The trends, the issues, and productive business
Problems in Scrapbooking ...
... Will only be solved by cooperation.
by Lisa Fedele, Managing Director, Cherished Scrapbooks, and
Trish Hansen, IConnect (January
(Note: Lisa's comments are in response to the CLN
commentary asking subscribers what happened to their business in
2007. Cherished Scrapbooks has stores in Mississauga and Thornhill
Yes, my revenues are down; my average sale is still the
healthiest Iíve ever heard of, at $48, for most of the year (now
declined to around $40), so something is going on. I still have the
same number of VIPís (which means a lot of elite customers), but
my new customer is down 50%. So few new customers in 2007 will make
every month worse in 2008. Agh! How to get the new customers without
Itís very odd that the industry has a group of well trained,
successful business people expressing what most people outside the
industry feel are sound business assumptions, yet within the
industry most donít listen. Well for what itís worth, here I go
(Before I do however, I feel it is necessary to confirm that the
projections I am making, while I am saying them in my own words,
were brought forward by Dennis Conforto of the SMART Group with
input from various members of the SMART Group.)
Let me start by saying that even understanding the challenges the
industry faces did not help me insulate my business from their
effects. This is primarily because it is an industry problem that
must be solved through widespread co-operation to fix what got us
where we are. So, "where are we?" you ask.
Problem #1: Not Enough New Customers
In 2001 Creating Keepsakesí research found that 34% of
scrapbookers considered themselves beginners; today only 8% call
themselves beginners. The industry started as an archival-safe
method to preserve photographic memories, the stories behind the
pictures, and other mementos. That was what we sold the public, and
I would argue we didnít do the selling. For the most part Creative
Memories' consultants conducting home parties nightly throughout
North America introduced women to scrapbooking and they soon flocked
to our stores.
I did little marketing. Every day I had a handful or two of new
customers who would say, "I was just at a home party last night
and I sought you out today." That is not the reality today.
Virtually no new customers come from Creative Memories any more, and
while word of mouth is always the largest contributor, it is
contributing a lot less these days.
Problem #2: Not Enough Money to Advertise
Advertising to get new customers is imperative. Most industries
spend too much money chasing new customers and not enough on current
customers. Our industry is the opposite. We spend almost all our
money on current customers and virtually nothing on new customers.
But you say, "I have a listing in the magazine so new customers
can find me." The circulation of the magazines we advertise in
is largely comprised of current customers. Manufacturers are doing
the same. In an effort to be the brand demanded by scrapbookers,
they spend most of their ad dollars on brand advertising or new
product advertising in magazines that, yes, are viewed by the
So nobody is out there trying to get new customers. It is very
expensive, but as an industry we must solve this; actually, we
should have started two years ago.
Problem #3: Co-op Advertising
It really is so simple. Why hasnít it happened? Manufacturers
must help develop co-op programs. While many progressive
manufacturers want to, they donít know how. Then others see it as
just another discount that retailers are asking for. But if
something isn't done, manufacturers will soon not have a large
enough base of independent retailers to sell to.
Co-op advertising means to attract new customers at the store
level, and if reducing ads in Creating Keepsakes is what must
happen, then do it. I would guarantee manufacturers will not lose
any ground if they stopped all magazine ads altogether. Their
retailer network is already talking to the current customer;
manufacturers need only develop effective email ad campaigns with
Problem #4: Undercapitalized And Over Inventoried
Independent retailers are typically undercapitalized. It only
takes a few really bad months, or one bad year, to topple an
independent. When we all opened our stores, Michaels was a joke in
the scrapbooking department. We were all a little naive to believe
we could take on the giant. Sure we did, for a while, but as the new
customer dries up for us and we find ourselves selling to the elite
scrapbooker who already has everything and shops online because she
knows exactly what she wants, we find ourselves between a rock and a
hard place Ė and Michaels knows where we are. The big-box stores
know that because weíre undercapitalized, we may collapse.
So what can we do? One, we should operate more efficiently so we
can achieve six turns a year. Then capitalization will not be an
issue. And why canít we turn six times a year? Even a retailer who
knew how to accomplish that would find it difficult because our
supply chain is ineffective.
Problem #5: Who Will Fix It?
So we donít have enough new customers. Our old customers are,
well, old. Getting new customers is expensive. Manufacturers and
retailers keep advertising to our current customers because itís
too expensive to advertise to newcomers. To advertise to potential
newcomers, we need to co-operate Ė both manufacturers and
retailers. We are undercapitalized so a hiccup can result in our
demise. Our operations are ineffective because our supply chain is.
Higher turns can reduce working capital which would free up money
So there are a few things that are broken that are inter-related.
Thatís why no one retailer can solve the problem even when she
understands it. Ideally, there would be a mechanism to fix our
inefficiencies, but unfortunately the free market fixes
inefficiencies by putting the weak players out of business. In this
case it is most of the independents. Without proactive efforts to
solve this "chain of events," the writing is on the wall.
Why? Because most industries develop this way and as an industry
evolves, there are consolidations, mergers, and alliances. The
players become more sophisticated (fewer basement operations) and
typically the Mom and Pop dies because chains are more efficient and
have better buying power.
What we are seeing in our industry is nothing new. One thing is I
believe another industry may have listened to these messages and
responded. Those of us who fought for change feel the manufacturers
do not care about the survival of the independents. Perhaps they
believe they will keep their creative product development capability
when they serve only one or two large chains.
History shows that a manufacturer who loses the independents or
who only serves one master eventually loses. And letís not forget,
some of our manufacturers are really only design houses. In a world
without independents, if I was a chain I would take over the
manufacturing and only ask the "design houses" to design.
I remember one vendor whom Michaels made demands of. When Michaels
could not get what it wanted, it just cancelled the contract and
commissioned its own line.
If I were a manufacturer I would want my independents to succeed.
I would want to find a way to avoid the free-market mechanism that
will force the failure of the independents. I would want to solve
the industry's problems. I would want someone, or some group of
progressive business people, to help us all come together.
Some Random Thoughts (by Mike Hartnett)
1. Lisa's point about concentrating on current customers
rather than attracting newcomers is well taken. I suspect people who
are already scrapping buy magazines such as Creating Keepsakes,
so advertising there may be preaching to the choir. But I also
suspect consumers who are thinking about starting a scrapbook will
buy Simple Scrapbooks, simply because of the title.
Because of the title, Simple Scrapbooks may be the most
important national magazine in the category for attracting new
2. But is it possible that the decline in the number of
scrapbook newcomers is due to the fact that now just about every
consumer in North America knows what scrapbooking is (or thinks she
does). Those who are interested are scrapping; the rest just don't
If that is the case, then the industry would receive a better
return on its marketing/advertising investment by enticing current
scrappers to do Ė and buy Ė more.
What's the answer? I dunno.
3. There are some low-cost ways to reach potential newcomers:
A. Many hospital maternity wards give a goody bag to mothers
when they leave the hospital with their new baby. The birth of a
child is often when someone starts a scrapbook. Retailers could see
if the ward would include a store coupon in the goody bag.
B. Retailers should create a scrapbook presentation on a lap
top (and keep it simple). Then call every area civic and church
group that has speakers at its meetings. Volunteer to speak and say
you'd be willing to be a last-minute substitute if a scheduled
speaker has to cancel.
A Program for Vendors (by Trish Hansen)
It seems I've written reams over the years on the pitfalls of
neglecting our independent retailers. I'm certainly not alone, many
voices with greater experience than I have voiced their concerns as
In her article, store owner Lisa Fedele makes some good points
about retailer-vendor relationships and the need to find new
crafters. It is important for vendors to support their retailers, on
the other side of the coin, who is supporting the vendor?
Just as we need independent retailers to educate and enthuse our
consumers, we need small, innovative vendors if we are to maintain a
vital and creative industry. Like the independent retailer, small
vendors are truly struggling. Many of them lack the resources to
remain competitive and are finding it increasingly difficult to
maintain, much less grow, their market share.
Most vendors would love to improve retailer support, but simply
don't have the ability to do so. Like their independent retail store
counterparts, too often vendor owners find themselves stretched too
thin, wearing too many hats and with limited financial resources.
During my time as Director of Sales & Marketing for a
Retailers Association, I chaired a meeting with a number of vendors
and asked the question, "What if you could work together?"
The overwhelming response was positive and although nothing came of
it at the time, the idea has always stuck in my mind.
What if a venue was created wherein vendors could pool their
financial resources to purchase advertising, strengthen their
relationships with retailers, create class and workshop projects,
and product promotions?
What if, with the security of stringent confidentiality
agreements, they could work together to create new product lines?
What if they were enabled to explore new markets, and by doing so
create new crafters?
This year, along with my partner, Barb Steffan, former owner of
Scrapbooks and More (an independent papercraft store), we are
transforming all of those 'what ifs?' into reality with IConnect.
Loosely based on the Retailers Association concept, IConnect will
be a Vendors' Membership Marketing Group. Members will pay monthly
dues which will then be pooled to purchase advertising and pursue
other effective marketing strategies, including retailer programs,
product education and, we hope (pending approval of trade
associations), trade show programs which will make it more
affordable for small vendors to participate. Ultimately our goal is
to look outside the craft industry with the hopes of attracting
non-crafters, especially young people who have not been exposed to
In the end, these activities will benefit the craft retailer by
providing support programs as well as assisting to drive new
customers to their stores.
One thing is certain; operating in the same old same old mode is
not working. Our industry and our business environment have changed
dramatically in recent years. It is apparent that new and creative
solutions are needed to address those changes and to prosper in the
markets of the 21st century.
(Note: CLN will be reporting on IConnect as details become
available. Anything you'd like to add to the discussion? Email
them to CLN at email@example.com.
To read previous entries in Memory, Paper & Stamps, click on the
titles in the right-hand column.)