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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
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Date:
February 5, 2001 TABLE OF CONTENTSCOMMENTARY: THE DANGER OF UNIQUE PRODUCTSDr. Oren Harari's keynote address at the HIA show was interesting and thought-provoking. Much of what he said was true, but I disagreed strongly with his contention that vendors should create truly unique products. That sounds good, but in our industry?First, many retailers wouldn't know which buyer should buy it or in which department it should be displayed. Second, that company, with its truly unique product would have to create a demand on the consumer and retail levels -- all by itself. It reminded me of Patty Nimmocks, the founder of modern decoupage (one of the industry's first megatrends which put our industry on the business map). She sold her company and retired, then years later returned with a brand new product line and concept. About six months later she admitted things weren't going very well. "I think I need to be ripped off by a few people," she said. Huh? "I can't push this concept by myself," she explained. "I need a few companies to rip me off and push it with me. I have no problem fighting for market share; I just can't do this on my own." With all the worry and complaints about ripoffs, perhaps occasionally they're not so bad.
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HIA SHOW REPORTIt was another very successful show. Most exhibitors were pleased (at least) and exuded a quiet confidence for the coming year, despite various problems with customers, the economy, the low unemployment rate, copyright problems, product ripoffs, etc. No earthshaking new trends, either, but none were expected by buyers. Everybody seemed to recognize the problems and challenges, but felt they would make it through another year -- and maybe even prosper!Booth numbers were up slightly, but the number of exhibitors was down -- a sign of industry consolidation. The buyer count was about the same, so the traffic "felt" slower. SHOW FLOOR BUZZ. Numerous vendors vented about problems with Jo-Ann's new computer system, but felt confident the company will work out the bugs without suffering disastrous financial consequences ... Chains (other than Michaels) weren't the only retailers who had a tough Christmas; many independents said they did, too ... Some concerns about Frank's, which is expected to make a major announcement today ... It appeared that we're at the beginning of a era in which vendors will pay more attention to independents. CATEGORIES. Yarn of all types -- basic acrylics, higher-end woolens, mixtures, etc. ... Products for kids and preteens ("tweens") ... Jewelry ... Beads for jewelry and home dec ... Soap and candle-making continue strong ... Seemed to be a big increase in the vendors offering readymade items; many were from the gift industry. Prediction: watch for dollmaking to return strong by the end of 2001, and for rug-making (hooking and latch hook) to increase. DESIGN. If it's possible to generalize about so many products, we'd say the designs appeared to be a bit more sophisticated and upscale; there seemed to be more glitz and brighter colors, too .... It looks like it will be another "Rolex" Christmas -- gold, silver, shiny. IRONY. Large retailers want to reduce the number of vendors they deal with, but then worry when one vendor becomes too dominant in a department. MARKET TRENDS. It is getting more difficult to get new lines in stores, so some vendors are expanding by looking to other industries and buying companies that already have products on store shelves ... One long-time, major manufacturer was so concerned about his new products being ripped off, that he showed the "really" new products and prototypes at a hotel suite near the convention center. SCRAPBOOKING. The pie is still growing, although some feel there are now so many vendors that they'll divide the pie into too many pieces. CONSOLIDATION. Just like the HIA figures, ACCI reports that, compared to a year ago this time, the July show is up about 100 booths, but the number of exhibitors is down a bit. SECTIONS. Sectionalizing the show floor is becoming irrelevant. For example, a craft buyer needs to walk the entire floor, because so many companies are expanding into product lines far beyond their basic categories. End result? Buyers better walk the entire floor whether or not it's sectionalized. MISCELLANEOUS. Bond America was knitting afghans non-stop on a "mega-machine" (two machines bolted together) with yarn donated by Caron; results were donated to "Warm Up America" and "Kids in Need" ... Wang's expects to be out of Chapter 11 in six months; the strategy is to trim entire categories and focus on hot trends ... Herr's is putting more reps on the road again ... End of an era: VDI closed the Mangelsen warehouse in Omaha ... The number of make-it/take-its seems to decline each year. ATTENDANCE. Scrapbook exhibitors were very happy with the crowd; ribbon vendors were not. Comment from a very typical vendor: "The crowd seems down a little, but I saw everyone I needed to see, so I'm happy." No specific breakdowns of buyer categories were available yet, but there appeared to be fewer professional crafters; more international buyers, especially from Europe but possibly fewer from South America. EVENTS. The crowds at the keynote speech and CEO Roundtable were down significantly from a year ago ... The awards banquet drew a large crowd ... The (surviving) e-commerce execs seemed more humble this year. "We thought we needed to build a superhighway when all we needed was a two-lane road," said eHobbies' CEO Brad Sobel ... The "Independents Speak Out" panel discussion sponsored by CNA and Promotions Unlimited drew a large, appreciative crowd. (More on specifics from the events in our next issue.) TERMS. A vendor complained about chains' terms of 45 days ROG (receipt of goods). That's not a problem, but when the truck isn't unloaded for two weeks and the products moved into the warehouse, the terms become, in effect, 60 days. NEW PRODUCTS. Companies whose new products won Innovations awards for best new products, as voted by retailers: Can You Imagine That ... Duncan ... Ellison ... Fiskars ... NSI ... Oggi ... Oilcloth ... Pebeo ... Scrapbook Times ... TMA Yarns ... What's New ... Thermo-Web. All My Memories won the Buyers' Choice award. INDUSTRY RESEARCH. HIA's new research pegged the industry at slightly under $10 billion ("basically flat," said Michaels Michael Rouleau) and the number of consumers crafting in the past year had declined slightly ... A new study of independent retailers by CNA magazine pegged independents' sales at slightly over $3 billion. (The complete study will be published in this month's issue of CNA, which subscribers should receive this week.) ... The new study by the Craft Yarn Council of America says the number of consumers who know how to knit and crochet has increased almost 10% to 38 million. The number of women under 35 who know how to knit/crochet has risen 13% since 1998. Note: We'll report on these three studies in much more detail in our next issue. MEDIA. The first issue of Michaels Create! magazine was a big hit ... Vanna White did her usual charming, professional job hosting the Lion Brand Yarn fashion show ... TV star Christopher Lowell attracted a huge crowd at the Krause booth. He autographed copies of Krause's Arts & Crafts magazine ... The profile of the Sierra Pacific Crafts in the January issue of CNA seems to have sparked interest in retailers forming similar groups ... Plans are progressing nicely for filming new episodes of Aleene's Creative Living tv series, Duncan officials say. ELECTION. Mike Catan (Darice), Dee Gruenig (Posh Impressions), and Michael Rouleau (Michaels) were re-elected to the Board of Directors. Sandra Cashman (Fiskars) and Ted Hessman (Herrschners) were elected to three-year terms for the first time ... Elected to the nominating committee were independent retailer Sandi Wilmot (Books n Things), Donna Wilder, (Free Spirit), and Mike Hartnett (Creative Leisure News). AWARDS. Jim Scatena of Floracraft won the Meritorious Service award ... The President's Awards went to tv star Carol Duval and posthumously to Wally Raley, founder of Delta ... Retired retailer Pete Hickman received the Lifetime Member award, as did Edna and (now deceased) John Clapper, who founded Pack O Fun magazine in their basement 50 years ago (Edna was the star of the banquet!) ... Craftrends' Editor Bill Garner received a Special Recognition award for spearheading the annual Creating for Life auction at the ACCI show. DATES. Future HIA shows: 2002: Jan. 27-30, Anaheim ... 2003: Jan. 26-29, Anaheim ... 2004: Feb. 5-8, Dallas .... 2005: Feb. 11-14, Atlanta.
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JANUARY SHOWS: MIXED RESULTSTNNA. Exhibitors report the show was excellent. There were 495+ booths and 1,000+ buyers -- including some NEW needlework shops. The mood was upbeat and positive. Design-watchers said they saw a small trend toward more modern, less traditional designs ... The next TNNA show is April 1-2 in Philadelphia. Call 740-455-6773, email tnna.info@offinger.com, or log onto www.tnna.org.Housewares. "Even an appearance by Martha Stewart, the maven of housewares, was not enough to pump up this crowd," the Chicago Tribune reported. "Exhibitors and retail buyers ... are wary about the prospects for their industry in 2001 after coming off a miserable holiday shopping season." According to craft observers at the show, however, there is an increasing number of our manufacturers crossing over into the housewares industry. Frankfurt. Mixed reviews. One attendee said it was excellent; another said it was poor. Holiday Expo. Slow. The buyers who were there seemed pleased with what they saw, but a number of vendors were unhappy with the traffic.
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WHILE YOU WERE GONE....In case you didn't read the newspapers while away at this month's trade shows: Numerous companies announced tens of thousands of layoffs. ShopKo, for example, is laying off 2,500 and closing 23 stores ... The Federal Reserve Board cut interest rates another half a percentage point and implied more cuts were on the horizon ... Alan Greenspan testified to Congress that he was not against tax cuts, but didn't say if he approved the extensive cuts President Bush is supposed to send to Congress this week.
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SPENCER TAKES OVER FOR FINE AT MICHAELSIt's confirmed -- Michaels' VP of Merchandising Larry Fine has resigned, but will stay on with the company until May 1. We talked to Larry at the HIA show; essentially he was/is tired and ready for a new challenge.Taking over as Executive VP of Merchandising is Bob Spencer, who had served as VP of the Northeast Zone for Michaels for the past three years. Prior to that, Spencer had been Executive VP/COO of A.C. Moore and President of McCrory Stores. Spencer also spent six years with Target. Our best wishes to Larry, who had earned the respect of the vendor community.
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CRAFTOPIA SOLD TO HOME SHOPPING NETWORKAs we reported in our last issue, the operating assets of Craftopia.com, one of the few survivors in the craft e-commerce world, were sold to the Home Shopping Network."The acquisition will provide HSN turnkey entr‚e into the multi-million dollar arts and crafts industry," a press release claimed. HSN CEO/President Mark Bozek added, "We look forward to leveraging our powerful multiple retail channels to bring this strong content to millions of consumers who have a passion for crafts and home decorating.'' Craftopia.com was recently named a "Top Service Store'' by Yahoo!. HSN and HSN.com are a division of USA Networks's Electronic Retailing unit. USA Network is publicly traded on NASDAQ under the symbol USAI. HSN reaches more than 143 million households worldwide via broadcast, cable, and satellite. In 1999 the company launched HSN.com, which integrates content, community, and commerce with HSN tv programming. In 1999, the company generated $1.2 billion in sales, received more than 68 million sales and customer service calls, shipped more than 34 million packages, and currently services a growing customer base of more than 5 million. Watch for the first big craft show on HSN next month. For the immediate future, the Craftopia offices will remain in West Chester, PA.
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ADVICE ON ACQUIRING A COMPANYNext month CNA will publish an interview with Frank Stapleton, President of MacPherson's-Artcraft, and in it Frank offered suggestions on what to do when buying a company. (MacPhersons merged with Artcraft last year, making MacPherson's-Artcraft the largest art materials distributor in the country.)1. Don't assume you can run the new company better or more profitably than did the previous owners. 2. Make conservative projections of what you can accomplish -- and then scale them back. Don't get trapped by selling the deal so aggressively to your bank that you have no margin for error when the inevitable surprises occur. 3. Use all the resources, especially human resources, that helped make the acquired company successful. Plan to spend more time than you thought necessary to blend the cultures. 4. Don't tell the employees of the acquired company, "Don't worry. Nothing will change now that we're here." You will have trapped yourself and lost your credibility in that brief, reassuring instant.
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REQUEST FOR INPUTIn order to give you an unbiased, comprehensive analysis of HIA, TNNA, Holiday Expo, Housewares, and other recent shows, I need your help. Please call or email me (309-925-5593; mike@clnonline.com) and let me know which shows you attended or exhibited at, and your evaluation: good show, bad show, the mood of the exhibitors and/or buyers, etc. I'll share your thoughts with my subscribers in my next issue -- using your name or not, whichever you prefer.RANDOM NOTES, RANDOM THOUGHTS1. I think some of this Internet hoopla is a little nuts: one of the new products at the Housewares show was a $10,000 refrigerator that, yes, is connected to the Internet.2. Received an interesting note from Judy Westegaard, one of the industry's best decorative painters, who'd read my profile of the Sierra Pacific Crafts group in the January issue of CNA. Her husband works for a business management firm that puts together "dealer 20" groups of retailers in the farm, marine, and rv industries. These are independent retailers in non-competitive locations who do many of the same things as the SPC group does. I would love to see more independent retailers form such groups. 3. If you want to see a charming, wonderful example of the effect a shopowner can have on a small village, go see the movie, Chocolat.
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MISCELLANEOUS NEWSFINANCES. Ames signed a commitment for $800 million of senior secured financing from GE Capital. This three-year facility replaces the company's existing $650 million facility. The terms of the new facility "will significantly increase availability and strengthen the company's cash flow and financial flexibility," a spokesperson said. Ames' stock has risen sharply since the announcement. It also assuaged the fears of some HIA exhibitors. "This should keep them going for at least another year," a vendor told us ... After the announcement, Moody's Investors Service confirmed the debt ratings of Ames "remain stable. The new facility provides an additional liquidity cushion to help Ames withstand a less robust economic environment and vagaries of weather and competition."ELECTION. Elected to the ACCI Board of Directors: Independent retailer Emma Gebo, Crafts & Frames. (Emma is also President of Sierra Pacific Crafts) ... Steve Graham, Toner Plastics ... Marla O'Dell, Syndicate Sales ... Lisa Oscarson, Jo-Ann's ... Jim Scatena, Floracraft. The terms last through 2003. PEOPLE. Rossana Gelpi-Houck is Key Accounts Manager at DMC where she will be responsible for managing and developing the DMC business with distributors and retail accounts ... DMC also promoted Shamara McNeil to Key Account Executive ... Joseph Galli, formerly of Amazon.com and Black & Decker, is President/CEO of Newell, the parent of Grumbacher and Sanford ... Susan Kocsis is Sales & Marketing VP for Search Press USA ... Todd Balcha is Marketing Manager for NAMTA ... Our very best wishes to Richard Kennepaske, who has left Delta as Marketing VP. Ginny Fulton was promoted to the position. RAG SHOPS. For the first quarter ended December 2nd, net sales rose 6.6% to $30.05 million and net income increased 8.8% to $1.2 million. Net income/share rose three cents to 27 cents. Officials said the improvement reflects higher sales for stores open at least one year, the ability to leverage operating expenses against higher sales, and the favorable shift in accounting. STOCK. Lazard Freres initiated coverage of Wal-Mart at Outperform ... Goldman Sachs upgraded Wal-Mart to Outperform from Neutral ... Bear Stearns reiterated coverage of Wal-Mart at Buy ... Ladenburg Thalmann reiterated coverage of Ames at Near-Term Hold/Long-Term Buy. WANTS TO SELL. Small company with great potential. Product appeals to craft, kitchen, soap companies, and premiums. Great opportunity for an existing company to acquire a new line. Very reasonable purchase price. For more information, in complete confidence, call Mike Hartnett at 309-925-5593 or email mike@clnonline.com. RESEARCH. A study by Wiese Research reported Christmas shoppers were looking for product first and price second, but 45% of the respondents said they were not impressed by any store and 42% spent money in a different store this year -- because of better selection. AWARDS. Dr. Toy is seeking submissions for this year's awards programs: The Best Classic Toys, Best Vacation Products, and the 100 Best Children's Products. Go to drtoys.com and click on "for companies only" for info. CROCHET. The Bead & Button show May 18-20 in Milwaukee will include a crochet pavilion sponsored by the Crochet Guild of America. There will be 90+ hours of bead crochet classes, too. For exhibit info, call 740-452-4541 or email crochethorizons@offinger.com. VIRUS. We were tricked recently when we received a warning about a new computer virus that would supposedly ruin your hard drive. Turns out the warning was a hoax. If you receive a virus warning from a well meaning friend and want to check its veracity, go to http://vil.mcafee.com/dispVirus.asp?virus_k=98893&. CHAPTER 11. HomePlace of America filed for bankruptcy and will close 38 stores and lay off about 1,500 employees. It has secured $150 million in debtor-in-possession financing ... Waccamaw Pottery has filed, too. SOFTWARE. Ames will use Spotlight Solutions's Markdown Optimizer, a software solution that claims to help increase sales, margins, and clear merchandise more effectively. The software applies mathematical algorithms to sales, inventory, and other operating data to help retailers optimize, manage, and automate markdowns. TV. Mel and Margo Fraisl's More Than Memories scrapbook stores and website were highlighted on a news segment of the CBS Chicago tv station. (Their e-commerce site is more-than-memories.com.) ROLODEX. MacPherson's-Artcraft has a new toll-free number that connects to the "Drop Ship Coordinator": 866-275-1245. MAGAZINES. Very positive article on quilting in the January issue of Country Living. AWARDS. Sandi Genovese, Sr. VP/Creative Director for Ellison Craft & Design, won Creating Keepsakes' 2001 Outstanding Achievement Award, given annually to an individual who has made an outstanding contribution to the scrapbook industry and community. SIERRA. Creative Crafts & Framing of Sheboygan, Wisconsin is the newest member of the Sierra Pacific Crafts group. LAWSUIT. Approximately 150 independent video store owners are suing Blockbuster, claiming the chain is trying to drive independents out of business by monopolizing the video-rental market and that Blockbuster has "substantial market power and influence" with the industry's suppliers, Hollywood studios. (Independents suing chains because they have power over the vendors? Hmmmm.) LICENSES. Bond America/CC Product's Tassel Master line will be manufactured and distributed exclusively by Darice under license from Bond, and its Multi's Embellishment Yarn will be manufactured and distributed exclusively by YLI under license from Bond. CONDOLENCES. Our best wishes to the family of Jane Cannon Meyers, who worked for ASN Publishing and, before that, Crafts magazine. A wonderful lady who will be missed.
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INTERNET & E-COMMERCE NEWSMICHAELS.COM. The increase in product selection is continuing. More than 10,000 art supplies have been added, including paints, brushes, mediums, and finishes ... Access magazine named the site to its "A list" for 2000 for offering "quality ideas from a quality source".SOLD. Walmart.com acquired the online assets of defunct Garden.com, but Garden's domain name and customer lists were sold to Burpee Holding. INDEPENDENTS. Dick Broecker who, with his wife, Erica operates Erica's, the outstanding sewing-craft store in South Bend, Indiana called to say their e-commerce site, Ericas.com, is doing very well, with huge increases over a year ago. MAGAZINES. Primedia, the corporate parent of Crafts, Craftrends, and other industry-related magazines, purchased About.com a few months ago. About is one of the largest Internet search engines and also includes extensive craft areas. Watch for greater synergy between the magazines and the site in the near future. Primedia is a public company (PRM), but its craft industry-related magazines comprise only a small fraction of its holdings. In last week's report for the fourth quarter ended December 31st, Primedia lost $1.62/share, compared to 45 cents/share a year ago, but it took extensive writeoffs and charges. CONSUMERS. Want to learn what quilters are thinking and doing? Log onto National Online Quilters at www.noqers.org. SITES. Martin/F. Weber has a new site at WeberArt.com which includes the complete catalog, price list, where-to-buy and technical info, newsletters, etc. LAYOFFS. Amazon, the dot.com king, is closing two operations centers and laying off 1,300 employees, after announcing its fourth-quarter losses were $545 million, compared to $323 million a year ago. The current losses include charges of $339 million in write-offs for investments in and acquisitions of Internet companies.
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THE CREATIVE NETWORK: JOB OPENINGSThe Creative Network is the only personnel recruitment firm specializing in our industry. Click on "Jobs" in the lefthand column for the latest job openings and featured jobs of the month.
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THE CLN RETAIL INDEXA. C. Moore (ACMR). Last*: 8 3/4 ... Change**: +1/4Ames (AMES). Last*: 5 7/8 ... Change**: +3 Hancock Fabrics (HKF). Last*: 4 5/32 ... Change**: - 3/32 Jo-Ann Stores (JAS.A) [a]. Last*: 5 3/4 ... Change**: -1/4 Michaels (MIKE). Last*: 39 ... Change**: +4 1/2 Rag Shops (RAGS). Last*: 2 21/32 ... Change**:+9/16 Wal-Mart (WMT). Last*: 54 3/4 ... Change**: +1 13/16 CLN Retail Index. Last*: 121.25 ... Change**: +8.9% Dow Jones Index. Last*: 10,864.10 ... Change**: +3.2% *Feb. 2 ** from Jan. 15 [a] voting share Note: Prices are exclusive of dividends
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WHY WE LOVE THIS INDUSTRYTwo stories from the HIA show:1. CNA's Karen Ancona overheard two men on the escalator raving about how friendly our industry was. She checked their badges and learned they were from the hardware industry. 2. Dick and Dee Scuderi, the owners of Walnut Hill, which was destroyed in a fire, told us that while they were watching the fire in the cold January air, they couldn't leave. Meanwhile the water from the fire hoses was flowing all around them. One of their manufacturer reps, who lives nearby and has repped the company with his father for 30 years, came to the fire. He saw that Dick and Dee were cold and wet, but refused to leave while the fire was still burning. So he went and bought coats and boots and brought them to the heartbroken owners. I won't mention his name; he might be embarrassed by this because he thinks he didn't do anything special. But it's people like him and acts like this that make us want to stay in this industry.
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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, February 19th.
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