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Phone: 785-760-5071
Email: mike@clnonline.com


 


The trends, the issues, and productive business strategies.

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The Paper Chase 

Too much paper, there are more profitable products to stock. 

By Lisa Kanak, The Cropper's Coprner (July 4, 2005)

We’re living an industry nightmare. Scrapbook stores are closing across the nation. And unlike the store closings of the past, many of the stores closing today were well established with excellent reputations for customer service and product selection.

These closures of established stores mean trouble for the industry as a whole. Stores are closing faster than stores are opening. Ultimately, this will lead to a manufacturing crunch (if it hasn’t already), and the closure of various manufacturing companies as well. A lot of the mess we created ourselves, and we have no one but ourselves to blame.

Today, the scrapbook industry has moved full swing from the early to mid-90’s, when there were virtually no scrapbook choices – to having way too many choices. And too many choices is creating a huge problem.

Consumers do want choices. However, offering such a wealth of choices is a double-edged sword. More choices cause more demand for more choices. Eventually the expectations for product is so high that the customer refuses to buy what is available. They become extremely picky – and this lowers sales.

It used to be that consumers were relatively content scrapbooking with just some cardstock and stickers. They did the best they could with what they could find. They were more tolerant of low product selection – and didn’t complain nearly as much.

Enter the modern scrapbook world. Product is released each week. Stores struggle with moving slow sellers, while people clamor for new or different themed papers to satisfy their thirst. But, once they’ve used "that" breakfast paper with the bacon & eggs, they want a "different" paper with pancakes and sausage. When we get paper in with pancakes and sausage, the customer exclaims "Oh, but these are sausage links, I want sausage patties!"

Customers can afford to be "picky" because there is so much selection. And, what they can’t find locally they hit the Internet for gratification.

It’s hard to go back; but with the store closures and manufacturers sure to follow, the industry is bound to contract. It’s pretty much an inevitable conclusion.

The question often pondered is, "Why?" Why are all of the scrapbook stores closing? Many people offer various reasons. No business sense, poor customer service, poor product selection. Too much product, not enough product. The answer is a bit more simple, and I can sum it up in two words, Not Profitable. There are all kinds of reasons stores may become un-profitable, and no store is immune.

Paper!

The number one reason stores are becoming less profitable is paper.

We have way too much paper in our stores. Perhaps I should rephrase that. Paper takes up way too large a footprint in our stores (for with proper merchandising, you can actually increase your paper selections AND make room for other products).

We had to face facts at our store. Paper sales don’t pay the rent. Sure, we sell more volume in paper (the actual pieces), but all that volume adds up to about 20% of our store’s revenue (this figure includes ALL paper, cardstock, printed, specialty and packs). Yet roughly 50% (or more) of a retail store’s floor space is occupied by paper.

On the flip side, about 50% of our store’s revenues are created by selling stickers and embellishments (our average price point for these is about $3). Sales figures don’t lie. Stickers and embellishments pay the rent; paper is the scrapbook store boondoggle.

The industry answered by broadening the focus of the paper category – card making, home dec, altered art. And, thankfully, we sold more paper, but not much more. Consumers also began demanding more and more papers, and retailers answered by making room for more and more paper.

Stores are replacing a $3 sticker or embellishment for a $0.60 item. Are stores selling more paper? You bet. But sales are not increasing enough to make up for losses in other categories. Paper sales may have gone up 5%, but sticker and embellishments have lost 5% in sales. In many of these cases, the stickers have been discontinued by the manufacturer.

Let’s put these percentages into dollars and cents. Here's an example of a store making $500,000 a year.

Original paper sales: $100,000 ... Additional paper sales: $5,000 (an increase of 5% of paper sales) ... Original sticker/embellishment sales: $250,000 ... New loss of sticker/embellishments: -$12,500 (a decrease of 5% of sticker sales)

The store, for all of its efforts to increase paper sales through cards, home dec, and more paper classes, has wound up losing $7,500 in sales due to "replacing" stickers & embellishment sales with paper.

We are in the great paper chase – and like a dog chasing its tail, we’re getting nowhere fast. The fact is, we must sell five sheets of paper to get the same amount of sales dollar from one sticker module.

Before heading off to the CHA Winter Show, we had "find new stickers" at the top of our shoping list. We were shocked at how few "new" stickers were available. We ordered quite a few designs of what we did find, but apparently not enough.

Just a few months ago (after bringing in about 250 SKU's of stickers), we re-surveyed our customers and asked them what we could improve upon. The answer was ... STICKERS! Apparently, even after increasing our selection by 20%, we still don’t have enough.

We did take the survey a step further. Overwhelmingly, people wanted more poems, quotes and sayings stickers (we currently carry over 150 SKU's of quotes and sayings), and, we’re adding to that number. Our next top vote getter was "other"; based upon customer comments, these customers miss the stickers made by PSX which were discontinued. (Anyone out there taking the hint?)

Conclusion.

As a retailer who scraps and pays attention the latest "trends" (shabby, clean and simple, etc.), we can’t let the trend of the month rule our industry. Whether you are a retailer, a manufacturer, or a distributor, your first goal is to run a profitable, ethical business. Which means we need to be looking at sales figures, not trend setters, to determine our product mix.

After more than three years, Jolee’s from EK Success is still going strong. Yes, there have been a few designs that have seen their day, but the concept is still working very well. Build-a-page has come and gone, but Jolee’s and Jolee’s by You are still going strong! (Okay, add to our list K&Co., Sandylion, Bo-Bunny, Doodlebug, Cloud 9, It’s the Little Things, and many others.)

No matter what the "trend setters" say (The Peas, for instance), a very large segment of the scrapbook world is still in love with stickers. While there may be a bit of regional diversity to the sticker phenomenon, the data on sales dollars is pretty far reaching. Chasing paper doesn’t pay the rent. Embellishments, adhesives, and high ticket items sold at a fair price (close to MSRP) do.

We need to stop chasing paper as THE answer to our profitability problems. We need more simple embellishments that create a cross-over market into more diversified product categories. Simply put, that’s stickers. Dimensional, beautiful, playful, flat, and embossed stickers!

CHA Summer is getting ready to begin. And we’ll be looking through materials in a never-ending search for more stickers. Unfortunately, I have no doubt that we’ll be disappointed… again.

(Note: Lisa's store, The Cropper's Corner, is in Fredericksburg, VA. To contact Lisa, call 540-752-1935 or email lisakanak@adelphia.net. Lisa also commented on why a small vendor is shutting her doors in the "Benny Da Buyer" column. To read it, click HERE. To comment on Lisa's article, on or off the record, email CLN at mike@clnonline.com. To read previous "Memory" articles, click on the titles in the right-hand column.)

xxx

 

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