Creative Leisure News - Business-Wise

Mike's often irreverent, thought-provoking analysis of the industry-- with an occasional guest columnist.

The Decade's Major Influences, Pt. IV: Changes in the Old Order

Evidence that the way things are today will change tomorrow.

by Mike Hartnett (September 3, 2007)

Note: To celebrate Creative Leisure News' 10th anniversary, I've surveyed readers and chosen the people, companies, and events of the past decade that have had the greatest influence on our industry of today. In previous issues I wrote about the decade's most influential category, scrapbooking, and the most influential person, Michael Rouleau, and the new generation of craft consumers � click on the headlines in the right-hand column to read them. In future issues I'll write about other major influences � Technology ... Media ... Imports ... Investors ... Lower Margins ... Yarn and Beads ... Wal-Mart.

Sometimes I want to scream to the industry, "Will you please STOP for five minutes so I can catch up!" I never do, because I know no one will listen. This industry is filled with too many bright, creative entrepreneurs; they won't stop for five seconds, let alone five minutes.

The point of this article is more than a recounting of the industry's recent history. It is intended as a lesson � and a warning: do not count on the industry staying the same.

Events.

Ten years ago, as the publisher of a new online trade newsletter, some of the most important events I would cover were the ACCI, HIA, and INRG trade shows. I would also want to attend the Society of Craft Designers annual seminar.

The Association of Crafts and Creative Industries and the Hobby Industry Association merged to become the Craft & Hobby Association. The International Needlework Retailers Guild "merged" with The National Needlework Association, but that was just a polite way of letting INRG fade away. The SCD changed its name to the Society of Creative Designers, but it didn't help; the organization died, a victim of the decline of the industry's use of freelance designers.

The MemoryTrends show did not yet exist.

People.

At an HIA show a panel discussion by Alan Rosskamm, Jack Parker, and Michael Rouleau attracted hundreds of people because they were, as leaders of Jo-Ann's, A.C. Moore, and Michaels, the most powerful people in the industry. All retired.

And over the years, the most influential chain leader of them all was Mike Dupey, the founder of Michaels and later, MJ Designs, which filed for bankruptcy and died.

Categories.

Scrapbooking was still growing so fast that almost anyone could make a product or open a store and make money. Knitting and crochet were still quiet little categories that had not yet become the subject of the major publicity campaign that would give yarn a huge shot in the arm.

Cross stitch had slipped. The dominant category for a decade or so wasn't so dominant any more. Attendance at the once-huge INRG show was declining and hard-core stitchers, who had covered the walls of their homes with projects, weren't quite so hard core anymore.

Decorative painting was waning, too. Consumers weren't as interested in the "Americana" folk art designs that were prevalent with painters, and already-painted imports were flooding the market.

Stores.

Remember Frank's Nursery & Crafts? MJ Designs? Rag Shops? Lewiscraft and White Rose in Canada? Ames?

Michael Rouleau was new to Michaels and had his work cut out for him. Expanding the store base without the proper infrastructure had left the chain in a mess.

Wal-Mart was going strong with fabric and crafts. The company still seemed to retain Sam Walton's strategy that those departments attracted the kind of customer Wal-Mart wanted. They were still scoring high on "destination studies"; in other words, many consumers went to those departments first. Sam and his early successors knew they might not make as much profit on sewing and craft supplies as they did on Coca Cola or Tide, but they knew they wouldn't sell as much soda or detergent if they didn't have our industry's products.

Wal-Mart's annual sales of our industry's products were in the billions.

Technology.

Approximately 95% of Creative Leisure News' initial subscribers received their issues by fax because they didn't have, or hadn't figured out how to use, email. The dot.com bubble was a gleam in some nerd's eye. Retailers were still figuring out how to use scanning equipment and UPC codes. A Blackberry was a fruit.

Miscellaneous.

Crafts magazine was the largest consumer magazine in the industry ... Private equity was virtually an unknown term ... Many manufacturer's reps were squeezed out because there were fewer retailers to visit, and the surviving retailers were more demanding of lower prices. As manufacturers' margins declined, so did their ability to afford a rep force.

The Future.

Some predictions:

1. The next hot trend will come out of nowhere, just like scrapbooking did.

2. We'll see more consolidations, mergers, and acquisitions among trade associations, vendors, and retailers.

3. It may take a while, but private equity's interest in our industry will wane.

4. Design trends will become even more difficult to track because they will be all over the place.

5. China will eventually decline from its position as the world's manufacturer because prices for Chinese goods will rise, due to changes in its currency, tougher Chinese regulations on its manufacturers, and tougher U.S. regulations on importers. The relentless quest for lower prices will inspire companies to look to Viet Nam, India, and other countries.

6. The trend for making unique projects will fade. Replicating the projects of talented designers (e.g., cross stitch and decorative painting) will become more popular again because the end results will be better looking projects.

7. Some independent scrapbook stores will close, which will make the remaining are shops stronger. But the lower number of independents may take down some vendors, too.

8. The consumer's relentless demand for the lowest price � and then lower again � will continue.

(Note: Agree with these predictions? Disagree? Have any that Mike missed? Email your thoughts � on or off the record � to CLN at mike@clnonline.com. To read previous articles in the series, click on the titles in the right-hand column.)

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