cut the slower sellers to make room for new products with good turnover potential. If every retailer does that, and if the best sellers in one store are the same as in a store three miles away, the stores will carry the same inventory.

But if the stores look alike, then where the consumer shops will be determined by convenience, and customer service or price. Let's hope retailers use service as the way to distinguish themselves from their competitors. Otherwise, we'll price-war ourselves to death.
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MICHAELS. June same-store sales rose a strong 7% and overall sales jumped 21% to $163.6 million. CEO Michael Rouleau said, "... we exceeded sales expectations for the month of June in spite of a reduction in the number of promotional events. The momentum that we generated last year has continued through the first five months of this year, and we remain confident in our abilities to produce another great year."

AMES. Same-store June sales dropped a whopping 5.2%, consistent with the warning the company announced June 21st.

SHOWS. We've heard nothing but positive reports about the Great American Scrapbook Convention ... The TNNA show saw increases in buyers (769 people representing 453 companies) and exhibitors (211, in 445 booths, including 17 new exhibitors). Sharon Hooper of Sharon's Designer Collection said she opened 10-12 accounts with new shops.

PEOPLE. Wal-Mart's Senior Vice Chair, Don Soderquist, will retire August 25, but will remain on the board. He joined the company in 1980 and served as Vice Chair/COO. He had served as President of the old Ben Franklin company ... Meredith promoted Dan Masini to Creative Director of Wood (magazine) and Crafts Group.

MERGER. Expressive, Capri, and Pacific Art & Design have merged into Pacific Creative Distributors, in Santa Ana, California. Pacific's Jake Rohrer is President, Expressive's Charlie Yacoobian is CFO, and Capri's Mike Caprino is VP/Business Development.

CREDIT. Zany Brainy received a commitment from First Union National Bank for a three-year, $65 million secured revolving credit facility -- and the amount will increase to $115 million after the closing of the acquisition of Noodle Kidoodle, which is expected this month. IMPORTS. Wal-Mart expects to increase its annual purchases from China by 25% or more, Li Chengjie, VP of Wal-Mart Asia, told Chain Store News.

CORRECTION. In our last issue we incorrectly said Julie Stephani was the editor of Arts & Crafts magazine. Linda Kessel Roovers is the editor. Julie is the editor of Great American Crafts. Both magazines are published by Krause Publications.

PLAID. Launched a new corporate tagline: "So Beautiful, So Easy, So Plaid". It will be used by Plaid, Bucilla, and All Night Media. It has also been translated into German, Dutch, French, Spanish, Portuguese, and Japanese -- a sign of how world-wide Plaid has become.

HIA. Hired Pamela May as Manager, Marketing Communications and promoted Laura Perez to Certification/Education Coordinator, Denise Lee to Membership Coordinator, Jodi Araujo to Senior Exhibits Coordinator, and Bob Bani to Mailing Coordinator.

CRAFT HOUSE. New Digimon activity kits based on characters and scenes from the Fox kids' series, Digimon: Digital Monsters. The introduction of the kits, available in a variety of price points, is timed to take advantage of a big Digimon promotion by Taco Bell.

REMINDER. HIA has started assigning booth space for the January, 2001 show. If you need a prospectus, go to hobby.org/2001 or call Jody Araujo at 201-794-1133.

AWARDS. Hot Off The Press won four Dr. Toy awards last month: The 3-book series, Disney Scrapbooking for Kids, and the Treasure Books -- Mickey & Friends Pom Pom, Winnie the Pooh Card Making, and the Disney Craft Collection Craft Foam ... Accu-Cut won a Pinnacle award from the American Marketing Assn. For its Jill's Paper Doll World templates.

TV. Aleene's Creative Living, now on the Odyssey network, also begins broadcasting today on the GoodLife cable network.

NEW COMPANY. Craftstream is a digital video production company specializing in our industry. Operated by Seth and Jennifer Fullerton, veterans of the Aleene's Creative Living series. Call 805-966-3136 or email craftstream@aol.com.
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CLICK & MORTAR. Another excellent e-commerce site is ericas.com, operated by Erica's, an outstanding independent sewing and craft store in South Bend, Indiana.

UPDATE. Bagworks updated its site, bagworks.com. It's primarily a business-to-business site, so retailers should check it out. At ACCI the company will be enrolling retailers and wholesalers for wholesale purchasing via the site. Go to ACCI booth 1621.

SPECIALS. Craftopia is offering a special every weekday in July -- for one hour only -- (noon - 1 pm EDT) ... Every day Martha Stewart is offering a good discount on a particular item -- and the item changes daily. Interesting way to draw traffic.

NEEDLEWORK. Fireside Stitchery has an impressive e-commerce site selling higher end needlework -- handpainted canvases, etc. The operation is backed by a retail store in Frazer, Pa., and a mail order operation. Go to firesidestitchery.com.
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In our last issue, we published a frank, thought-provoking letter from independent retailer Bob Ferguson who questioned the viability of industry related dot.com's. We asked for responses from you -- and we got 'em!

Angus Mackie, former CEO of the now-defunct CraftShop.com responded, as did Catherine Bracken (Pt. II), a "click-and-mortar" retailer, and Bob Cunha of Artisan Network (Pt. III. Here's Angus:

Bob is right on one count and way off base on another. He's correct about consumers needing instructions and ideas. That's what Craftshop.com was all about: Our business model was about community, teaching, sharing, and learning -- leading to a solid e-commerce experience.

And I can tell you that our volume of customers was building daily and the average order at Craftshop.com was almost double that of the typical mass merchant craft chain! And our gross profit margin was well north of 35%. So the metrics speak for themselves.

I believe our market can easily support a stand-alone dotcom ala Craftopia (or Craftshop, if our funding had been sustained). If you build in a brick-and-mortar partnership (Jo-Ann/Ideaforest), the prognosis for success is even greater.

The bottom line is that crafters are all over the web, and there are a number of successful, craft-related web sites growing nicely, thank you. There will be a shakeout as there is in every market, and of course, good retailers will continue to do what they do best.

Retailers will learn to live with successful web sites as they have with successful mail order companies. The two commerce systems will live side by side and the competition will no doubt benefit the consumer, and probably grow the market.

Note. Angus is now the CEO of 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. Call 607-547-9752.
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This letter is from Catherine Bracken, who operates a retail store and discountneedlework.com:

Speaking from both sides of the fence, I say Bob's right. We have focused on higher priced kits, canvas, and bulk yarn not available in chains. Any time I branch out and add, for example, a specialty thread line, I regret it. Demand isn't very high, and unless I stock EVERY color, invariably I get an order from a customer who has apparently gone through our color list and intentionally selected every color that I chose NOT to stock. (You can stock less than all of everything in a store because you can redirect the customer into other suitable products).

Except for needles, I mostly regret all notions I stock. I gave up on cross stitch leaflets, as you need an almost infinite selection of $5 leaflets, and the customer wants to see that selection CHANGE about monthly, so you scan in the pic, create the database SKU, stock a few, sell one, discount the others, and then repeat the whole thing again for the next round.

So we select specific designers have almost their entire catalog -- but nothing else.

When you're talking about $2 items, that's a big challenge for online retailers. But I suspect some like Michaels and Jo-Ann will find a way to recreate the "project approach" to get that $20 ticket the brick-and-mortars get.

Streaming video and such could help bring instructions to the home. Consider the working crafters who can't tune into Carol Duvall when it comes on. Or who want access to a particular project video at their convenience. Stores can't be everything to everyone.

The online guys just have to find out how to fill in the gaps. But all of this may take more build-up time than the guys who crashed early were able to put into it.
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This letter is from Bob Cunha, President of Artisan Network, of which the e-commerce site, MisterArt.com, is a part.

Consumers do and are buying arts and crafts supplies online. MisterArt.com has seen terrific success since our launch last year -- as evidenced by our continuous growth and expansion into additional areas of e-commerce and community. We indeed serve, motivate, and inspire our customers, but don't take my word for it. Here's what our customers have said through a third-party, online shopping rating and consumer-review service:

"I get better service online at this store than I've ever gotten at a brick-and-mortar shop.... I will be back for more."

"Huge selection... Easy to navigate and has great incentives for first-time buyers."

"... a huge inventory, including many items I have been unable to find in local stores, and the prices are discounted! I will be ordering from MisterArt.com again."

"MisterArt.com immediately acknowledged my order and kept me informed of the shipping date. The items arrived in good time and good quality. I definitely will order from them again. Customer service seems to be the goal of this company."

"Online shopping experience was great. Site had easy navigation, graphics were quick to load, and ordering was easy. PLUS, shipping was extremely fast...." "... Whether you are looking for a specific supply, or are just interested in browsing around and getting some inspiration, you'll enjoy shopping at MisterArt.com."

"By far the lowest prices for art supplies on the web. I have made several purchases here and have never been disappointed. Exceptional response to e-mail questions."

With responses like these, it's easy to see exactly why customers love to buy online.
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The only personnel recruitment firm specializing in our industry has the following job openings. Go to ACCI #9806 or call 360-834-0802; fax 360-834-0702; email jessica@creativenetworkinc.com; or check www.creativenetworkinc.com.

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: Director of 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).
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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. Create monthly promotions for key accounts. Travel 15-20%.

For more about these positions, contact The Creative Network at 360-834-0802.
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A. C. Moore (ACMR). Last*: 8 ... Change**: +1 5/8
Ames (AMES). Last*: 8 9/16 ... Change**: +13/16
Hancock Fabrics (HKF). Last*: 4 1/4 ... Change**: UNC
Jo-Ann Stores (JAS.A) [a]. Last*: 7 3/4 ... Change**: +3/4
Michaels (MIKE). Last*: 47 1/8 ... Change**: +1 5/16
Rag Shops (RAGS). Last*: 2 11/32 ... Change**: +13/16
Wal-Mart (WMT). Last*: 59 1/2 ... Change**: +1 7/8
CLN Retail Index. Last*: 137.531 ... Change**: +4.7%
Dow Jones Index. Last*: 10,812.75 ... Change**: +3.5%
* July 14 ** from June 30 [a] voting share Note: Prices are exclusive of dividends
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Trade shows can be hectic, frustrating, and nerve-racking for buyers and sellers. Some thoughts to remember from Andy Rooney:

I've learned.... that we should be glad God doesn't give us everything we ask for.
I've learned.... that money doesn't buy class.
I've learned.... that under everyone's hard shell is someone who wants to be appreciated and loved.
I've learned.... that God didn't do it all in one day. What makes me think I can?
I've learned.... that to ignore the facts does not change the facts.
I've learned.... that everyone you meet deserves to be greeted with a smile.
I've learned.... that life is tough, but I'm tougher.
I've learned.... that opportunities are never lost; someone will take the ones you miss.
I've learned.... that one should keep his words both soft and tender, because tomorrow he may have to eat them.
I've learned.... that a smile is an inexpensive way to improve your looks.
I've learned.... that everyone wants to live on top of the mountain, but all the happiness and growth occurs while you're climbing it.
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Note: Creative Leisure News is published on the first and third Mondays of each month. Because July has five Mondays, your next issue will be in three weeks, August 7th.

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 mike@clnonline.com.

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