Kate's Collage
"Vinny Da Vendor"
"Benny Da Buyer"
Kizer & Bender
Memory, Paper & Stamps
Category Reports
Designing Perspectives
Scene & Heard

Creative Leisure News
306 Parker Circle
Lawrence, KS 66049
Phone: 785-760-5071
Email: mike@clnonline.com


Challenges, problems, and triumphs -- from a manufacturer's perspective.

Printer Version

You Want Junk? You Got It

Pricing pressures are ruining good categories.

by "Vinny" (January 17, 2005)

So Hartnett's got predictions for 2005 in this issue. Well, I've got one of my own, although maybe it's a wish instead of a prediction. Here goes:

I think/hope this is the year when retailers begin to realize that their constant pressure to lower prices is hurting sales, not helping. Once the manufacturing and distributing systems are as efficient as possible, then the only way to lower prices is to lower quality.

If we're not careful, we'll lower the quality to the point where the consumer doesn't want to buy what we're selling. Examples:

1. An industry friend recently wanted to sew a pair of pants for herself. Went to a number of fabric stores and couldn't find any fabric she wanted. "All they had was cheap cotton," she said. She gave up and bought readymade pants instead.

2. A company with one of the strongest brand names in the industry, whose primary product has been drastically discounted, has been getting letters from consumers asking if the company has cheapened the product because the price is now so low.

3. Remember when acrylic paint was a dynamite category? It was successful in part because manufacturers paid enough profit to fund traveling teachers, pay for consumer advertising and all sorts of goodies that encouraged consumers to paint.

Then the retailers get price happy, vendors lose their margins and cut way down on promotions and ... you know the rest of the story. Does anybody really think sales would drop off if the industry increased the price a nickel a bottle then used that nickel to promote painting?

4. Years ago one of the industry's strongest categories was plastic canvas. Now you don't hear much about it. What happened? Well, a price war broke out every retailer wanted to sell it cheaper than his competitor. So they busted the vendors' chops. Then they cut their margins to keep up with the other guy.

Guess what? Pretty soon sales were great, but nobody was making any money. Not the retailer, not the distributor, not the manufacturer. So everybody stopped pushing the category and concentrated on products that let them put a few bucks in their wallet. Publishers switched to other categories and published fewer plastic canvas books, vendors didn't create as many new products and stopped promoting the category to consumers, retailers used endcaps and other prime spots for more profitable lines, and designers produced fewer projects because no one would pay for them.

So the consumer who loved plastic canvas from day one now hears less about it, sees fewer new projects that inspire her, and doesn't have as wide a choice of products to choose from. It's not as easy to find it in the store any more, either. So she turned to other things.

Time went by and eventually someone said, "Hey, whatever happened to plastic canvas?

So here's the moral of the story: retailers, insisting on lower and lower prices, will eventually result in me producing junk. You want junk? I'll give ya junk. That's easy.

I'm just not sure either of us will have a job in five years.


Note from a Small Vendor.

We're starting to re-think the whole show thing; for a small company like us, it's an enormous expense, and aside from some exposure, we're not sure that it really is proving to be worth what we have to spend to be there. I say this having worked to get the most out of every show that we can pre- and post-show mailings and calls, offering and publicizing our show specials, etc.

To put it in perspective, we spent - for booth components, shipping, drayage, booth space, travel, and so on nearly $15,000 on a [show last year]. This netted us only 27 new customers and the orders we wrote from them and from returning customers didn't even cover our expenses.

I've spoken to several of my show friends (other small manufacturers) who are similarly reviewing their 2005 budgets and concluding that doing all three of the major shows is probably not in the cards. Name Withheld

(To read previous columns by "Vinny," click on the titles in the right-hand column. Like to comment on Vinny's ideas here, or any other industry topic, for that matter? Email your thoughts on or off the record to mike@clnonline.com.)



horizontal rule

horizontal rule


Vinny's Recent Columns...
ADVICE ON EXPORTING TO THE UK AND EUROPE; An interview with the former CEO of HobbyCraft.

THE HISTORY OF WALNUT HOLLOW; One of the genuine pioneers of the modern craft industry.

HOW MICHIGAN SCRAPBOOKER WAS LAUNCHED; Substantial growth in 3+ years.

THE HISTORY OF PLAID ENTERPRISES, INC.; It's come a long way in 36 years.

"FLASH" SALES COME TO THE INDUSTRY; Q. & A. about the newest way to introduce new products or dispose of overstocks.

SITTING ON A BULLS EYE; What to do if competitors want your market share, or customers want to cut costs.


FIVE COMMON AFFLICTIONS OF SALES TEAMS; The result: Bad morale and lower sales.

BEYOND MARKET MULTIPLES: INCREASING THE VALUE OF YOUR COMPANY BEFORE THE SALE; How to create a company with greater appeal to buyers.

CHA SHOW NEW PRODUCT REPORT; Hundreds (thousands?) of products, many from new exhibitors.

THE SOLUTION TO MEXICAN DRUG CARTELS; A sure fire way to inspire them to quilt.

ATTRACTING YOUNGER CUSTOMERS; Yes, we aren't our mothers' knitters.

NEW PRODUCTS TO BE UNVEILED AT THE CHAS SHOW; Two parts: new exhibitors and veterans.

WHAT SCRAPPERS ARE SAYING ABOUT MANUFACTURERS AND PUBLISHERS; Scrapbook Updates' readers analyze the problems.

ANALYZING THE CHA ATTITUDE & USAGE STUDY; The rationale and the science behind the number.

REST IN PEACE: JEAN HOWARD BARR; JHB International's Founder and CEO.

POSITIVE NEWS ABOUT THE INDUSTRY; What they want/need from the industry.

COMMENTS FROM INDIE CRAFTERS; What they want/need from the industry.

UNDERSTANDING INDIE CRAFTERS (BY AN INDIE CRAFTER); What they want, what they buy, and how to reach them.

CHA EVENTS FOR MANUFACTURERS; How to get more out of a trade show besides selling your products.

CREATIVE INDUSTRY TURNS TO EDUCATION TO BEAT RECESSION; Simple solutions for vendors and retailers to create online video classes.

WHAT HAPPENED TO CREATIVE MEMORIES? Not adjusting to the times.


HOW A VENDOR SCAMMED A SCAMMER; A sharp eye, a sense of humor - and be wary.

HOW A SMALL VENDOR WAS ALMOST SCAMMED; A savvy, suspicious mind averted a serious financial loss.

COMPANY FOR SALE; The owner is retiring.

EXHIBITORS: YOU'RE WASTING YOUR MONEY! Check your customer list before pre-show mailings.

PLAID CONSERVES TO PRESERVE; Simple changes can mean big savings.

SUGGESTIONS FOR THE CHA SHOW; How to attract more buyers and exhibitors.

CHANGES AT A.C. MOORE; They may not be what they seem.

THE TERRI O SHOW IS COMING; Building industry sales by empowering consumers' creativity.


BOTTLES OF HOPE; A polymer clay grassroots movement.

SEWING SMILES FOR KIDS; Pillowcases and quilts for kids in hospitals.

HELPING THE WORLD IN MORE WAYS THAN ONE; Mrs. Grossman's, C&T Publishing, and Tara Materials.

HELP PEOPLE -- AND THE WORLD; How one company contributes to charities and to Mother Nature.

TAKING CARE OF BUSINESS AND HELPING THE WORLD; Plaid employees' long list of charitable activities.

A SAVVY WAY TO INTRODUCE A NEW LINE; Put it in the hands of consumers and teachers.

CHA AND PMA: SHOULD IT BE EITHER/OR? Why not take the best of both worlds?


RESPONSES TO CLN'S CODE OF ETHICS...from chain store execs, vendors, and reps.

PROVO RESPONDS TO CRICUT CRITICS; Unexpected demand caused problems.

ADVICE TO VENDORS; Common sense, please!

HOW TO HAVE A GREAT TRADE SHOW; It takes more than great products.

KEY CHALLENGES/OPPORTUNITIES FOR THE CRAFT INDUSTRY IN 2006; Office supply, private label, and direct import.

IS MIKE DUPEY RIGHT? The industry's retail pioneer's criticism of chain stores elicits strong reactions.

RETAILERS: CREATE A "PLACE," NOT A STORE; Customers return if they feel a sense of community.

"HOW AND WHY WE CHANGED OUR BUSINESS"; Sometimes necessity forces gutsy businesses into new, scary areas.

WHY INDEPENDENTS ARE DECLINING AND THE INDUSTRY IS SOFT; We can't improve the situation until we understand the causes.

HOW TO MAKE THE SCRAPBOOK PIE LARGER; "Keep it simple and non-threatening."

INDEPENDENTS: SUPPORT VENDORS WHO SUPPORT YOU; "Support goes both ways. It is a relationship of trust and consistency."

WHAT MAKES A GREAT SALES REP? Colleagues and customers remember the late Bob Watikins.

TRADE SHOW PRESS POINTERS; Maximize your publicity for a minimal cost.

HOW CAN A SCRAPBOOK START-UP SUCCEED? The answer may be a "Group" away.

DO TRADE SHOWS REFLECT THE STATE OF THE INDUSTRY? If we're like other industries, trade shows may be in trouble.


THE STATE OF THE FLORAL MARKET; A blunt interview with Aldik's Larry Gold.

YOU WANT JUNK? YOU GOT IT; Pricing pressures are ruining good categories.

PLANNING THE PERFECT TRADE SHOW; Ten tips for CHA Winter Show exhibitors.

MORE VENDORS RESPOND...; A dialog between vendors and a savvy but unhappy independent.

VENDORS RESPOND TO INDEPENDENT'S PLIGHT; Why vendors have minimums and what retailers can do about it.

RETAIL, E-TAIL, AND "UNFAIR COMPETITION"; Expensive advertising, false promises, and little education.

THE TRIALS OF A SMALL COMPANY, PT. II; Expensive advertising, false promises, and little education.

THE TRIALS OF A SMALL COMPANY; Talent, drive, and product -- but no money.


THE THREE L's: YOU CAN'T SELL WITHOUT THEM; How to look, listen, and learn.

IT WASN'T ALWAYS THIS WAY...; but why does that matter?

WHATEVER HAPPENED TO STRAWBERRY?; Does every new product have to be cheap?