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A view of the industry through the eyes of a chain buyer.

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Retailers Respond to Scrapbook Dilemma

How to be a merchant, not a missionary.

by various industry retailers (September 20, 2004)

(Note: An independent scrapbook retailer sent a discouraging email to CLN (see the 9/6/04 issue). Mike Hartnett thought it raised some troubling issues regarding the future of independents, and emailed his worries to various industry veterans. What follows below are responses from retailers. Mike's original email and responses from a scrapbook company veteran and a veteran designer appear in Business-Wise. Manufacturer responses and the independent's answers are in Vinnie Da Vendor.)

Bob Ferguson, Ferguson Merchandising.

(Bob runs a Ben Franklin store in Redmond, WA. A member of CHA and a leader in the Sierra Pacific Crafts group, Bob's store is considered one of the most successful in the industry.)

Realistically, when the pipeline gets full in any area of commerce, there are going to be some failures. In my opinion, the pipeline is definitely full of scrapbooking retailers. Some are good and others not so good. This particular creative endeavor is relatively easy to enter since the investment is not large compared to a lot of other retail adventures. This surely means that there are or will be a lot of folks entering the business who are truly not qualified or experienced enough in any form of retail to be ultimately successful.

Because he could do it with relatively little money, 53 years ago my father went into the restaurant business. The sum total of his restaurant experience was that he liked to eat and he could cook. He worked his butt off for four years, garnered some significant awards from local and regional competitions, but the bottom line was that never got any awards for productivity and he eventually went out of business.

Working his butt off simply got him an ulcer and a lot less time at home helping to raise his four kids.

His failure was all in his lack of understanding of how a business of this type should be managed and what motivated people to buy. Then there were the employees; he did good work while his employees stood around and watched him work.

He did not know how to control food costs through modern inventory control methods, he did not understand that making a profit was more than just seeing a 60% gross margin, and he could not believe his employees did not have the same motivation to succeed that he did.

Of course there were many other failures because he truly did not "know" the business and did not have the staying power financially to continue his very costly "education" in the food business.

Are things really different in the scrapping arena? I don't think so, based on what I see in many retail shops today: absolutely motivated people trying hard to make a go of it and not being armed with the latest information (or even how to go about finding it) about pricing, trends, and consumer motivation, let alone what makes consumers walk through the front door in the first place. These things are a huge factor in the success or lack of same in the scrapbooking business as they are with most any retailer endeavor.

This failure is not limited to independents, either. We recently spent time in Dallas studying the scrapbooking business and found startling differences in approaches and, of course, successes.

Witness this: In one center there is a brand new Recollections store side by side with a Michaels. In fact there is a common wall between the two and the scrapbooking department in the Michaels store is directly adjacent to the wall between the Michaels' department and the Recollections store. One can stand outside, straddle the common wall and look into both stores at the same time and see the activity of both scrapbooking departments.

In one there is old fixtures, dust on merchandise, no innovation, 30%- and 40%-off signs everywhere, no employees and NO CUSTOMERS. In the other there is good lighting; great fixturing; merchandise that was just introduced to the trade in the previous three weeks; organization; a steady stream of employees taking the initiative to say, "Let me show you what's new"; and there are about 10-15 customers constantly, day and night. Is the Recollections store an independent? Of course not, but it is emulating what a good independent can and should do to be successful.

To your question of inventory: should there be more 25-ct. packs of paper? Of course there should be and in fact there are. Many paper vendors offer choices in 25-ct., 50-ct., 100-ct., and 250-ct. Each step down in quantity costs a bit more per piece.

Stickers seem to be a different animal in that they are either packaged or on bulk rolls. There are generally way too many on a bulk roll to be profitable, but with a little innovation and some creative thinking, there are lots of ways to manage this excess inventory profitably.

As retailers we often think we are bound by a certain gross margin to establish our retail prices. Has any retailer ever had a customer say, "Show me your $1.29 stickers" as opposed to "Show me your stickers with birds on them"? Doubtful! Would the consumer be willing to pay $1.59 for that sticker? Probably! That additional 23% would go a long ways towards covering costs involved in throwing away or cleaning up that 30% of those stickers that will take more than a year to sell.

Paper is the same way. Who says that the independent store has to match the pricing suggested by the vendor or dictated by an understanding in the retail world that one must be competitive with the lowest price in town? Remember, Michaels is always on sale at 30%, 40%, or 50% off nearly everything, and and yet right next door at Michaels-owned Recollections stores nothing is on sale and they have all the customers.

It is well understood that in the creative world of craft and independent retail stores IDEAS, IDEAS, IDEAS are what sell goods, not price, price, price.

I recently had the good fortune of meeting with a group of seven independent scrapbook storeowners. What a treat! Each was successful for different reasons. One had a huge die-cut center and attracted customers to her store with the newest dies and multiple models showing how each could be used to make a project.

One took her high ticket items and sold them at a separate-location, outdoor-sale each weekend.

She sold more than 300 of Provo's Sizzix die-cutting machines each month and then the customers had to go and find the Sizzix dies they needed to use in the machine and guess which retailer had the biggest selection of dies at prices that were very favorable to her final margins?

Another near my store has an incredible, innovative activity program each week and each is different. Yes, she has crop nights, but like our own knitting classes that are now called "Yarn Yoga" events, she has crop nights that are called a myriad of catchy names that draw attention to the crops (like a "football widows crop"). Her activity program reads like a booklet announcing classes for a high school or college continuing education program.

Her store is jammed with customers and truly she is so darned busy she has had to hire about 10 full-time people poor thing! (But she better know the techniques she needs in order to manage that many folks or she will lose all her hard earned-profits.)

All in all, the entire business of retailing is not an easy one and not for the faint of heart. I wish I could say that there are some tried and true formulas for the successful operation of a scrapbooking store, but there are just so many factors that enter the picture, and they are different in virtually every location.

If I was sitting next to a Recollections store in Dallas, I would find something else to deal with or have a paper arts mousetrap they could not emulate. Even at the level of sales we run in Redmond, we compete daily with so many scrapping outlets that we have to be "on it" each day to stay out front.

Our biggest growth in the category is coming from the cardmaking business and all it entails. I was surprised that of the seven scrap stores I was so impressed with, only two of them talked of any kind of success in their cardmaking departments.

I believe the scrapping store of today must evolve into a full blown paper-arts store that incorporates not only cardmaking but even things like origami, papermaking supplies, and perhaps many other paper related creative products.

I will be anxious to hear of your findings from all the other people whom you have asked to comment. I really want to know the "answer" as well.

Russ Trentlage, Crafts Galore.

(Note: Russ is also a member of Sierra Pacific Crafts.)

Just a brief background regarding our "scrapbook" store: We had a large, normal crafts store here in Centralia, OR and three years ago our landlord built us a 6000 sq. ft. adjacent store which has a walk-through from our old store. It has been very successful.

Now, to your question: I have been successful in that area as I have two highly motivated and enthusiastic people working there. Really, this is key. As such, I have asked them to help answering your question.

Tami: "Doing samples of a product does wonders. If it's on a card, scrapbook, page, bag, or altered book, customers have to have it. Just that fast you're out of it and your customers are asking for it. This all at full retail price.

"Almost every company that sells stickers on rolls of 50 also sells them in packages. Then you only have to buy six and we always reorder. If it's a sticker that we keep selling out of fast, then we buy it on the roll as its less expensive to the customer and we always will have it in stock. We've never been disappointed this way.

"We very seldom buy whole collections of anything. If you know your area and your customers, you know what they want. Select accordingly or ask the rep what the top sellers are and choose wisely. You can always special order an item if a customer wants it and it's not one you have."

Cindy: "I agree with the 'samples sell' idea. I have noticed that many companies require a large order to receive a sample card to display in your store. I prefer to place smaller orders and make my own store samples. I am able to create a sample using products we have in our store instead of always ordering everything the company uses on their pages.

"When a company demands that we buy a complete line and display center from them, we will not order. We know our customers and order what we believe will sell in this area.

"Demonstrations sell products. Offer to stop what you are doing and take a customer to your classroom to show how to use tools and products."

Russ: We have been very successful with our huge 6000' scrapbooking store. The key is to have employees like the two above.

Emma Gebo, Crafts & Frames.

(Note: Emma is also a member of the CHA board and a leader in the Sierra Pacific Crafts group. Her store is in Pocatello, ID.)

You raise some interesting questions, and I surely don't have the answers. I do know however, that without cross merchandising and flexibility we would never survive. Our scrapbooking department sales have evolved over the years; we sell fewer big items now (bags, etc.) and more basics (paper, stickers, new items from Making Memories, etc.).

As we buy at the shows, etc., we really don't worry about the 50 sheets of paper/package; we can typically sell all 50, but don't re-order that particular paper we keep new ones rolling in. That's pretty much the process we use on all of the products; there are some basics that you sell day after day, but the majority of items have a very short shelf-life and need to be replaced with something new.

Inventory is an issue. It's easy to get too much in the department, and it's easy to lose sight of the items that have been sitting there for a long time and haven't sold. Our POS system helps with that, and we double check all the information to make sure an item hasn't been entered into our system in more than one way. It truly does help to identify the X items -- those that haven't sold in a period of time -- and forces you to mark them down or use them in a creative new way to get them sold.

The Treasury of Memories store in Bellingham, WA has some very creative ideas for scrapbook stores. She's a member of SPC, and one of those extremely high-energy individuals. She's managed to increase her business quite well from all that I know, but she also works really hard at reinventing the store all the time.

I guess the bottom line from my perspective is that it is not the fault of the vendors it is the decision-making of the scrapbook retailer. Just because something may look really good in the vendor's booth the retailer has to be able to see that item in his/her store and know how it

will work adjacent to other products and in the mind of the consumers. Will it work? That's the question that we all have to answer, and many times we are wrong but sometimes we have to be more than a little skeptical when we analyze the opportunity costs of an item.

(Note: To read previous "Benny" columns, click on the titles in the right-hand column. To respond to the comments above, email mike@clnonline.com.)



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