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

 

 


Date: October 2, 2000
Vol. IV, No. 19

Printer Version

TABLE OF CONTENTS

bulletCommentary
bulletPredictions For The Fall Season
bulletReport: Fall Sewing Show
bulletReport: Knit-Out & Crochet 2000
bulletReport: Learn to Paint
bulletUpdate: Internet Copyright Piracy
bulletChange Of Leadership At CraftClick
bulletPredictions For Fall -- In Great Britain
bulletMiscellaneous News
bulletRandom Quotes, Random Thoughts
bulletE-Commerce Update
bulletThe Creative Network: Job Openings
bulletCreative Network: Job Of The Month
bulletThe CLN Retail Index
bulletA Reader Responds With A Customer Story

COMMENTARY

Our work on moving Creative Leisure News to the web is progressing nicely. Soon, when a new issue is posted, we'll send you an email with a link. You'll click on the link and it will bring you to the site. To see the new issue, you'll use a username and password.

But there will be other sections that don't require a password, including recent issues, and still-relevant letters and comments (and humor) from industry people.

Fax subscribers will still receive their issues as usual.
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PREDICTIONS FOR THE FALL SEASON

We asked a wide variety of retailers, wholesalers, and vendors for their thoughts on the upcoming holiday season -- for their company and for the industry in general. Some responses:

1. "I believe that the 4th quarter will be stronger for the manufacturer/distributor segment than for the retailers. Let me explain.

"The retailers are up against record sales from the 4th quarter of 1999. In most cases, those large percentage increases will be difficult to surpass. Plus, most major retailers have managed their inventories to a much lower level than is normal for this time of the year.

"I believe that as the consumers start back into their 'crafting' activities, store sales will ramp up and heavy fall re-orders will flow to manufacturers. As a result, manufacturers will show stronger than normal 4th quarter shipments. For faster service, some retailers will turn to wholesalers/distributors for replenishment, creating positive sales for this segment. In some cases, manufacturers will not be able to meet this demand, causing out-of-stocks at retail, further limiting store sales growth.

"We are expecting 7-9% increases for the last 3 months of the year which is impressive, given our strong 1999 sales. Part of that is due to 1999 goods shipping heavily in the 3rd quarter as opposed to the 4th quarter in 2000." -- Major craft/floral vendor

2. "Flat. I don't see anything great happening." -- Major sewing vendor

3. "2000 could be a very strong holiday selling season due to consumer confidence. However, a real storm cloud building on the art material horizon is the poor fill rate and delivery performance of some of our industry's largest manufacturers. If vendors can't get their act together soon, a lot of retailers will be short of many key seasonal items." -- Art materials distributor

4. "Considering I am introducing a new line, I better have a great 4th quarter. From early showings though, things look to be very positive. We have had major placements in some catalogs and positive feedback from a few quilt shops, with whom we previewed the lines.

"Most quilt shops I speak to continue to do well and they report having many customers new to quilting. The prospects for Quilt Market look good and will set the tone for the whole quarter." -- New quilt vendor

5. "I truly believe there could be two very negative impacts to sales in the golden quarter: the current and near future weather conditions and the enormous increase in home heating costs.

"We can all read today about the rain which is occurring in some of the drought-stricken areas, but in most cases it is too late to save those crops which would create the cash for seasonal expenditures. Small town and rural America WILL BE AFFECTED ADVERSELY; there can be no doubt about it.

"The prices for gas and heating oil are predicted to be so outrageous, it is utterly ridiculous and although I do not totally buy into the 'shortage' reasons, it is still a fact of life that it is here and not going away.

"As for the craft industry in the golden quarter. I have reservations about any significant great things happening. It simply is soft, and there is nothing yet to really make them knock the doors down to get at it -- and there hasn't been, for some time. I go by numerous large craft retailers to and from my office and it is scary when you look at the parking lots -- they are not even remotely close to what one could consider full.

If people are going to 'craft' for the holidays, they should have started by now, and to do that they would need to drive to the craft store and use the parking lot? Oh, I forgot about how the Internet lines are burning up with orders being placed -- shame on me for forgetting!!!!!!!!!!!!!!" -- Major Midwestern floral and seasonal importer

6. "It's going to be a great quarter, and surprise a lot of people. From looking at advance bookings and talking to people, I think the well managed companies are going to be fine. If the retailer is prepared, has done his homework, and has his inventory in line, he'll have a great year." -- major art material vendor

7. "I checked my tea leaves and it shows sales and product sell-through equal to last year's fall season. Consumer sales are a little softer now than last year, but I believe the Thanksgiving and Christmas holiday season should help pull it back to even with last year. I doubt that this year will be any meaningful gain versus last year's season.

"I could be wrong, but I believe the economy is into a 'soft landing' stage for real." -- Very large manufacturer who will be unveiling its first craft line in January.

8. "I have been noticing that people are getting more interested in purchasing as of late. We are just climbing out of the slow season in Florida. Last week I noticed that one of my stores in Naples had already set up nearly a 1/6 of their store to highlight Christmas.

"Additionally, there are three new stores scheduled to open within the last quarter from a chain group that is growing here. They are streamlining their stores and their look to the 80/20% rule, making the stores smaller as well. There seems to be good activity in the rest of the chain." -- Manufacturer's rep

9. "We expect the season to be very good -- up 15% over last year. Reasons: people are bored with their existing activities, are becoming less interested in the Internet on an individual basis, and still want to do things meaningful. In any event, our early results support the estimate. Time will tell?" -- Large California independent

10. "I'm in Taiwan today and on my last day of a month-long trip to China. What a country! We are so far into next Xmas and have not heard anything other than things are slowing down. We shipped a lot for the 4th quarter, so we anticipate sales will be there for unique, well priced, good-quality items." -- Midsized importer

11. "The fourth quarter for us has never been the strongest quarter. However we are forecasting an increase for fourth quarter for several reasons. We feel that, now that the summer is over, the consumer will start to jump into projects that we have advertised over the last few months. We also feel that as the stores increase traffic, it will help turns in the several brands that we offer." -- Major needlework vendor

12. "We and most of the Sierra Pacific Crafts members believe we are going to have a fantastic fourth quarter. We have created our first ever Home Decorating Catalog. It is a beauty to behold. Those that we have shown it to cannot believe that it is our product! We break it on October 10th.

"However we have a lot of the product on display now and it is selling well! Hope we purchased enough of the good stuff!

"We are also very enthusiastic with the results of our employee training programs and feel it has made a difference. We receive compliments everyday on 'Outrageous Customer Service'.

"Our store no longer looks like the chain stores; our employees no longer 'act' like chain store personnel. We are moving forward." -- Independent in the Northwest

13. "All indications thus far indicate that we will have a strong reorder business in the 4th quarter in accounts like Wal-Mart, Hobby Lobby, Michaels, etc., for products such as craft, apparel, home decorator trimmings, ribbon, quilting tools, and knitting and crochet implements. We are anticipating single digit growth for most of these categories in the final quarter vs. last year. The consumer sell through on our seasonal assortments is strong so far and should continue into the final few months of the year." -- Major trim-sewing-craft vendor

14. "I think the chains are cutting down on their inventory. They'd rather lose the sale than have to eat the goods." -- Industry consultant

15. "I believe it should be a GREAT selling fourth quarter. Having said that, as you know I sell a few rather staple lines to some pretty big hitters in the art/craft market, BUT, I can only refer buying [by retailers] in for the fourth as tentative.

"It's like someone, somewhere is sending out the message that this coming fourth quarter isn't going to be all that great -- like the rather disappointing back-to-school we had this year. Or maybe the reason is the buyers, especially for the big hitters, were told all year long by top management to hold inventories DOWN!

"I think there will be a lot of buyers who wished they had bought heavier." -- Manufacturer's rep.

16. "Since our business is so seasonal & cyclical, usually the 1st and 3rd quarters are our strongest each year. We will be going into the 4th quarter with a moderate increase for the year, and enough new orders to stay busy for the month of October. We hope to continue that with a few specific promotions and programs that will run in the 4th quarter." -- Major floral vendor.

17. For a sales rep this quarter is done;.we are now selling spring. Spring sales do not appear to be as strong as last year. The biggest problem I hear from stores is they cannot get enough help. Storeowners have had to miss shows due to this problem, had to cut hours, etc. This seems to be a national problem, not a regional one. Cutting hours and days results in lost sales.

There is a lot of concern about 2000. I feel that this is typical for an election year, but it is cutting into my spring sales. Just completed one distributor show and it was very slow. --Midwestern manufacturer's rep.

18. "We are feeling very good about the 4th quarter in terms of our fall product line, positive indicators from our direct mail response from this summer's new prospect campaigns, our reader feedback, visitors to our various web sites, and our own external research. There seems to be an element of enthusiasm for creative expression and improving one's home and decorating for the holidays." -- Consumer magazine publisher

19. "I think the fourth quarter for me is going to be OK only because I am selling so much to Michaels. You really wouldn't believe. The overall state of the paint field is flat at best. We desperately need more teaching shops. New blood is the life force of the industry." -- Distributor
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REPORT: FALL SEWING SHOW

A report from Beth Mauro, the Sewing Editor for CNA magazine:

"The Home Sewing Association's fall show had steady traffic. It's always a little smaller than the March show so it was expected and vendors were generally pleased they were able to see customers; many did better than they expected. These (sewing) shows provide a full hotel-catered lunch so it adds to the value of the exhibitor fee and helps defray some of the buyer's costs.

"For fabric retailers, this show was good because of all of the promotional fabric resources.There was a tremendous amount of exciting, well priced product. One trend I noticed is, rather than buying for the next season, many retailers were buying for immediate shipment. They seem to be filling in on hot items and can expand the categories they are doing well in. There were just as many booths showing furs, wools, and velvets as spring looks. This is able to happen, of course, because of all of the jobbers present."

One observer told Creative Leisure News, "As always, my disappointment is that the association-sponsored show (and, for that matter, the March show) does not have the full support of sewing machine, notions, and pattern suppliers. I understand their reasoning and I don't think the situation will change, but I believe the buyers really miss their presence."
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REPORT: KNIT-OUT & CROCHET 2000

Karen Ancona, the Editor of CNA, attended the event and filed this report:

Knit-Out & Crochet 2000 attracted more than 12,000 consumers to Union Square Park in New York City on September 24, the third year this event was held in NYC. It's sponsored by the Craft Yarn Council Of America (CYCA) members and associate members who man tables each year and offer on-site education and free patterns, plus display products. No selling is allowed.

The huge crowd enjoyed a fashion show that included many knit and crochet items, even some for dogs. More than 200 people helped to assemble squares for Warm Up America afghans that will be donated to charities.

The Big Apple location has served as an incubator for similar events that will be held across the country. With seed money from CYCA, and with the cooperation of The National Needlework Association, this year 31 new Knit-Outs will roll out in other locations, one in Canada.The events are all designed to stimulate an interest in knit and crochet and are manned by volunteers. Possibly the most unique event will be held in Portland, Oregon on public transit.

(Note: Karen complains about the stereotype that all knitters are old ladies, so her report in CNA includes a page of photos of Knit-Out participants who look like anything but old ladies.)
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Report: Learn to Paint

Although final numbers aren't available, as many as 54,000 consumers learned to paint a papier mache box during Learn To Paint, the massive promotion sponsored by the Society of Decorative Painters. Numbers: 191 SDP chapters participated, as did 1,054 chain stores and 621 independent stores, libraries, and other.

"This has been an incredible experience -- one which will produce long-range positive benefits, sales, and new consumers for the entire paint-related industry," said Gretchen Cagle, chair of the Paint task force.
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UPDATE: INTERNET COPYRIGHT PIRACY

Jim Hedgepath of Pegasus Originals reports making progress shutting down sites with copyrighted material. Seven or eight are already down and another 20 should be down this week but, Jim says, "There are messages at some of the down sites now that they will be back someplace else, so this battle will probably continue until we have the money to actually prosecute a few of the ring leaders and set an example."

Krause Publications, which has an extensive book publishing division in addition to its magazines, has agreed to publish the design book, the income from which will go to the legal fund. "The book will produce the money," Jim adds. The team leader on the book project is Jennifer Aikman-Smith/Nicholas Smith. Contact Jennifer at dragondr@nbnet.nb.ca.

Time magazine's article on Jim and Internet piracy appeared last week, but it contained nothing that hadn't already been reported in our previous issues and in CNA.
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CHANGE OF LEADERSHIP AT CRAFTCLICK

Russell Murray has succeeded Peter Yolin as Chair of the Board of CraftClick.com. Murray has also made a binding, two-year commitment to fund company operations. Murray, the son of Tom Murray, owner of the now-defunct distributorship, Ozark Arts & Crafts, is the founder of the e-commerce site Art2Art.com which was acquired by CraftClick in February. Yolin has resigned.

The agreement calls for CraftClick to issue a new class of voting preferred shares to Murray, which are each convertible on a 1-to-1 basis with CraftClick's common stock, and which have 20-to-1 voting rights. In exchange, Murray finances CraftClick's operations for two years, maintains its public status and filing requirements, and satisfies ongoing obligations. Murray received 1.5 million voting preferred shares, and will receive 1 million voting preferred shares every six months for two years.

CraftClick stock is traded on a NASDAQ bulletin board under the symbol, CTCK, and is currently trading around 40 cents/share. In the past year, the company has acquired approximately 15 industry-related e-commerce sites and portals, reportedly paying for them with stock.
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PREDICTIONS FOR FALL -- IN GREAT BRITAIN

The following is from Chris Crombie, an executive at Hobbycraft, the leading chain in England:

This year has been tough, particularly the first five months of the year. All UK suppliers (who will actually be candid about their sales) suffered negative sales.

That being said, we had an encouraging June, July, and August, averaging a 5% increase. September for us and many got off to a roaring start; however, the UK fuel crisis really hit us in mid-September when our customers couldn't get out in their cars and our stores were exceptionally quiet. When the fuel blockades were lifted, the protesters threatened another protest in 60 days (mid-November) which could be devastating to the industry.

I worry that our customers are now feeling poor because of all the media reporting of "rip-off Britain" and "high fuel taxes". This could potentially mean a poor fourth-quarter.

The good news is that we are up against last year's figures which were fairly poor for September and October, due to a late blast of summer heat. This year is much cooler so far and I suspect this will drive people into our stores.

In general I believe the fourth-quarter will show a modest increase on last year for all in the UK market but it isn't going to be a bonanza year! People feeling a little bit poor is not such a terrible thing for sales in the medium term, because they are likely to spend on cheaper leisure activities (i.e. crafts) and not on foreign holidays, cars, and the like.

However, we still have the axe hanging over us in terms of another potential fuel stoppage -- that could turn what I think will be a few percent gain on last year's fourth-quarter into a thumping, double digit negative.
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MISCELLANEOUS NEWS

QUOTATION. "Reorder business has been trending upwards in the last 6 weeks as Jo-Ann's personnel come to understand the SAP system better at store level and in the warehouse." -- Industry vendor.

MONEY. Martha Stewart is a new addition to Forbes' annual ranking of the nation's wealthiest people. The issue is out this week. No word on Martha's rank.

NAME. ImageHill is the new corporate identity for Soap ExpressionsTM and Country LaneTM, and the new National Sales Manager is Bob Duncan. Call 888-888-4353 or Bob at 888-590-2996. The websites are www.soapexpressions.com and www.clcs.com.

HIA. In the September issue of O, Oprah Winfrey's new magazine, Rosie O'Donnell talks about her favorite way to relax: decoupage. "For me [decoupage] is therapeutic. It's an artistic expression, and it's something to do with my kids." Her favorite decoupage tool is Plaid's Mod Podge, one of the oldest, continually-selling products in our industry.

HIA. The keynote speaker at the 2001 Anaheim show is Dr. Oren Harari. His speech is "Beep, Beep: Competing in the Age of the Roadrunner Millennium." ... Speakers at the CEO Roundtable are Rich Bergsund (IdeaForest.com); Steve Davis (Michaels.com); Harold Poliskan (Craftopia.com); and Brad Sobel (eHobbies.com). Topic: "Clicks & Mortar-- the New Retailer of Today" ... The topic of the Generic Product Workshop is "On the Paper Trail" and Kathy Lamancusa will again conduct the 4.5-hour workshop on paper crafts. Go to hobby.org/hia2001.

PEOPLE. David Murray was promoted to Marketing Manager for Activa. His Dallas office phone is 214-370-0832 or 888-670-0832 ... Cheryl Darrow joined Accu-Cut's sales staff ... Zany Brainy named Thomas Vellios President/Acting CEO.

JOB. Northeastern manufacturer needs a Director of Product Design & Development fpr merchandising, packaging, and presentation concepts; supervise sample department; participate in showroom and trade show design and presentation; and meet with key accounts. Salary and benefits commensurate with experience. Call Mike Hartnett, in confidence, at 309-925-5593.

PRICES. The Wisconsin state consumer protection agency charged Wal-Mart with illegally cutting prices below cost to take business from competitors, reported the Milwaukee Journal Sentinel, which said the agency had been sending warning letters to the discounter since 1993. No craft or sewing products were mentioned.

STOCK. Fahnestock reiterated coverage of Wal-Mart at Hold and Bear Stearns initiated coverage of Wal Mart at Buy ... Piper Jaffray reiterated coverage of Michaels at Strong Buy ... Ladenburg Thalmann reiterated its coverage of Ames at Strong Buy.
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RANDOM QUOTES, RANDOM THOUGHTS

1. A postcard, so to speak, from Sara Nauman at Hot Off The Press: "We've just returned from exhibiting at Stitches & Craft, a consumer craft show in Melbourne, Australia. It was awesome! The interest in scrapbooking is huge there, and several consumers told us they had been avid scrappers for several years now.

"Interesting, since there currently are fewer than 20 stores with scrapbooking supplies in the entire country. So, how do they buy their American-made scrapbooking supplies? On the web, of course! The Internet has really been one of the primary forces behind scrapbooking's popularity Down Under, offering consumers access to product, news, and information, and chat and email groups for a virtual cropping party."

2. Do you want to increase sales to independents, but don't have the sales force? In my last issue I talked about a company with a strong sales force interesting in adding other companies' lines to their sales staff's repertoire. Now a second company, with a strong sales force, is willing to have their sales people sell other vendors' lines, too. If you're interested, call email (309-925-5593; mike@clnonline.com) and I'll put you in touch with the companies.

3. The vendors returned from the Michaels and A.C. Moore meetings, and in general seem to be in a better frame of mind than a year ago. Yes, the chains still wanted help with advertising and such, but because they fulfilled the promises they had made a year ago, this year's requests were more palatable. One vendor said, "the attitude was, 'You give me the opportunity, and you work with me, I'll show you I can produce.'" Another said, "Both [chains] plan to open many new stores in 2001. That is wonderful. I also feel VERY upbeat about the continued focus to truly keep consumers interested in crafts."
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E-COMMERCE UPDATE

CORRECTION. For vendors to want to see their lines sold on joann.com, call the IdeaForest merchandising department at 310-335-0676; fax 310-335-0676

TAXES. California Gov. Gray Davis vetoed the Internet tax bill that would have required retailers with stores in the state to collect taxes for online sales, saying he did not want to stifle e-commerce, Reuters reported. Supporters of the bill said they would try again next year.

SITES. Hot Off The Press' revamped site at paperpizazz.com allows surfers to buy books, Paper Pizazz and Punch-Outs (at suggested retail prices), enter page contests, learn tips on scrapbooking techniques, locate their neighborhood Paper Pizazz retailer, learn about conventions and new releases, and sign up for a twice-monthly email newsletter.

CLIENTS. Studio Source (studiosource.com), the b2b company that builds and operates online art stores for traditional retailers and etailers, launched an online art supply store for MeetTheMasters.com, a major elementary school and home-schooling art education site. Other clients of Studio Source include Idea Forest, which operates Joann.com.

PEOPLE. IdeaForest named Andy Rifkin as Chief Technology Officer for its e-commerce site, joann.com. Rifkin has worked for Mattel and Time Warner.
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THE CREATIVE NETWORK: JOB OPENINGS

The only personnel recruitment firm specializing in our industry has the following job openings. Call 360-834-0802; fax 360-834-0702; email jessica@creativenetworkinc.com; or check www.creativenetworkinc.com.

CENTRAL: Marketing Coordinator ... Product Manager (wedding/florals).
MID ATLANTIC: Chief Controller ... Sales & Marketing Director ... Product Manager (crafts) ... VP Account Executive (soft goods) ... VP Marketing ... VP Marketing (soft goods).
NEW ENGLAND: Assistant Art Director.
NORTH CENTRAL: Director of Sculptural Team (3D gifts) ... Director of Sports Collectibles ... Junior Product Development (licensing/gifts).. Layout Artist (2 positions) ... Product Development/Designers (gifts/dolls/plush) ... Senior Copy Editor (marketing communications) ... Senior Product Development (licensing/gifts -- 2 positions).
PACIFIC: Director of Product Development ... National Account Manager (gifts/specialty channels) ... Production Manager (overseas experience) ... Senior Director of Product Management (crafts) ... Senior Product Manager (crafts).
SOUTH: Design Department Manager ... Marketing Manager (crafts).
SOUTH CENTRAL: Marketing Communications Manager (retail experience) ... VP of Customer/Employee Product Education.
SOUTHEASTERN: Senior Sales VP (gifts/plush/toys).
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CREATIVE NETWORK: JOB OF THE MONTH

Position: Marketing Manager ... Salary: $50-60K ... Location: South ... Description: Identify new product opportunities and/or line extensions; work with other product managers and the purchasing, operations, creative, and sales departments -- and domestic and overseas vendors ... Qualifications: Excellent understanding of and strong experience in the craft/art industry; organizational, marketing, communication, and analytical skills; an understanding of chain stores. Marketing degree preferred.

For more about these positions, contact The Creative Network at 360-834-0802.
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THE CLN RETAIL INDEX

A. C. Moore (ACMR). Last*: 7 7/8 ... Change**: UNC
Ames (AMES). Last*: 5 23/32 ... Change**: +3/8
Hancock Fabrics (HKF). Last*: 5 ... Change**: UNC
Jo-Ann Stores (JAS.A) [a]. Last*: 7 1/4 ... Change**: +1
Michaels (MIKE). Last*: 40 ... Change**: -9/16
Rag Shops (RAGS). Last*: 2 5/32 ... Change**: -1/4
Wal-Mart (WMT). Last*: 48 1/8 ... Change**: -3 3/4
CLN Retail Index. Last*: 116.125 ... Change**: -2.3%
Dow Jones Index. Last*: 10,2650.92 ... Change**: -2.5%
     *Sept. 29 ** from Sept. 15 [a] voting share Note: Prices are exclusive of dividends
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A READER RESPONDS WITH A CUSTOMER STORY

Katherine Yoss, a manufacturer's rep in the Midwest, read our appeal in our last issue for stories about unusual customers, and was prompted to tell us about two of hers:

"Yesterday I had a man call looking for a particular color of spray paint. (I sell Krylon and the customer service department gave him my number). He had purchased a can of copper spray paint at a craft store, sprayed it on a piece of his siding, and fell in love.

"He wanted to know how many cans he needed to purchase to cover 5,000 sq. ft. I was, of course, shocked and told him that he surely did not want to spray an entire house.

"He informed me that he could attach a sprayer, saving him from having to hold the nozzle with his finger. This particular color was the only one he had found that would make his home look like a copper penny.

"I referred him to a distributor near him. I am hoping that he did not use my name. "About a year ago, I had a lady call wanting 250 cases of Camouflage Green. I asked why and she stated that it was to paint her hand grenades that she made in her garage.

"She was from the same vicinity as the gentlemen yesterday, so I referred her to the same distributor. She purchased the paint from them and none of us have heard from her since.

"After that experience, I doubt that my distributor will find this housepainter strange."

How about it, readers? Have a story to contribute? Email it to mike@clnonline.com or fax to 309-925-5593.
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Note: Creative Leisure News is published on the first and third Mondays of each month. Your next issue will be Monday, October 16th.

Need any rumors 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.

xxx

 

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