Challenges, problems, and triumphs
-- from a manufacturer's perspective.
Vendors Respond To Independent's Plight
Why vendors have minimums and what retailers
can do about it.
by Various Industry Vendors (September 6,2004)
(Note: Inspired – and worried – by an email from an
independent scrapbook retailer, CLN sent emails to various industry
people. The original email is in the 9/6/04 edition of CLN. What
follows are replies from vendors. Retailers' responses are in
Memory, Paper & Stamps; the original CLN email and a response
from a scrapbook industry veteran are in Business-Wise.)
David Wilke, Paper Adventures.
David informed CLN that Paper Adventures will introduce
new papers at this month's MemoryTrends show (booth #528) in
Las Vegas – in packs of 25s instead of 50s. It was already in the
works, David told CLN, because he had heard similar
complaints from other retailers.
Sandra Joseph, Reminders of Faith.
(Note. Sandra is the former executive director of the
Memories Community. Reminders of Faith sells a variety of scrapbook
supplies and books with religious themes.)
I have always (and will always) insist that the small retailers
have to understand how to market to women. Recently in The July
issue of CNA magazine there was an interview with Brenda
Lugannani who just left Michaels' management. I thought her comments
were excellent and represented what is missing in so many small
"We have to embrace and understand the craft customer who
yearns to be successful. We can capture her for a short time with
great price or interesting items, but to capture her heart, we have
to embrace her. We have to care for her. We have to build her a
community made up of real people who identify with her – and we
have to invite her to join it."
I love the fact that Brenda said that we have to care for her;
that is crucial and something the bigger stores will not be able to
do. Also, understanding the niche markets will bring the smaller
retailer their core customers. All of this is relational marketing
which the smaller retailer must have an understanding of.
I know that Reminders of Faith is willing to work with our
retailers to accommodate their ordering needs; it is extra work for
us, but we need and want these stores to succeed. Very often stores
do not tell us of their needs when they cannot meet the ordering
(Just the other day, we found out that a store within a 30-mile
radius of our warehouse jointly ordered with another store in NY; in
other words, we shipped an order to NY which that store owner split
and then sent back down to western PA to this store. Another thing
to consider here is that the western PA store is not on our Internet
listing of stores – which could be a great marketing tool for
them. We would have been more than glad to accommodate this store by
filling a smaller order and figuring out a cheap way to get it to
Now we are doing a major program for a Pittsburgh radio station
and since we had no idea this store had our products, we were not
Tell the stores to ask vendors for what will work for them.
Kathy Brundage, Reminders of Faith.
1. Develop a relationship with the smaller manufacturer (such
as Reminders of Faith) who will accept smaller orders and listen to
the store's needs.
2. Have an in-store designer who can work with the new
products to show how to use them simply.
3. Find a new niche in your area that hasn't been emphasized
– the home school market, the teenage market – teens who have
money and love to be creative, etc.
4. Learn how to creatively cross-market, papers and books
that compliment in a unique display instead of on the same racks.
Have a store showcase that gets rotated to show off a new item(s)
every month, then a bulletin board with pictures of the past
"showcases": More ideas to stimulate the buyer.
Anonymous. (Major manufacturer).
For us it's a very timely topic as we continue to push the
envelope on new product ideas and techniques that could help some of
the independent scrapbook retailers. I have no particular order to
our collective thoughts. Use them however you see fit.
1. The key for any business is maximizing the cash return on
cash investment, not necessarily having the most inventory or best
price. The Hallmark card story is an excellent example and helps
explain why cards cost so much. Hallmark figured it out with their
marketing. Minimums are a tough challenge for all of us. A
majority of the products don't turn, but a variety is mandatory for
consumers. It's very difficult for manufacturers, whether domestic
or overseas, to affordably make minimum production quantities or
ship ideal retail minimums and not pass the handling costs of this
along to the consumer.
The cost comes in the form of higher unit cost when dealing in
volumes that are less than optimal (for producing or handling) or
higher cash inventory investment with low unit cost when buying at
volumes that are optimal (from a production or handling cost). The
chains have the same problem as independents. In spite of their
size, they don't always reach the optimal minimums to enable a lower
2. Knowing the consumer base is critical to making the bet on
how you go about expending cash available to make purchases. Each
store has to develop and continually re-develop its sources of cash
generation. This enables the business to dabble in other ideas.
Although it seems that the scrapbook consumer is always looking for
new, the retailer must figure out what the basic supplies for their
consumer base are and exploit this to the max – and don't stop
there; keep looking for other niches to exploit.
3. Don't fall in love with a hot trend for too long. Look for
the signs of slowing and de-emphasize and move on. Inherent in all
this is willingness to experiment with a variety of offerings.
Independents can do it much quicker than any chain can!
4. A lot of independent scrapbook stores do not appear to
know how to "buy smart" and calculate retail sell-through
and inventory turn. Unlike many industries, distributors are
available. This can really assist retailers in their inventory
5. There are many affordable computer solutions to accurately
track movement of inventory and profitable vs. unprofitable items.
Independents should challenge themselves to maintain this for their
business. It doesn't have to be a complex system, but it has to be a
6. Independents should use their in store classes to learn
rather than teach. The consumer invariably "figures things
out" that makes something more achievable or easier to do. Pay
great attention to what's going on there.
Don Guidi, Paper House Productions.
I have seen the similar thing happen over the years in the gift
industry as well. The card/gift industry has been flat to declining
during the past ten years. I think there are a few ways to improve
the business of small retailers (and it's in our best interest as
manufacturers to have strong retailers!). Inventory is the number
one area that needs improvement.
Managing inventory is the biggest challenge for all of us (small
independent retailer as well as a small independent manufacturer
like Paper House). In that area we share the same concerns as our
retail friends, yet there is also a paradox (small manufacturers
have the same issue in reverse because of retailer buying habits).
As a small manufacturer, often we have to do larger runs than we
want to in order to compete with larger paper companies who print
themselves (they own printing equipment) or in print China (we print
in USA with high quality paper stocks).
Often, retailers and consumers don't want to pay a premium price
for our quality (who does anymore?) but we won't sacrifice quality
for price; it's our competitive advantage when we get in front of
our customers and consumers. So we do larger runs to get the cost
down to what they will pay.
We also sell in paper in 50's to move our inventory faster so we
can introduce more new items for the next show – which the market
demands! If we sell in 25's, the small store usually orders once and
moves on to something new, so I'm left with extra stock of the line
just introduced and find myself in the same boat as your complaining
The answer to this problem is balance in inventory and in
Small retailers need to work with all companies to keep in stock
the basic, good selling items; about 70% of their inventory should
be in these products, and they should keep them in stock for at
least as long as they sell well by the turn standards of the
particular store. Ironically, Michaels is famous for this approach
and you see how well they have performed.
The independents also can experiment with new items, but only
about 30% of their inventory to keep the assortments fresh and on
trend. If they could do this, manufacturers could keep most SKU's
active longer to amortize the cost of development and help deplete
their inventory faster. The trendy new stuff can be managed by a
lower, 25-count putup's and smaller initial runs by manufacturers
(which I would be happy to do since I'm making money on basic good
sellers). Thus, all parties achieve a balance in their inventory
that lets all of us make money while keeping new things in the
Expectations need to be balanced by the store to the consumer
that we don't need the entire store to be new every three months. We
are a world of ADD shoppers where what was introduced last month is
"old" and something needs to follow up right away. No one
can make money if this continues.
Paper House has been in business for 21 years by not falling into
the trendy trap, yet staying fresh by selectively offering new
products during the year. Many of our best greeting cads have been
in the line for more than 10 years. A sunflower or a daisy is
timeless, isn't it! We are trying to achieve the same timelessness
in scrapbooking with Oz, florals, pets, travel, and sports as our
main focus. These themes are always needed and if we keep them
fresh, we will do well for years to come in scrapbooking.
Retailers should also be loyal to companies who have always
performed well for them and keep open-to-buy for these companies
always ready. It's easy to go to a show and get caught up in new and
forget that new doesn't mean a guaranteed sale! In fact, SKU's with
a good run rate over time tend to sell well for many years (as seen
is chains like Michaels). Support your existing companies with
reorders on good selling items and your good companies will reward
you with more innovative products from the profits they made on the
last products they produced and sold repeatedly.
(Note: To read previous Vendor columns, click on the
titles in the right-hand column.)