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

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A Scrapbook Vendor Quits What Went Wrong?

Too much product and loyalty or too little?

by Lisa Kanak, The Cropper's Corner (July 4, 2005)

(Note: The 6/20/05 issue of CLN included a piece from a small scrapbook vendor who was shutting her doors, and then we asked a series of questions. What follows is the original article and questions, and then a response by Lisa Kanak, a scrapbook retailer in Fredricksburg, VA.)

A Scrapbook Vendor Calls It Quits, Pt. I

I am a small scrapbook manufacturer who started my company at my dining room table. I grew and grew, but now I am being squeezed out due to several factors. You are so right-on in your observations about the scrapbook industry!

I did very well for several years, but I held onto my niche too long, and by the time I realized it, there was just so much product out there and the local stores were just jumping on to all the new items you know the song and dance. Since my revenues decreased, it was hard for me to develop the product lines that were necessary to compete.

When I started I was VERY receptive to the advice given to me by the independents. Everyone knew each other back then. Many stores asked me not to sell to chains, at consumer shows, or from my website, and not to sell out/join with larger companies. I even had one store owner tell me that if the chains carried my product then she would not.

When I started losing support/sales from the stores, I started selling to consumers from my site, since the consumer could choose from the entire product line; when I started checking into consumer shows, I noticed it was mostly manufacturers who were selling, and I've noticed many local stores carrying the same products as the chains do!

I have let independents know that I don't sell to chains and I have even created a special program for stores to help educate the consumer and get her to try the product. Nothing.

It's taken me awhile, but I have come to the realization that I can no longer remain profitable and will have to close my business. Name Withheld

A Scrapbook Vendor Calls It Quits, Pt. II

The note above raises all sorts of questions about loyalty and business management. What are the lessons here:

1. Should the vendor have not been so loyal to independents?

2. Should retailers pay less attention to customers who are always pushing the stores to add the newest/latest so they can continue to order from their loyal vendors?

3. Should the vendor have poured more profits into new products?

4. What should the vendor do now?

Lisa's answers.

1. This is a mixed bag. Vendors and store owners are running a business. That's the first thing everyone needs to realize. Our #1 priority is to STAY in business. There are some vendors who have walked the "local store only" line and have prospered (or appear to have prospered); there are some who have not. There are some LSS (local scrapbook stores) who sell "independent only" products who have prospered; others have not. There just isn't a simple answer to the situation.

As a store owner, I can tell you that customers aren't "loyal." Our best customers shop everywhere. And much of their buying is "impulse." If they see "it" somewhere else first, they will buy it there simply because that is where they are at the time. I can't tell you the number of times we've had a customer see "it" on display in our store and say, "Oh, I just bought that over at X; I didn't know you had it too!" That comment can be extremely frustrating, but it happens and there is really nothing a store can do about it.

As far as the vendors go, vendors need to generate business. They need to generate interest in their products to drive people to their stores. At the beginning, that may mean selling online (at or slightly above MSRP), or setting up one or a series of "premier" online stores that will have their entire product line to direct sales.

If small businesses do NOT have an online outlet (either their own, or a partner), they are going to lose sales, period. So much of this industry is "Me Too." If one person gets it, so must another, and another and then the word spreads.

Selling to chains: if you have a wide or diverse product line, this is a good thing; the vendor has a "bit" of product that gets a lot of visibility, but still has a lot of additional products that complement it for independent stores. If a major chain picks up your entire line, that can be

great for you, but it will probably really hurt sales to other groups, and your "logo" will be known as a "chain" logo; your identity apart from that chain could very well disappear.

My answer: be as helpful to independents as you can. But you still have to build your business. If sales to independents are dropping off, ask, "Why?" Like store owners, vendors can't afford to "fall in love" with a product line and simply do "same old, same old"; new product can enhance old product sales. But it is only the rare company (still looking for it) that can survive on old product alone for long.

2. Funny you should ask. We surveyed our customers and found that the "latest and the greatest" were desired by 50% of our customers, while another 50% preferred multi-use products. To be honest, retailers have to pay less attention to customers. We have to make the best decisions for our businesses. If something is selling well, retailers shouldn't "dump" it to make room for new product. Most customers don't "know" what they want; they buy what they see. Sometimes, all it takes is re-merchandising an area to make things sell better.

Honestly, I think manufacturers created the "latest and greatest" craze not the consumer. If you look at Creative Memories as a model, they only added a small number of "new" products each year. Much of their product line was around for many years and their customers were happy with it. If the consumer was constantly pushing for "new," Creative Memories could not have sold the same basic papers for 5+ years.

We have reached a point in the industry where customers (even the best) can't keep up with new products. When your "high end" consumers feel overwhelmed by the new products, there is a real problem. A very small segment will continue to "want" the latest and the greatest, but store owners can't depend upon that small segment to "save" their business. We must attract a larger pool. We can't have it all, nor will we ever please everyone. And, when we try, we frustrate everyone.

3. Not knowing what products the vendor sold, this is a toughy. If the vendor had a group of, say, eight sticker designs that hadn't changed in roughly 5 years, then yes. New product development is a MUST.

If the vendor had a greater number of products, I'd say the vendor needed to a) keep best sellers and replace slow sellers with a new product; b) advertise a mix of new and old designs used together in layouts; and c) take best selling designs and add additional enhancements. (For example, if the vendor had great selling sticker designs, develop some of those designs into dimensional designs.)

4. If she have the money and desire, she could try to re-invent herself. Basically, she may have to start over. Her company wouldn't be the first to do this, and it is possible. Get the website up and running. Go to consumer shows. It's a fight for all of us to stay in business. But if the vendor doesn't want to fight, and is burnt out, she should take a break and re-visit it another day.

(Note. Lisa also wrote the current entry in the "Memory, Paper, & Stamp" section. To contact Lisa, call her home office at 540-752-1935 or email lisakanak@adelphia.net.) To comment on Lisa's response, or the original vendor letter, email CLN on or off the record at mike@clnonline.com. To read previous "Benny Da Buyer" articles, click on the titles in the right-hand column.)



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