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Creative Leisure News
2677 Ashley Ct.
Tremont, IL 61568
Phone: 309-925-5593
Fax: 309-925-9068
Email: mike@clnonline.com

 

 


Date: June 19, 2000
Vol. IV, No. 12

Printer Version

TABLE OF CONTENTS

bulletCommentary
bulletIdeaForest: New Funding, Alliance With Jo-Ann
bulletAleene's Creative Living Shuts Down, For Now
bulletWhat Happened To CraftShop?
bulletNew Fabric Company -- For Independents
bulletSewing...For Dummies
bulletMore Websites To Check
bulletINRG or ACCI?
bulletHow To Build Customer Loyalty
bulletMiscellaneous News
bulletE-Commerce Update
bulletThe Creative Network: Job Openings
bulletCreative Network: Jobs Of The Month
bulletThe CLN Retail Index In Mid June
bulletModern Business Practices

COMMENTARY

ACCI and INRG are coming up fast. It's unfortunate -- and won't happen again, I'm sure -- that both shows are concurrent. Regardless, some of you may still be deciding whether or not to attend one or both.

There's no guarantee, of course, that either show will be worth the time and money, but the essential trade show truths remain: they continue to be the only place to see new products and talk to the vendors up close and personal, to learn about business and products in seminars, to network with other retailers, and to have some fun.

Odds are that if you do attend, you'll return home with a better understanding of your current products, ideas to improve your store operations, and a line on some new products with excellent sales potential. And some happy memories.
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IDEAFOREST: NEW FUNDING, ALLIANCE WITH JO-ANN

Jo-Ann Stores announced a "strategic partnership" with IdeaForest.com, the huge e-commerce site that opened for business June 1st.

Under the terms of the partnership, Jo-Ann has invested $6.5 million in connection with IdeaForest's new round of funding that adds up to $21 million. Other investors include TMCT Ventures, ValueVision Int., Media Technology Ventures, North Castle Partners, the principals of Texas Pacific Group through their Tarrant Venture Partners fund, and bainlab.

Jo-Ann's cash investment, combined with its contribution of significant strategic assets to the partnership, will give it a 28.5% ownership in IdeaForest, with the ability to increase its future ownership percentage through the vesting and exercising of warrants.

Jo-Ann's said it expects the investment to dilute its earnings by 30-40 cents/share.

IdeaForest, which will continue its own site, reportedly will bring online selling capability and enriched content and community features to the joann.com website. The site will also benefit from Jo-Ann's product assortment, physical store presence, and merchandising experience.

The site will initially feature a significant representation of the products that are featured in Jo-Ann's etc superstores by fall, with plans to add more products after the holiday season.

As part of the strategic partnership, IdeaForest has received the trademarked license for joann.com and will be the exclusive provider of all content and technology support to the joann.com website. Jo-Ann will provide product to the site, with customer fulfillment and service being handled by IdeaForest.

Jo-Ann's Chair/CEO Alan Rosskamm joins IdeaForest's board. "Through our combined efforts," Rosskamm said, "we will create the premier portal for the creative consumer on the worldwide web and deliver to current and future Jo-Ann customers a convergent shopping and learning experience that will leverage our existing retail base of over 1,000 stores nationwide."
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ALEENE'S CREATIVE LIVING SHUTS DOWN, FOR NOW

Aleene's Creative Living has been cancelled by The Nashville Network (TNN). The series is the longest-running (14 years), craft-related series on cable television and is broadcast one hour each weekday. The last broadcast will be June 30th. The production studio has been shut down and the crew laid off. The staff in the company's extensive telemarketing department has been notified the last day will be June 30th.

Artis, the producer of the series, is currently in Chapter 11 bankruptcy proceedings. President Tony Hirshman told us he had a verbal commitment from TNN to broadcast the show through August, but the network called last week and rescinded it.

Hirshman said enough segments for two months have already been filmed, and he is calling other television networks and stations.
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WHAT HAPPENED TO CRAFTSHOP?

CraftShop.com was the first major, venture-capital, e-commerce site to go online. The Founder/CEO, Angus Mackie, is a 20-year veteran of our industry and had developed a number of successful websites for industry companies. Plus, he assembled a first-rate, experienced staff to give consumers a wealth of free content and services.

The investors included some of the biggest, most successful companies in the venture capital field. CMGI and others poured in $3-$5 million and promised another $15 million.

In its first full month of operation, February, it attracted 199,000 visitors, according to PCDataOnline.com. So what happened?

1. Apparently the investors were more interested in making money via the stock market than by building a profitable craft company.
2. Tech stocks took a tumble, making it unlikely CraftShop could go public in the near or reasonably near future. So if the investors were going to receive a reasonable return, it would have to be from profits on the sale of craft supplies.
3. Technical snafus postponed CraftShop's debut from October until late January, traditionally one of the slowest periods of the retail calendar. "We didn't go live until January, and it killed us," Mackie told Bloomberg News. "All the content was for Thanksgiving and Christmas, and we had to rip it down and put up a sign saying, 'Happy New Year'."
4. Even after the site was running, "We didn't have our merchandising department fleshed out," Mackie told the New York Times, "so we didn't do a very good job of merchandising."
5. CraftShop converted less than one percent of the site's visitors into paying customers. (The New York Times reported the industry average is 1.8%.)

Why? Perhaps consumers needed more time and familiarity with the site to feel comfortable enough to place orders. There may have been concerns over security. Prices may have not been low enough to compensate for the shipping costs. The site may have offered the wrong items, although that's unlikely, since the site offered more than 40,000 sku's. Perhaps too many consumers insist on touching the merchandise before they buy. Potential customers may have felt the site was difficult to navigate.

The actual reasons will remain unknown because CraftShop wasn't allowed to stay in business long enough to query its visitors.

6. The investors had tied their second round of funding, as much as $15 million, to sales goals, which were missed for the reasons cited above. That caused CraftShop to miss its sales goals.
7. That caused the investors to change their minds about a second, essential round of funding. Meanwhile, some highly publicized e-commerce failures frightened away other potential investors.
8. Mackie negotiated with CraftClick.com up to the night before his board of directors pulled the plug, less than four months after CraftShop had gone live. According to Dow Jones News, Craftshop reported $1.8 million in debts to between 50 and 99 creditors.
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NEW FABRIC COMPANY -- FOR INDEPENDENTS

One of the most respected names in quilting, Donna Wilder, has formed FreeSpirit, a new company created to sell unique quilting fabric to independent retailers. "FreeSpirit will employ separate artists and designers to create the designs for the fabric lines," explained Donna, who founded the Fairfield Fashion Show and won numerous awards for her contributions to quilting.

"The approach will be to create fabric lines that technically work for quilters, and fill a need in the market. Basically, our mission is to produce fabrics that are smartly styled, uniquely colored and expertly printed on quality fabric."

The former Marketing VP for Fairfield, Donna thinks the potential for quilting -- and independents -- is very bright. "Most independent quilt shops operate successfully because their focus is directly targeted to selling fabric for quilts," she says. "This is a business where education and service are necessities, and who can accommodate these needs better than the independent quilt shops?"

Note: A more detailed interview will appear in the July issue of CNA.

For more information: FreeSpirit, 1350 Broadway, Ste. 2106, New York, NY 10018. Email dwilder@fabrictraditions.com or call 212-279-0888.
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SEWING ... FOR DUMMIES

Simplicity Pattern Co. announced a licensing partnership deal with IDG Books Worldwide, the publisher of the For Dummies series of books. The first pattern collection will include patterns for crafts, home dec, kids apparel, and accessories. The line will adopt the distinct, yellow-and-black For Dummies design, logo, icons, etc. and will be available in the U.S., Canada, and the United Kingdom early next year.

Simplicity Sr. VP Judy Raymond said, "Simplicity and IDGB's For Dummies brands are such a perfect fit because both are synonymous with self-education and improving one's life. We expect our Simplicity For Dummies Patterns series to help women, and all would-be crafters, to rediscover the joy and simple satisfaction of sewing."
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MORE WEBSITES TO CHECK...

RAGSHOP.COM. Surfers will find in-store promotional circulars and coupons, free projects for a wide variety of products and techniques, store locations, and information on in-store educational activities, new products, and "Camp Rags" for kids. No selling on the web, but an official said the company is evaluating the concept.

HOMEDECORATINGACCENTS.COM. This is Hancock Fabrics' third site, specializing in readymade home dec pieces. CEO Larry Kirk explains: "This is a logical step for us, as it coincides with and complements a greater emphasis on home related products in our physical stores. Home accents, in particular, have been very well received by consumers since the line was added to our stores' product mix in late 1999."

KAYEWOOD.COM. Features Kaye Wood's entire product line of quilting and sewing books, patterns, templates and tools, as well as notions. Home dec and wearable art books and patterns are also featured. There's an online store, freebies for quilters and sewers, tips and techniques from Kaye, and info about Kaye's TV shows, teaching schedule, and charity quilt projects. There are two free email newsletters, one sent to 150 guilds and the other a weekly sent to almost 10,000 consumers.

CRAFTCATALOG.COM. An e-commerce site selling a wide variety of products, mostly hard crafts (glass, soapmaking, kids, etc.), memory, and painting supplies. Price example: 2-oz. bottle of Patio Paint, $1.59.
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INRG OR ACCI?

For many years shows sponsored by the International Needlework Retailers Guild and the Association of Crafts & Creative Industries were considered "don't miss" by craft and cross stitch retailers. Well, retailers will have to miss something this year, because both shows are on July 28-30. We asked a few needlework vendors what they planned to do.

A Publisher: My comment is @#$$!***. We are going to exhibit at both shows -- unfortunately we'll take less space at each show because we don't have the exhibit equipment.

Half of our people will go to INRG and half to ACCI.

We go to the shows for different reasons. We actually write orders at INRG while most of what we do at ACCI is talk. So the order writers go to INRG and the talkers go to ACCI. It's easy for an exhibitor to make this choice.

My fear is how will the customers react? Who will go to which show? Especially the overseas people. It's a stupid thing and can only serve to make both shows less important. I think that ACCI will suffer the most because INRG has its supporters -- even if they are few in number.

Kit Manufacturer: We are only showing at ACCI; we think we will see most of our stronger customers (chains and independents) at this show and so is not worth trying to exhibit at both.

Needlework/Craft Manufacturer. We will have 7 stands at the ACCI and three stands at the Charlotte show. I do not see much of a conflict, buyer wise, as these needlecraft stores did not attend the ACCI too much anyway. So I will have my needlecraft staff at one show and the craft staff at the other.
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HOW TO BUILD CUSTOMER LOYALTY

The following is a letter sent to Janlynn and shared with me by the president, John Kozub. (If your company doesn't receive such letters, perhaps some customer service training is in order.)

Dear Mr. Kozub,
Last week I sent an unaddressed email to your office, because I had lost a pattern (it was shredded by mice) I'd had for a number of years. With the center of the pattern missing, I'd never be able to complete my kit. I thought there was a million-in-one chance of replacing the pattern.

I was fortunate to get a million-in-one person to handle my request. Debbi Carroll emailed me immediately, saying she was getting up a hunting party. She even got the factory staff to search for the discontinued pattern. They found it! Today Debbi emailed me the good news, and I know my pattern will arrive by mail in a few days. That's not all -- Debbi is sending it at no charge!

I am so pleased! Debbi was prompt, courteous, and competent. She got the job done quickly. She kept in touch, and took the time to send me a friendly note. She impresses me as the kind of person I would hire for our business.

I am very happy to have dealt with Debbi, and because of her I will remain a faithful Janlynn customer. Thank you.
Sincerely,
Carol Ann Hanshaw
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MISCELLANEOUS NEWS

REMINDER. This Friday is the deadline to preregister for the ACCI show July 28-30 in Chicago. And don't miss the member reception with featured speaker T. Scott Gross, author of Positively Outrageous Service. Gross, the best business speaker we've ever heard, leads an impressive lineup of business and industry speakers, Mega Workshops, and other events. Your badge allows admission to the Art Glass show running concurrently. Go to accicrafts.org or call 740-452-4541 ... Friday is also the deadline for priority point assignment for the 2001 HIA show in Anaheim. Call 201-794-1133 or go to hobby.org.

STOCK. Michaels' stock has recently been flirting with the highest prices since we first began such things -- in 1990. Meanwhile, Ames keeps sinking to new, 52-week lows. We've yet to hear a reasonable explanation for Ames' decline. Analysts seem perplexed, too. An analyst with Tucker Anthony Cleary Gull said he doesn't see any fundamental reason for Ames' decline. "It seems to be related to the general weakness in the retail sector."

STOCK. The Hancock Fabrics board authorized the open-market repurchase of up to 2 million shares of company stock. In the past 11 years Hancock has bought more than 11 million of its shares. The board also declared a quarterly cash dividend of 2.5 cents/share ... T. Rowe Price reported a 10.1% stake in Hancock Fabrics, according to a form filed with the Securities Exchange Commission. The firm owns 1,844,200 common shares in the company.

ACQUISITION. Accents Unlimited bought Blay-Ko/MPI, manufacturer of wood products, display boxes, and Leaf Craft gold gilding transfers. Blay-Ko's Glenn Kolodny and John Labunski remain to oversee product and market development and sales. All products except the display boxes and Leaf Craft products (which move to Milwaukee) will continue to be produced at the Garland, Texas facility. For more info, call Accents CEO, Ron Creten, at 414-355-3020.

SALE. In our last issue we reported on the sale of Westrim to Bemiss-Jason. Gordon Case, CEO of Bemiss-Jason stated, "We are pleased to have the good fortune to bring these two industry leaders together and offer their respective customers access to a much broader line of high quality, creative craft and education based products. The acquisition will allow each organization to expand its market reach and utilize the synergies created to form a very sound base from which to pursue future acquisitions to grow the company into a global leadership position in the craft, education and office products markets." Gary Deitsch remains President/CEO of Westrim Crafts with other principals continuing to play key roles under the Bemiss-Jason umbrella, officials said. Westrim remains in Chatsworth, California where it currently has warehouses totaling more than 150,000 sq. ft. Bemiss-Jason is headquartered in Newark, California, a 250,000 sq. ft. facility in Neenah, Wisconsin, and an international division in Dudley, England.

SALES. Zany Brainy received antitrust approval for its proposed acquisition of Noodle Kidoodle. The deal -- Zany Brainy paying 1.233 shares for each share of Noodle Kidoodle for a total of $35.4 million -- still requires approval by shareholders of both companies. The deal should be completed by next month.

$$$. On June 29, Michaels will redeem its 4.75%/6.75% Step-up Convertible Subordinated Notes, due 2003, worth approximately $96.9 million. CFO Bryan DeCordova said, "We are in the enviable position of having more than sufficient resources to redeem these securities, and by doing so we will, in effect, repurchase over 2.5 million shares of our common stock, consistent with our previously announced stock repurchase program." After the announcement, Standard & Poor's placed Michaels on CreditWatch with positive implications due to the company's improved performance and that it's less leveraged.

POTTERY. FloraCraft, known for its Styrofoam brand products, is introducing Timeless Accents, air-dried pottery made from a new polyclay making the pieces chip- and break-resistant, non-porous, and easily painted. Three collections: Containers and Vases, Home Decor, Garden and Patio.

KNITTING. Watch for a new infomercial this fall featuring Bond's new Ultimate Sweater Machine. The production will be done by Q-Direct, a division of QVC, which has had remarkable success selling Bond's Incredible Sweater Machine. (Bond is one of QVC's longest-term craft vendors.)

JOBS/PEOPLE. Southeastern vendor specializing in promotional home dec fabric assortments for retailers is looking to redo its rep group and is looking for good fabric reps ... We also know of a number of excellent, experienced people in sales, editorial, design, product development who are looking for new full or part-time positions. Call Mike Hartnett, in confidence, for more info. 309-925-5593 or email mike@clnonline.com.

INDEPENDENTS. At its summer buying shows, Promotions Unlimited is unveiling its new Internet ordering system including Internet training. The next show, for which Promotions provides airline, hotel, and meals, etc., is June 26-28 in Racine. Call 800-992-9307.

PEOPLE. Congrats to independent retailer Sue Jennings who will receive TNNA's Tribute to Excellence award during next weekend's trade show in Columbus, Ohio. Her store is Needlewoman East in Falls Church, Virginia.

MEMORIAL. Wal-Mart presented a check for $14.5 million to Sen. Bob Dole, chairman of the National World War II Memorial Campaign. To date it's the largest corporate gift for the memorial. "With more than 1,900 World War II veterans currently serving as Wal-Mart associates," Wal-Mart CEO Tom Coughlin said, "we are proud to salute the men and women who pledged their lives and sacred honor to provide the peace and prosperity we enjoy today."

NEW STORES. Zany Brainy opened in La Mesa, California;Tulsa, Oklahoma;and Burnsville, Minnesota. Total store count is up to 110. Additional stores will open this October in Camp Hill and Pittsburgh, Pennsylvania and Buffalo, New York.

OVERSEAS. Martha Stewart told a meeting of stock analysts that her company is discussing expanding into Germany, England and Japan, the Associated Press reported.

TRADE. Mexico's Trade Undersecretary, Luis de la Calle, predicted that within seven years, Mexico would surpass Canada as the U.S. #1 trading partner, Reuters reported.

JOBS. Michaels has posted online openings for Store Managers, Assistant Managers, and Department Managers. Contact Krista Herfort, kristaherfort@earthlink.net; fax 972-519-1075; call 972-612-8903.

TV. Sew Creative, hosted by Donna Wilder, uplinks series 16 to PBS stations next month. Call your local PBS station and ask for it. It's sponsored by Fairfield, Better Homes & Gardens Craft Group, Janome, Quilters Only/Springs, American Quilter's Society, Sulky, Gammill, Wrights, Rowenta, and June Tailor.
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E-COMMERCE UPDATE

PEOPLE. Jo-Ann Stores named Debra Walker as Exec. VP of Marketing and E-Commerce, reporting directly to Chair/CEO Alan Rosskamm. She had been Exec. VP, Chief Marketing Officer, and co-founder of iCARumba, Inc., an on-line auto services site. Prior to that Walker served as Vice President-Retail, responsible for all of Goodyear's U.S. retail stores.

FOAM. FloraCraft's web site, floracraft.com, has experienced a 42% increase in web visitors since the beginning of January, (70,000+ in April) with the average visit lasting 11 minutes. When asked why the big increase, an official said, "It's the projects that pull people in. They are referred to us by sites like CraftNetVillage, CraftsInc, CraftsForKids, and the Styrofoam-crafts site by Dow." The company plans to expand the site in the near future, adding new features to attract not only more consumers, but professional craft and floral designers, too.

CHANGES. In an email to current and prospective customers, Craft.com announced, "Due to the current business climate, craft.com was not able to fully prepare the site for its Grand Opening. Rather we are moving the business to try some exciting new directions in e-commerce." The site also eliminated all membership and benefit programs (coupons, shopping credits, introductory free shipping, etc.) and announced a "Special Summer Sale" with discounts of 30-40%. The message said the revamped site would be unveiled "later this summer."

EXPERTS. In last issue's report about IdeaForest, we inadvertently omitted Dee Gruenig of Posh Impressions, and the site has added another expert -- Bunny DeLoria. The operation has already hired many people well known within the industry, if not to consumers: Jack Bush, Bob Kendig, Jackie George, Lesley Siegel, Susan Ray, Kathy Kemper, and Michele DeFay.

LEGISLATION. The House of Representatives voted 426-4 in favor of the Electronic Signatures in Global and National Commerce Act, a bill that gives electronic signatures and documents the same force in law as their paper counterparts. The bill goes to the Senate and President Clinton says he will sign it. It would go into effect October 1st.

ADS. IdeaForest.com has a banner ad on eGreetings.com, one of the most popular free-greeting-card sites.

LOSSES. Martha Stewart admitted to analysts that her e-commerce site lost $14.8 million last year and may lose as much as $29 million this year, but predicted the site would break even in 2002, the Associated Press reported.
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THE CREATIVE NETWORK: JOB OPENINGS

The only personnel recruitment firm specializing in our industry has the following job openings. For more information, call 360-834-0802; fax 360-834-0702; Email jessica@creativenetworkinc.com; or check the website at www.creativenetworkinc.com.

ATLANTIC: Product Manager (school & office supply) ... Product/Marketing Manager.
MID ATLANTIC: Buyer, Soft Crafts ... Divisional Merchandise Manager ... Graphic Designer (catalog, collateral material) ... Inventory Control/Sourcing ... Sales Manager (crafts).
NEW ENGLAND: VP Sales & Marketing (soft goods) ... Healthcare Merchandiser (catalog) ... Assistant Art Director (art reproductions) ... Sr. VP Marketing (soft goods).
NORTH CENTRAL: Creative Licensing Art Director ... Licensing Manager (negotiate contracts) ... Designers/Product Development (gifts, doll, plush) ... Copy Writers (catalogs and collateral material) ... 3D Consumer Product Graphic Artist ... National Sales Manager (gifts) ... Designer/Product Development (doll, plush) ... Direct Marketing Manager ... Creative Director (country gifts) ... Art Directors (country gifts) ... Copy Writer (catalogs, newsletters).
PACIFIC: Design Coordinator (fashion/sports).
SOUTH ATLANTIC: National Sales Manager (gifts).
SOUTH CENTRAL: Director of Product Development (home dec chain).
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CREATIVE NETWORK: JOBS OF THE MONTH

Position: National Sales Manager ... Location: New York ... Salary: $75-100k, plus 401k, benefits, bonus ... Description: Direct all sales activities for the craft channels of distribution; develop industry-specific selling and merchandising programs for all product lines; work with marketing and product development departments; hire, train, and manage appropriate rep firms; prepare sales forecasts; and manage national trade shows, events and budgets ... Qualifications: Know the craft accounts and the principals; experience managing rep groups; understand the craft industry and its needs; insight regarding product development; an understanding of pricing policies, presentations, and planograms.

Position: Soft Craft Buyer ... Location: Mid Atlantic ... Salary: $40-60k, plus 401k and benefits ... Description: Plan, evaluate, and purchase merchandise; provide product mix and pricing to meet financial goals; supply new merchandise to stores and keep basic merchandise flowing; identify trends; provide appropriate, effective merchandising programs ... Qualifications: BS./BA in business; overseas sourcing experience; strong analytical and negotiating skills.

For more information, contact The Creative Network at 360-834-0802.
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THE CLN RETAIL INDEX IN MID JUNE

A. C. Moore (ACMR). Last*: 7 5/16 ... Change**: +1 7/16
Ames (AMES). Last*: 7 11/16 ... Change**: -3 3/4
Hancock Fabrics (HKF). Last*: 4 3/8 ... Change**: -5/16
Jo-Ann Stores (JAS.A) [a]. Last*: 8 5/8 ... Change**: -5/8
Michaels (MIKE). Last*: 41 11/16 ... Change**: -3 1/8
Rag Shops (RAGS). Last*: 3 ... Change**: +13/16
Wal-Mart (WMT). Last*: 53 7/8 ... Change**: -5 3/16
CLN Retail Index. Last*: 126.877 ... Change**: -7.8%
Dow Jones Index. Last*: 10,449.30 ... Change**: -3.2%
* June 16 ** from June 2 [a] voting share Note: Prices are exclusive of dividends
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MODERN BUSINESS PRACTICES

The ancient tribal wisdom of the Dakota Indians says when you discover you're riding a dead horse, the best strategy is to dismount. This, of course, is old fashioned. In modern business, education, and government, many more advanced strategies are employed:

1. Buy a stronger whip.
2. Change riders.
3. Threaten the horse with termination.
4. Appoint a committee to study the horse.
5. Arrange expensive trips to see how others ride dead horses.
6. Re-classify the dead horse as "living impaired".
7. Hire outside consultants to ride the dead horse.
8. Harness several dead horses together to increase the speed.
9. Provide additional funding and/or training to increase the dead horse's performance.
10. Conduct a study to see if lighter riders would improve the dead horse's performance.
11. Declare that, since the dead horse does not have to be fed, costs less, and carries lower overhead, it therefore contributes more to the bottom line.
12. Promote the dead horse to a supervisory position.
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Note: Creative Leisure News is published on the first and third Mondays of each month; your next issue will be Monday, June 5th.

Have any rumors you need checked? Company news or comments on industry issues? Call Mike Hartnett, in confidence, at 309-925-5593; fax 309-925-9068; or Email to mike@clnonline.com.

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