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Your Business Commentary

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

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Readers Weigh in on Industry Challenges

Chain stores, bead, and yarn.

by CLN Subscribers (January 21, 2008)

(Note: The January 7 issue of CLN included a an article, "Challenges Facing the Industry in 08" and invited subscribers to respond. To read the original article, click on CLN Archives in the right-hand column, then 2008, then January 7.)

CHAINS AND PRICE INCREASES

(Note: CLN wrote: "Chain Stores. The eternal quest for increased profits can have long-term, adverse effects. Pressure vendors too hard and the result is shoddy products the consumer doesn't want, or it drives the vendors and their creativity out of the industry. Bypassing vendors to source the products directly loses the vendors' creativity.")

You are dead on! You can see it in the decreasing quality of products on many retailers' shelves.

The only way vendors can survive is to increase their prices. The major retailers have been flat-out refusing price increases for years. We have some products that we haven't been able to increase in price in over seven years.

The major retailers put us in a no-win squeeze play by giving us the same old song and dance every time: "Your competitors aren't raising prices, and if you raise your prices, then we will seriously consider switching to them," and "Until we see that our competitive retailers have accepted your price increase and passed it on to the consumer, we won't accept a price increase from you."

This obviously puts the vendors in a precarious position as our costs go up every single year with cost-of-living adjustments and rising health care costs, raw material prices, transportation costs, and everything else going up.

It forces the vendors to reduce their R&D budgets and cut costs everywhere else possible – including the quality of their products, which affects the positive experience that crafters have, and in some cases turn them off to repeating that craft. – Name Withheld (Major manufacturer)

(Editor's note: This email arrived shortly after a phone call from an industry veteran, now retired. During the course of the conversation she said, "I hadn't been in our stores much until recently. Boy, there sure is a lot of cheap junk in them now.")

CHALLENGES FOR BEADING

(Note: CLN wrote: "Beads. If key vendors want independent bead shops to prosper, they need to stop selling to consumers at prices so low the shops can't compete. There are too many bead shows, vendors, magazines, and in some cases retailers; the glut divides the pie into too many pieces. The marketplace will eventually sort it out, but in the meantime....")

As Divisional Publisher of Interweave Press’ Bead, Gem, and Jewelry Media, I read with interest your column, "Challenges Facing the Industry in ’08." I agree 100% with your assessment of the bead market. Since we publish magazines, websites, and stage consumer events for beaders, we’ve witnessed some vendors at shows, from time to time, undercutting their local retailers by selling goods directly to consumers for less. This practice by a few is short-sighted, in my opinion, and we discourage it. The answer is for event producers to attract more budding enthusiasts into beading. Our research shows that the students at our workshops (Bead Fest and Bead Expo) will visit the shows on a seasonal basis and then buy from their local bead shops year-‘round. To encourage this, Interweave will soon unveil a new online directory of local bead shops, which is intended to be a permanent addition to our BeadingDaily.com website and blog. This directory will help new (and already passionate) beaders find their local sources for beads and supplies.

I also agree with your comment about "There are too many bead shows, vendors…" That’s why we’ve recently announced the Interweave Vendor First program, based on three central tenets: A) We reduced the number of shows to a manageable number for vendors and beading enthusiasts. B) We are limiting the number of vendors at any of our shows so that the ratio of attendees to vendors will yield a strong return on investment for vendors and a rich experience for attendees. C) We are limiting the number of vendors who sell the same products so that attendees will not have to look at booth after booth selling the same products – which is also the right strategy for vendor return on investment. At the same time, we’ve hired a full-time, experienced event promotions person who spends 100% of her time focused on increasing attendance at our shows.

Our goals for these new initiatives are a step in the right direction to address the problems you wrote about in your newsletter. We want to insure that vendors at our events get the best possible return on investment; that attendees have a rich and exciting buying and workshop experience; and that beaders buy from their local shops all year long. – Joe Breck, Divisional Publisher of Interweave Press’ Bead, Gem, and Jewelry Media

(Note: In addition to knitting/crochet, fiber and quilting books and magazines, Interweave publishes Beadwork, Step by Step Beads, Step by Step Wire Jewelry, Stringing, Colored Stone, and Jewelry Artist. There is also a website, www.beadingdaily.com, and the company produces Bead Expo consumer shows in Portland and Phoenix, and Bead Fest shows in King of Prussia, PA, Miami, and Philadelphia. Visit www.beadexpo.com/beadexpo for details.)

YARN, FASHION AND NOVICES

(Note: CLN wrote: "Yarn. The ads in the latest issue of the impressive trade magazine, Yarn Market News, makes the issue look like a fashion magazine. The vendors' emphasis on fashion may work with existing knitters, but the projects look difficult, which could frighten away potential newcomers.")

YMN is a trade publication for retailers and people in the industry – not consumers – and its ads should introduce trends in color ways, yarn lines, and fashion. Most of the ads by yarn manufacturers promoted very accessible patterns.

I looked through all the ads and found many beginner-to-intermediate projects: a simple garter stitch shawl by Alchemy Yarns; classic cardigans from Tahki Stacy Charles; colorful baby sweaters from Knit One Crochet Too; a stunning but easy shell in ribbon yarn from Prism; a plethora of socks, handbags, afghans, and totes from Kertzer; and the list goes on.

Moreover, most of the ads put the focus on yarn, like Louet’s full-page ad showing off gorgeous skein after skein of their popular lines in enticing spring colors. The only high-fashion in the issue is Vogue Knitting Editor Adina Klein’s Spring Forecast (pages 54 and 56), an editorial feature that looks at the knitwear and colors from the runways during Spring 2008 NYC Fashion Week.

Yes, these designer knits might scare away the new knitter, but it’s inspirational (and important) for retailers to get a glimpse of these trends to project how they might trickle-down to the average knitter. – Jaime Guthals, Publicist, Interweave Press

(Note: Have any thoughts you'd like to add to the discussion? Send them to CLN at mike@clnonline.com.)

xxx

 

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