irreverent, thought-provoking analysis of the industry-- with an
occasional guest columnist.
So, Why Aren't We Happier?
Maybe the theme song for the January trades
shows should be Elton John's "I'm Still Standing."
by Mike Hartnett (December 21, 2009)
Consider these positive items:
A) The quarterly reports from Michaels, Jo-Ann, and Hancock
were strong. Although the average transaction was lower, there were
more of them because more consumers are shopping in our stores.
B) Wall Street is impressed. The stocks of this publicly held
trio have risen substantially this year.
C) Anecdotal reports from independents around the U.S. One
retailer wrote, "For the quarter our sales are flat, margins
are up two full points, and customer count is up, but the average
sale per customer is down about 6%. But our expenses are down and
profits are UP!"
Wrote another independent: "Our customer count is up over
the past two years – but average sale is still difficult. Lots of
people "redoing wreaths" is sort of an attitude indicator.
They want the new look and are working to save $’s in the process.
In many ways it reminds me of people doing the "old
crafts" re-using and recycling for economic reasons. Lots more
people doing small projects using basic craft supplies – Styrofoam,
glitter, felt, sticks, and pipe cleaners. (Let's use an old term; it
sort of goes with the times).
D) There are countless media reports, just as there were
last year, on consumers turning to crafts this holiday season.
There are still more media items offering crafting advice;
Michaels' Jo Anne Pierson's recent appearance on NBC's Today Show
is just one example. Martha Stewart demonstrating on the Today
Show how to use crafts to make Christmas gifts is another.
Clearly, our industry is performing better than most retail
industries. So why are so many people unhappy?
Once upon a time, their main concern was making a product that
retailers would carry and consumers would buy. Not this year; they
had to contend with the following:
A) The Consumer Product Safety
Improvement Act; it was well intentioned, but vague and rushed into
law – a confusing, expensive mess.
B) Losing their credit line, even though they had – they
thought – a strong relationship with their bank and a good credit
C) Their inability to obtain receivables and product
liability insurance. Some worried about a particular customer
eventually going bankrupt, then worried even more when they not only
couldn't buy insurance for that customer but, in some cases, couldn't
buy any insurance.
D) Employees contracting the H1N1 virus. Especially for small
businesses – what if half your employees called in sick?
E) Chain stores summarily dropping their lines because
they're having the products made overseas. Supported a chain for 20
years? Doesn't matter.
F) Worrying about A.C. Moore's mounting losses as sales
decline, Michaels' $3.4 billion debt, and struggling independent
A) For independents, their most important customers, the
enthusiasts, aren't spending as much, dipping into their stash
B) Are the chain stores worried? Michaels has that enormous
debt. A.C. Moore's declining sales and growing losses. Jo-Ann,
Hancock, and (I assume, but don't know for certain because it's
privately held and doesn't release sales/profit figures) Hobby Lobby
must wonder, are we doing ok because we're on the right track, or is
it simply because Wal-Mart is getting out of fabric?
In light of all I've mentioned above, is it any surprise that
publishers are worried? Advertising – and advertisers – are
declining, and magazine sales are down. When you think about it,
magazines, especially trade magazines, are a reflection of the state
of the industry.
The problems, imagined or real, that retailers and vendors are
having create a trickle-down effect on everyone else – wholesalers,
designers, and even trade associations. Fewer customers, fewer
exhibitors, and smaller booths.
So What Do We Do?
Vendors, don't expect the chains to be more loyal.
Retailers, think of ways to get your enthusiasts to deplete their
stashes more quickly.
Everyone else, as Ken Harrelson, the broadcaster of the Chicago
White Sox says when a Sox batter has a two-strike, no ball count
against him, "He's got to cinch it up and hunker down."
Remember, too, this time-honored principle: If you can expand
your business, whatever it is, and increase your market share during
bad economic times, you'll maintain that greater market share when
the economy bounces back.