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Your Business Commentary

Mike's often irreverent, thought-provoking analysis of the industry-- with an occasional guest columnist.

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CHA Responds to The SMART Group

CEO Steve Berger on scrapbooking, PMA, and the winter trade shows.

by Mike Hartnett (June 4, 2007)

(Note: In the previous issue, CLN published an interview with Dennis Conforto, the CEO of The Smart Group. The interview is still in the Memory, Paper & Stamp section. CLN asked Steve Berger, the CEO of the Craft & Hobby Assn., to respond.)

CLN: Dennis Conforto claims PMA offers more services to its members than CHA does.

BERGER: This is not a battle between Associations. CHA prides itself on continually offering all of our members’ true value. If there is anything that any member or group of members who want CHA to undertake some particular activity or services beyond what is already being provided , we are more than happy to discuss the matter and see what accommodation can be made consistent with all of CHA's other commitments and obligations . We are and will always be a member-driven association.

CLN: Dennis says he believes the costs for joining/exhibiting at PMA and CHA are "on par."

BERGER: The facts are as follows: For the 2008 CHA Winter show our booth rates will be $14.25 per sq. ft. versus PMA's booth rates of $38.95 per sq. ft.

CLN: Dennis says PMA will announce a new pricing model shortly.

BERGER: That will be an interesting challenge for PMA. I suspect long-time PMA members will not think it's fair if PMA suddenly lowers its dues/exhibit fees for new members. Pulling off such a move would be far easier said than done and to my knowledge, PMA has not announced any new dues/exhibit structure.

CLN: Is it "crystal clear that photo retailers and scrapbook retailers have more in common than, say, scrapbook retailers and quilting, floral, or other craft retailers," as Dennis says?

BERGER: Scrapbook retailers are finding countless items, such as ribbon and beads, at the CHA shows, items that complement their inventory and improve sales, items they wouldn't find at a photography show.

CLN: Dennis says scrapbooking declined 15% last year; CHA's research says it grew slightly.

BERGER: Dennis does not cite how his research was conducted, who conducted it, how large a sample he used, or the validity of the previous year's data to which he compared his new data, so I can't comment on his research.

Our research is done by one of the most reputable market research firms in the world, IPSOS. All CHA members have access to this in-depth research. In fact CHA members only have to click on this link, www.craftandhobby.org/research.html, and they will have full access to our A&U research study which encompasses 50,000 US households in order to see what research has been conducted and the results obtained. In that way they can draw their own conclusions about the validity of CHA's research..

CLN: Dennis said PMA offered 400 business classes at its winter show. That's more classes than CHA offered.

BERGER: We know retailers attend our shows to look at new products and attend workshops, in addition to attending business classes. Shows are only three or four days. If we filled the days with 400 business classes, retailers wouldn't have time for anything else. We believe we offer the right balance of all three.

CLN: "The photo industry is working on digital scrapbooking," Dennis says.

BERGER: By exhibiting at CHA shows, companies such as HP, Epson, Sony, etc., are demonstrating a keen interest in scrapbook retailers. If other technology companies were interested, they also would be present at CHA shows. I'm not sure what the value would be for a retailer to see exhibits of companies who haven't shown an interest in scrapbooking.

CLN: What's wrong with scrapbook vendors and retailers attending the PMA show and the CHA winter show?

BERGER: Nothing! However, the shows are typically just one week apart. It would be both difficult and expensive to attend or exhibit at both show. I would much rather see craft industry exhibitors and retailers use the savings from attending only one winter show to improve their business through advertising, lowering prices, etc.

I also want to point out that PMA doing a scrapbook section is not new news! They have been doing this for years. A few of our exhibitors have tried it and it simply has not worked for them. I would be happy to refer any CHA member to those companies that have exhibited at the PMA show so they can learn from other members' experiences.

CLN: Dennis complains about "the huge spikes in inventory purchases two times per year at trade shows."

BERGER: I agree completely. No retailer should order only twice a year. Frankly, I don't know of any who do. Our business seminars have addressed that issue. CHA's shows permit orders to be taken, but that does not mean that a retailer should order its entire annual inventory at the shows.

CLN: "... nobody on the board of CHA represents a purely scrapbooking company" and "... if an association is retail driven, then it should have more retailers on it than manufacturers."

BERGER: First, let me state that CHA has a very long and sacred tradition of keeping the board nominating process totally autonomous and separate from the CEO and staff of CHA, as well as from the current board members.

Each year in compliance with CHA's bylaws, a nominating committee is duly elected by the membership. All applications are sent directly to the Chair of the nominating committee. I and the staff do not even know who has been nominated. We also never touch or see the applications.

To say that the current board members do not represent retailers and/or the scrapbooking interests is wrong. First, all board members are required to sign a code of conduct which explicitly states that they are to represent the industry and not to favor any one particular segment of the craft and hobby industry. Second, the board currently consists of five (5) independent retailers who sell scrapbooking products as well as a GMM/VP of a major chain store retailer. In addition, two board members are with wholesalers/distributors who sell a significant amount of scrapbooking products, and three board members are with manufacturers who sell varying levels of scrapbooking products.

The bottom line is that anyone who wants to serve on CHA's board should put his/her name before the nominating committee and is urged to do so. That does not mean a scrapbooking representative will be selected as such, but instead a member involved in scrapbooking will be considered by the nominating committee on the same basis as all other candidates.

CHA also offers members numerous ways to volunteer via task forces in areas in which they may have a specific interest. They also are encouraged to call me directly at any time at the following numbers: Office-201-794-1133, ext. 214 or on my cell 908-256-0307, or email me directly at sberger@craftandhobby.org.

CLN: "... I believe the vast majority of manufacturers and retailers who are purely scrapbooking will move in mass to PMA for the winter show ...."

BERGER: Dennis is certainly entitled to his opinion that CHA scrapbooking members will move to the PMA show. So far we have not seen or heard of a single CHA member who is choosing to do so.

CLN: How do you feel about a 26-week scrapbook show on network television?

BERGER: That would be wonderful, but no network has committed to it, there is no list of companies putting up $100 million, and the only producers mentioned are the Avalanche Group and Dennis' company. But if it happens, I believe it would only be a plus for the industry. As an association we would do what ever we could to help this initiative.

CLN: Dennis says people in the craft industry are treating scrapbooking as a fad.

BERGER: Scrapbooking is the longest-lasting, strongest trend in the history of the industry. There's no reason to think it's a fad, and to my knowledge none of our members think that.

CLN: "The craft industry by its nature has passed on some of its bad habits to the scrapbooking industry, and many retailers now have taken on the high-end, craft-store mentality of high margins and low turns, with pricing placed on the back of the products and lack of any kind of sales events or signage."

BERGER: I don't know of any stores like that. Craft retailers who have survived for years have learned basic lessons like that, or they wouldn't still be in business. By attending CHA seminars or sharing a trade show lunch table, new retailers can learn from them and avoid these mistakes.

CLN: "CHA has 32 craft market segments it has to support; how can they be effective for all 32 categories?"

BERGER: I don't know where the number 32 came from, but it doesn't matter. The underlying appeal that is common to all of the categories is so consumers can learn, be creative, express themselves, make gifts that mean far more to the recipients than a readymade item, and feel that "I made it myself!" sense of pride and accomplishment. In addition, as an association we will continue to work towards the betterment of all of our members.

That's why a scrapbook retailer has so much in common with a quilt shop, needlework store, etc.

CLN: Why cancel The SMART Group's seminars for the Summer Show?

BERGER: The SMART Group classes were cancelled for one reason and only one reason – Dennis was unable to substantiate to us the methodology of his market research. First he told us it was proprietary, and then he told us PMA had purchased his company and that it was now their property.

I personally conveyed this message to Dennis, so it is unfortunate that he is choosing to portray it any other way. I also told Dennis that as long as he is a CHA member in good standing he will always be welcomed at CHA’s Winter and Summer shows. For the record, I have also agreed to meet with Dennis at the summer show and buy him a cup of coffee!

(Note: To comment on or off the record about the issues raised by this and the Dennis Conforto interview, email CLN at mike@clnonline.com.)



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