Challenges, problems, and triumphs
-- from a manufacturer's perspective.
Advice on Exporting to the U.K and Europe
An interview with the former CEO of HobbyCraft.
Staff Report (February 20, 2012)
(Note: For two-plus decades, Chris
Crombie has been on the receiving end of U.S. vendors' efforts to
sell their products in the U.K. and Europe. He knows from practical
experience what works and what doesn't.)
CLN: What is your background in
the craft industry?
CROMBIE: I have been working in the UK
craft industry for over 20 years. In 1995 I was part of the
management team that created the retail chain, HobbyCraft. Today it
is still the only dedicated art and craft superstore group in
Britain. Prior to becoming CEO of that business, I spent eight years
as Buying Director, so product and sourcing are my key
specialties. I left HobbyCraft last year
and I'm now consulting with a variety of businesses looking to
expand in the craft market.
CLN: What is the state of
the euro and the pound? Are exports from the U.S. to Great Britain
and Europe more or less expensive?
CROMBIE: Like the dollar, the pound is a
safe haven currency. Since the financial turmoil began in 2008, the
exchange rate has been stable and trading in a relatively narrow
range of between £1=$1.50 to $1.60. This makes trading in the UK
predictable and from a UK wholesaler or retailer perspective, I'd
say that U.S. products are competitively priced at this exchange
rate level. The euro is, of course, less predictable Ė since 2008
the currency range has been anything from 1euro=$1.25 to $1.50.
Currently trading at around $1.30, it makes buying from the U.S. an
attractive option at the moment.
CLN: What is the state of the
economy in Great Britain and also in Europe? If Greece defaults on
its debt, will that drag Europe into a recession?
CROMBIE: Stagnant is probably the best
description here. The U.K. saw weak retail sales in the
all-important fourth quarter last year, and despite a small boost
from post-Christmas customer traffic, retail sales remain flat.
Economic sentiment in the U.K. is that 2012 will be a challenging
year with minimal growth, but should the euro fail, this growth may
become negative. The general view on Greece is that the financial
markets have already priced in the scenario of them leaving,
defaulting or leaving the euro, so I believe you'd have to see a
total failing of the euro to really upset the economies of the euro
CLN: Are you seeing interest in
crafts from retailers who aren't traditionally "craft" retailers?
CROMBIE: The unfettered growth of
e-commerce has affected all retail markets. Gross sales of
brick-and-mortar stores continue to decline as more sales go online.
So all retailers looking at adjacent product categories to add to
their assortments in order to bolster same-store sales. In the craft
sector in the U.K., we have recently seen grocery, stationery, toy,
gift, and variety retailers all adding crafts to their stores. As
our industry is still growing, I expect this trend to continue. It's
not easy to downsize a store portfolio in the U.K. because property
leases typically last for 15-20 years and very few retailers want
CLN: What do you see as the
biggest roadblocks stopping vendors from more actively pursuing the
CROMBIE: Lack of knowledge about the
target market is definitely the main roadblock. All too often the
question of "where do we start?" is answered by simply appointing an
exclusive distributor and leaving them to it. This rarely translates
into a successful outcome for either party. Dealing with Europe
directly needn't be difficult, but it does require engaging with
experienced locals on the ground in the target country, locals who
know the market.
CLN: What considerations should a
U.S. vendor make when dealing in an export market?
CROMBIE: Product design has to be the
most critical factor. Consumer tastes are very different in Europe,
and so it's vital, especially with fashion-led product, to
understand what will appeal to the end-user. Remember, too, that the
U.S. consumer is more "craft literate" than their European
counterpart, so making sure that packaging explains the product and
what to do with it is important. Think too about how the retailer
will merchandise the item and what point of sale aids that will
boost sales. Law is another key area to consider, especially in the
area of product packaging and safety. The "CE mark" is the European
safety standard for toy and electric items and, like in the US, the
law is becoming more stringent at the moment.
CLN: What's the biggest mistake
vendors make when they try to sell to the U.K.?
CROMBIE: Over the years I've seen so
many U.S. vendors assume that just because their brand is well known
in the U.S. that their product will automatically sell in Europe.
You can't just "ship and forget"; you need to work closely with your
customers to establish your brand and demand for you products. I
would recommend investing in P.R. and trade and consumer advertising
to create demand. It's also vital to exhibit at key trade shows,
too. Another assumption to avoid is that a single European sales
operation can successfully sell to the whole of Europe. I've seen at
least two major U.S. vendors fail by making this error; treat each
country as its own export market.
CLN: What craft categories are
hot in the U.K?.
CROMBIE: Paper crafting continues to be
the engine-room of the industry. The key activity, however, is
making greeting cards. Scrapbooking is only a minor category in our
market, although of course memory book components are used widely
for card making. Fine art and needle craft are good, stable
categories in the U.K., with needlecraft in particular being a
resilient category, more so than in the U.S.. Knitting and jewelry
have both seen good growth trajectories in the last few years,
although they are relatively modest in gross turnover terms.
Finally, in the last eighteen months we've also seen home baking
really taking off, lead by the popularity of cup cakes.
CLN: What outlook do you see for
the UK craft market?
CROMBIE: The UK craft industry
has grown enormously over the past decade and continues to do so.
Research has estimated the market to be worth about $3bn, so itís
definitely a market worth targeting. However, in relative terms the
market is still in its infancy. The majority of UK consumers still
donít have access to a craft superstore, so customers are still
discovering crafts for the very first time. This is great news for
the industry which has much growth ahead of it.
(Note: Chris is also advising the
sponsors of Autumn Fair International, a huge U.K. trade show
Sept. 2-5 in Birmingham that is expanding its craft area. Chris can
be contacted at
email@example.com and his cell phone is +44-7502-300-300.)