irreverent, thought-provoking analysis of the industry.
ADAPTING TO CHANGE
Why some industry businesses fail.
by Mike Hartnett (August, 2003)
You know, our industry is a lot like rock 'n roll. As I walked the
recent ACCI show, I thought of all the exhibitors who have come and
gone, like one-hit wonders. I realized I appreciate old rock 'n
rollers such as Paul Simon, Eric Clapton and Rod Stewart more now
than when I was in college. Why? Because I've come to understand
that just surviving is an accomplishment.
Surviving in this industry certainly is. Changes in consumer tastes,
technology, and distribution have made it impossible to remain the
same, regardless of how successful a company is at the moment, or
how successful it's been for years. Today's success is old news, and
not a predictor of tomorrow.
Where are the macrame companies? Pepperell Braiding is the only one
left that I saw at the ACCI show. Once there were about 19 lines of
fabric paint, and hundreds of cross-stitch publishers. My first ACCI
show in 1980 was dominated by macrame, miniatures, and
I think the classic example of a company adapting to changing times
is Westrim. The ACCI booth was mobbed, as usual, but it seems it's
always been mobbed, regardless of the hot trend. Yes, today the
booth does have lots of scrapbooking products where the macrame cord
was once displayed.
Another example is the yarn companies. Knitting and crochet -- those
were your grandmother's categories, right? And yarn vendors can't
just switch products like Westrim, so what do they do?
They chip in money and start the Craft Yarn Council of America,
which sponsors a host of public relations efforts. Pretty soon all
sorts of movie stars are telling women's magazines how much they
love to knit and crochet. Bingo! A new, younger generation is
attracted to knitting and crochet.
The changes have been just as great with retailers, too.
Traditionally many independents have looked at the chain stores as
all-powerful, never-ending monoliths, able to crush their
competition at will.
Well, about 10 years ago at ACCI, I moderated a panel discussion of
the most powerful chains in the industry. This was the lineup:
Frank's: Eventually went into bankruptcy, emerged, and dropped
crafts ... MJDesigns: Eventually went into bankruptcy, emerged, went
bankrupt again, and died ... Ben Franklin: eventually went into
bankruptcy, died, and the rights were sold to Promotions Unlimited
... Cloth World: Sold to Jo-Ann's ... Michaels: the panelist was the
VP of Merchandising, and he's long gone.
Hmmm, maybe it isn't so easy being a monolith. Just ask Kmart.
Distribution & Technology.
Years ago I'd written a column encouraging retailers to learn about
computers. A couple of weeks later I was walking a trade show when a
distributor pulled me into his booth and really yelled at me. He
thought suggesting retailers adapt to computers was terrible advice,
and a waste of their time and money. As you can imagine with an
attitude like that, the distributor's business has not flourished.
Not that long ago, he was one of numerous distributors, who
collectively dominated the industry. But we no longer need so many
distributors, so many have fallen by the wayside. A few are left --
Notions Marketing, Sbar's, Herr's, Stan Brown, Petersen-Arne, and
others. Why have they survived and others failed?
Each survivor used a different strategy, whether it was switching to
importing, adding hot categories, or changing customer bases. What
they all have in common is adapting to change.
A prime example is Notions Marketing -- even the title implies
sewing, needlework, and soft crafts, and the company was known for
those categories. But now the company just published a 600-page
catalog devoted to memory.
The trick in all this is to adapt to change the right way, while
maintaining some basic principles. When Ames went bankrupt, it
eventually dragged Craft World, Notions' biggest competitor, into
bankruptcy. Notions was stuck for a lot of money, too, but Notions'
Herb Latinga runs a very tight, conservative ship -- and Notions
survived and prospered.
So the products and the marketing strategies may change, but the
basics of money management stay the same. The Rolling Stones may
have survived disco and rap, but their basic good rock and roll
(Although I'm not sure Keith Richards really has survived. I think
he passed away in the 70's, was pickled, and is propped up on stage
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