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The trends, the issues, and productive business strategies.

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Problems Loom For Scrapbook Retailers ... 

... But there are some common sense solutions.

by Mike Hartnett (March, 2004)

Independent scrapbook retailers will be facing their most difficult year, and how they react and adjust to the challenges looming on the horizon will determine if they survive. I'll detail the coming problems, then outline strategies to solve them.

Problem #1: Increased Competition.

It's about to get much worse. None of the companies listed below will offer the education, service, or the selection that an independent offers, but they offer scrappers more options and in many cases, lower prices.

1. Wal-Mart and Target are expanding their scrapbook offerings. You think that's not a problem? Ask KB Toys and FAO Schwarz who went bankrupt a few months after Wal-Mart got serious about toys.

2. Some office supply and drug chains will have memory departments by the second half of the year. Why wouldn't a drug chain, with its photo-developing departments with big "Kodak" signs, put in an adjacent Kodak line of scrapbook products?

3. Gift, toy, variety, and book stores are adding some memory products. Maybe it's only a few stickers, a selection of photo albums, or a handful of beginner kits, but any amount spent in those stores probably means less money spent in yours.

4. Online services that create scrapbooks for customers who email their photos. Some consumers, particularly those with hectic schedules and lacking confidence in their own creative abilities, may decide this alternative is quicker and easier.

5. New scrapbook stores continue to open. One independent in a large city told CLN, "When I opened a few years ago, I was the only scrapbook store in town. Now there are 10 of us."

6. The consumer's switch to digital photography is not a problem unless she doesn't have an easy, inexpensive way to get her photos out of the computer and onto paper. If she doesn't, she'll create her scrapbooks in her computer and they will remain there.

"Yes," you can argue, "but my customers love my store. They'll remain loyal to me."

That may be true, but your customers are also busy, tired people. On a Saturday visiting your store might be on the to-do list of a busy mother, but she's already in Wal-Mart buying sneakers for the kids, and if she picks up some scrap paper there, that's one less thing stop to make on her tiring errand journey. Wal-Mart's paper selection won't hold a candle to yours, but it may be good enough, and it's probably cheaper.

Then our busy mother does to the drug store, and as she walks the aisles waiting for a prescription to be filled, she sees an array of memory products....

No single competitor such as Wal-Mart will drive you out of business. But it doesn't have to. Look at your financials for 2003. Now imagine if you had had 20% less in sales. There's a good chance your store would have lost money rather than made a profit.

If you lose a little business to Wal-Mart, a few sales to the new scrapbook store in town, a bit of business to a drug store collectively that can add up to 20% or more.

(Note: You are not doomed. Don't put your store up for sale or call a suicide hotline. There are some solutions below. Keep reading!)

Problem #2: Less Business from Existing Customers.

1. When a consumer gets hooked on scrapbooking, she probably has a lifetime of photos stuck away in drawers. But as time goes by, she eventually will catch up. Then she only scraps after the next picture-taking event a vacation, birthday party, etc. Granted, she probably takes more photos than she used to take so she can engage in her favorite hobby again, but still, she's probably not buying as many supplies as she once did.

2. Furthermore, when she first realizes the joy of scrapbooking and the fun of scrap parties, she buys the tools scissors, a carry-all, etc., which are higher-ticket items. Once she has purchased the tools of the trade, then she only needs to buy consumables paper, stickers, etc. She may be scrapping as much as before, but she's not spending as much money in your store.

3. It's a cardinal rule in business, especially in retail: customers die, move away, or move on to other hobbies. It's called life, human nature.

Problem #3: Inventory management.

In the last issue of CLN, I quoted the marketing director of a company that sells to numerous independent retailers. "We're seeing a number of the older scrapbook stores close, mainly due to poor inventory management," he said. "The consumer's constant pressure to add new products pushes them to add new lines, but then they only sell 90%. So each year the amount of 'dead' inventory grows and grows."

Eventually the store doesn't have the room or the money to add new lines, which turns off the hard-core customers who pressured the retailer into new, new, new in the first place.

Answer #1: Drop Dead Merchandise.

There are two solutions to these problems: attracting new customers and dumping old merchandise. The latter is the easiest: get rid of the merchandise that no longer sells.

Holding on to dead merchandise is one of the most common and fatal mistakes independents make. They hate to discount or give away the old stuff and take a loss. They don't understand that the key to profits is turnover, not margin. And if some merchandise isn't turning anymore....

The dead merchandise takes up shelf space that could be used for better-selling merchandise, and it creates an old, out-of-touch atmosphere for your store. Some solutions:

1. Donate it to charity schools, Girl Scout troops, social agencies, youth groups and take a tax write-off.

2. Create a "bargain bin" in your store. Dump the no-longer-selling items in it and mark everything down drastically. Drastically enough so it sells!

3. If worse comes to worse, throw it in the dumpster.

Answer #2: Attract New Customers.

They have a lifetime's worth of photos to scrap, they need those higher-ticket items, and they don't know that your "old" merchandise is, well, old. They also aren't familiar with the prices of memory products, and don't realize Wal-Mart may be selling paper for a nickel a sheet less.

1. Make your store accessible and inviting to newcomers. Remember Sandra Joseph's comment in CLN's last issue. She was shocked when some buyers at a Christian bookstore show said they wanted to make a scrapbook, but "how do I start?"

Suppose a novice walked into your store, not knowing how to start a scrapbook. Would her first impression be examples of simple scrapbook pages and racks of understandable products? Or would she be hit with signs using terms she doesn't understand. ("All embellishments 20% off!")

If she doesn't know how to start, she won't know what embellishments are, and probably won't have the slightest idea what vellum is.

Stand just inside your front door and close your eyes. Imagine you know nothing about scrapbooking. You'd like to make one, but you're nervous, and don't like feeling stupid. Now open your eyes: is what you see going to calm your fears and excite your interest?

2. Always offer beginning scrapbook classes. If you charge for classes, make the beginner class a "two-for-one" so a nervous novice can bring a friend.

3. Reach out to minority groups. Buy Sue DiFranco's new book, Scrapbook U-Diversity, and learn how you can attract the teens, Hispanics, African-Americans, Asian-Americans, gays, and oh yes, men. Collectively, these groups make up a much larger customer base than middle-class white women. www.scrapdiv.com.

4. Perhaps the wisest advice I've ever heard for independent retailers came from Aleene, the founder of Aleene's Tacky Glue, one of the industry's strongest brand names. Aleene has been giving this advice for about a half century now, and it's still true: "To succeed, you must introduce your store to at least 50 new customers a week. Every week."

Easier said than done, of course, but there are some ways you can do just that without spending a fortune on advertising. For example, develop a slide presentation on scrapbooking, then call every group in town, learn who is in charge of arranging for speakers/entertainment at the regular meetings, and offer to be a speaker, free. If you're turned down, remind them that you can be available on very short notice, in case a speaker cancels at the last minute.

Newspaper advertising can be expensive, but newspaper editorial coverage is free. Get to know the features editor at your local paper and bombard the paper with press releases.

(Note: In our next installment, we'll discuss strategies to keep your best customers interested and enthused. To read previous "Memory, Paper & Stamps" articles click on the titles in the right-hand column.)

xxx

 

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