Creative Leisure News - Business Wise

Mike's often irreverent, thought-provoking analysis of the industry.

ARE WE STIFLING CREATIVITY?

How we're driving the industry's creative people out of business.

by Mike Hartnett (June, 2003)

Our industry has always thrived on creativity; it's the fuel that powers our growth. So how are we doing? A casual observer walking our trade shows might conclude that the industry is prospering, given the multitude of new products on the show floors.

I'm not so sure. Recent trends are making it more difficult for new products to be seen by the consumer. New products make it to the trade show floor, but how many make it onto store shelves? Some examples:

1. Some large retailers want to reduce the number of vendors from whom they buy. Very understandable: better to deal with vendors who have a proven track record of reliability. But that can lead to serious ethical problems. Some smaller manufacturers have complained to me that they have developed a new line, often in conjunction with a retailer, only to have that retailer give the designs/ideas to a larger vendor.

That happened recently to a good little company. The owners, who have created a number of excellent, strong-selling products over the years, are so disgusted they're selling their company and getting out. Will our industry really be better off when they're gone?

2. Testing makes sense, if the tests are fair. It's perfectly logical to test a new line in a handful of stores before a buyer makes a chain-wide commitment. But sometimes the tests aren't fair. I know of one vendor who spent tens (hundreds?) of thousands of dollars developing a really unique new line. The buyer loved it, but insisted on a test in about 20 stores. Ok so far.

The vendor visited many of the stores during the testing period, only to find that in half the stores the new line never made it out of the back room. The buyer ultimately deemed the test a failure, and so consumers never had the chance to accept or reject it.

As a result, the owner changed the direction of his company. Instead of introducing cutting-edge new lines as he'd planned, he started making cheaper versions of products already on the market. It's not the vendor's fault; he's got payroll to meet and rent to pay. Cheaper versions of popular products -- is that what the industry needs for sustained growth?

3. Some retailers are taking longer between department re-sets. The logic is, better that store clerks wait on customers rather than move merchandise around the store.

Oh? Does this have to be an either-or proposition? Our best customers, whether they're crafters, painters, scrappers, home sewers, or needleworkers, always ask, "What's new?"

In January, as exhibitors in a particular category scrambled to get their new lines ready for the Hobby Industry Association show, they received an email from their buyer at a major chain. The buyer said the company changed its mind and was postponing re-setting the department until 2004. Gee, that way the clerks will have plenty of time to tell the customers there isn't much new.

4. Some retailers take a vendor's product and have it copied overseas. If U.S. manufacturers go out of business, what kind of industry will we have?

5. Some retailers will take on a new line, but make such demands (lower price, ad allowances, rebates, etc.) that the vendor doesn't make any money unless the line is a mega-hit.

6. What I've written above is relatively new in the history of the industry. What is not new is vendors stealing product ideas and designs from designers and other manufacturers. How much has the industry lost because creative, inventive minds give up?

The end result of all this? Talented, creative people and companies are saying, "What's the point?" If vendors and designers aren't compensated fairly for their creativity, they'll do something else.

And ultimately, we will all be the lesser for it.

Here's a history lesson: Fabric painting was the scrapbooking of the 1980's. The company that started it all was Tulip, led by Dave Lester, a chemist who invented "puff" paint.

For years, nobody cared much about fabric painting and Tulip hung on by its fingertips. Finally the company went bankrupt. Dave tried to sell it for $300,000 but couldn't find any buyers. So Dave kept going and finally, the consumer slapped her forehead and said, "Wow! Squirting paint on the T-shirt -- what a great idea!!!!!"

A few years later Dave did sell Tulip -- for $100 million.

Somewhere out there are the creators of our next hot trends. Can they survive long enough in today's marketplace until the consumer discovers them?

(Note: For a prominent vendor's take on a related issue, click on the "Vinny Da Vendor" button and read, "What Happened To Strawberry?")

Have any thoughts on the subject? Call Mike at 309-925-5593 -- on or off the record -- or email Mike at mike@clnonline.com.