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Your Business Commentary

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

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Cheaper To Buy Clothes Than Cloth

Imports and "Pile it high and price it low."

By Rob Bostick, JudiKins (May 15, 2006)

(Note: The 5/1/06 issue of CLN included an article, "So Gas Prices Are Rising Now What?" Here are selected quotes from the article, and Rob's answers.)

CLN: "A cardinal rule in the industry has always been that a product or group of products will be successful if the consumer understands that making a project will save a substantial amount of money over buying a readymade."

Rob: We sold stamps that way 10 years ago. Back then we could make a good case by explaining how one stamp can make many greeting cards. It worked well as a stamp was only about three times the price of a card. Unfortunately this may point to the very cause of our problems today.

I just received a quote on having a small couch recovered. The shop wanted $2,000 to do the job. That seemed a bit much, especially since they used immigrant labor. So before Judi and I had the work done, we went to see what a replacement couch would cost. As our living room is small, our requirements were strict, so we visited a lot of stores (over a dozen). We saw a lot of furniture. (We can now even recognize several Chinese brands.)

We had a hard time paying $2,000 for a couch that was small enough to fit into our tiny living room. Everything was made overseas and yes, the quality varied, but overall I was surprised at how inexpensive and well made all that we saw was. We ended up buying a couch slightly larger than what we had before, covered in leather instead of cloth, for only $1,500. A replacement similar to our old couch (made in the Ukraine) was less than half of what we spent. It is no wonder Americans throw away more trash than the rest of the world. Even our furniture is now disposable!

How can we possibly tell our customers that they can make it for less when it is cheaper to buy clothes than cloth?

Now don't get me wrong. I don't blame low overseas wages. China is not the problem here; this is an American problem. England doesn't have this problem (well, not yet) because the merchants there know how to make money. It is not about how low you can price it. It is about how much can you make from selling it. The British Pound is worth over $1.80. My products sell in the UK in Pounds for what I charge here in Dollars. The Brits use the extra profit for such frivolous things as teaching the customers how to use their products. They spend it on brand building, for paying designers to create new projects, and to "generally increase perceived value." Exactly the opposite of what we do here. It is no wonder they have a thriving craft industry.

Corporate America finds it easier to "Pile it High and Price it Low" than to actual sell. Price expectations have been lowered across the board and the smaller you are, the more you suffer. The Internet with one-click price comparisons only feeds this fire.

I do see one possible way to combat this phenomenon and it comes from one of our oldest crafts, The Quilting Bee. It is time for the indies to get crafters together. Not just for "event marketing" but true social time with shared experiences. The scrapbook stores have already started with their crop nights. The trick now will be to increase the perceived value of crops. Making stores "Disneyland for Crafters" might actually pay.

CLN: "Retailers could also emphasize that making a project results in a one-of-a-kind item, something that can't be bought anywhere."

Rob: When I can learn Chinese sofa brands from seeing the same couch in five different stores, the idea of-one-of-a-kind looks better all the time. But as the more experienced crafters age and the young go without good instruction, it is increasingly important that today's crafts be easy to master and produce good-looking finished items.

(Note: To read previous Business-Wise entries, click on the titles in the right-hand column. To comment on Rob's thoughts or any industry issue, email CLN at mike@clnonline.com.

xxx

 

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