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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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What's Happening to Our Trade Shows?

And what does it mean for the future?

by Mike Hartnett and CLN Readers (February 7, 2011)

Trade shows have always reflected the state of our industry, and they were an essential forum for buyers and sellers alike. Yet many shows have disappeared and the remaining trade shows are smaller than they once were, despite the best efforts by show sponsors.

They are smaller -- and apparently less important, according to CLN readers. In the latest CLN poll 65.2% said trade shows were less important; only 26.1% said they were more important.

Trade shows are a major source of revenue for our trade associations CHA, TNNA, and NAMTA and the trade associations are critical to the ongoing success and growth of our industry.

If, in fact, trade shows are declining in importance, does that mean the industry is faltering, or simply evolving? Should trade shows evolve, too? How?

Let's start a discussion. I've listed here some reasons why trade shows are smaller; consider it food for thought. Then email me (mike@clnonline.com) or call 309-925-5593 on or off the record and I'll publish the comments.

1. Fewer buyers

There aren't as many independent retailers; that decline also dragged down some distributors and some smaller vendors who relied on independents' sales because they didn't have the resources to service the chains. Fewer buyers = less profitable trade shows for many exhibitors.

2. Are exhibitors sometimes their own worst enemy?

Special trade show discounts are probably as old as trade shows. But some exhibitors now give "show specials" to everyone, including to retailers who don't attend the show. Others unveil their new products online before the show. Ok, but then don't complain to the show sponsors that not enough retailers attended.

And how about respecting the wishes of the retailers who do attend and place orders? Consider this note from an excellent independent scrapbook retailer:

"For the first time in six years, we did not go to CHA. While we love the trade show, vendors are getting too aggressive. For example, [at the summer show] we would place an order at the show, give them our credit card info, and ask for our order to be sent in October. (We had a monthly budget for new items.) Low and behold, the order was shipped in August. We ended up with too much inventory and nowhere to put it. This was the common theme for virtually all vendors, and made our cash management go down the drain. 

"This year, we will shop as we need it and place an order when we can use the inventory. Also, we saw very few 'Show Only' specials last summer. We also see that most vendors are offering 'Pre-Show' specials, which are the same deal one gets at the show, if not better. This is the same sales concept that major retailers did last November with their pre-Black-Friday sales. I guess the theory is he who gets there first usually gets the sale."

Some vendors will fly their major buyers to their factories, or produce videos of their booth presentations and put them on the web for retailers who don't attend a show. These actions make sense for the vendors, but they don't help attendance at trade shows.

3. The snowball effect

A buyer attends a show hoping to see numerous relevant vendors. If he's disappointed by their absence, he'll be less inclined to invest the money and time to return to the show the following year. If he and others decide not to attend, the exhibitors who are there will be less inclined to exhibit the following year.

Consider this comment from Bob Ferguson, owner of a multi-category Ben Franklin store in Redmond, WA and considered one of the most successful independents in the industry.

"A big concern for us is the lack of a consistent presentation venue for seeing what is new, hot, or trending up in our industry. Our trade shows have been less than relevant in the area of those product categories that are the hottest in the consumer marketplace. Today we are unable to see more than a small percentage of goods that make up our craft store offerings at our own CHA shows. Huge categories are missing entirely and some big ones like beading are represented only by the producers of goods that find favor in our industry chain stores."

Bob has complained for years that floral and framing vendors, among others, no longer exhibit at CHA. (Actually, their numbers had declined before HIA and ACCI merged to form CHA.) Why don't floral companies, for example, exhibit at CHA? Half a dozen explained it to me this way: the chain stores either import florals on their own or expect to see the new products in their offices and there are no longer enough Bob Fergusons to justify the cost of exhibiting.

4. The chain stores

The buyers and the higher-ups are doing what they feel they need to do to increase company sales and profits.

A. They insist on seeing new products far in advance of a trade show. Exhibitors for whom the majority of whose sales are comprised by these chains, question why they spend so much money for a trade show in order to display new products their major customers have already seen.

B. They increase their direct importing and private label programs, which either squeeze out vendors or reduce their profit margins. These policies in turn motivate vendors to look to other industries gifts, toys, stationery, etc. Result? Many creative minds are now focused elsewhere, not on our industry.

5. Show dates

Buyers and vendors continue to want their shows early in the year. Consequently, shows conflict with each other. If not directly, then they're so close together that some businesses just don't have the time, money, resources, or personnel to attend/exhibit at both. Because they are scheduled so closely to one another, needlework, crafts, art materials, paper, and bead shows in the U.S. and Europe probably divide the pie into so many pieces that collectively they each detract from the others.

6. The best use of resources

A few years ago I was sitting with four major vendors/competitors and a pr person. One vendor complained about the cost of the CHA summer show. "How much did it cost you," the pr person asked.

"About $50,000." The other vendors nodded in agreement.

"Well, if you're complaining and it cost that much, why did you exhibit?"

The vendor grinned sheepishly, and pointed to his competitor. "Because he exhibited." The others nodded.

"Do you mean to tell me," the pr person asked, "that if the four of you decided right now not to exhibit, we'd have another $200,000 to spend promoting the category?"

Interesting question.

Finally, I little history

While an annual trade show might seem permanent, it isn't. In addition to what are now the winter and summer CHA shows, at one time there were craft trade shows in Philadelphia, Atlanta, Dallas, and Seaside, OR. Distributors such as Herr's, Sbar's, and Craft World held "open houses" which were, in effect, trade shows. The now-defunct Home Sewing Assn. sponsored a show each spring and fall. If I remember correctly, TNNA sponsored four or five shows, and there was the once-huge INRG cross stitch show. And let's not forget MemoryTrends.

I talked to numerous vendors at the CHA show in Los Angeles, and many were questioning the return on their investment in exhibiting. What if they all decide not to exhibit?

Ok, now what should CHA, TNNA, and NAMTA do? What is the future of trade shows? Send me your thoughts mike@clnonline.com, 309-925-5593.

xxx

 

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