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Creative Leisure News
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Date:
February 4, 2002 TABLE OF CONTENTSCOMMENTARY: HIGHLIGHT OF THE HIA SHOWEvery year at the HIA show, something happens to remind me why I love this industry. This year it was the gathering of friends of the late Ken Griffen. Ken was a field manager for the old Ben Franklin, then ran a number of stores in Florida which failed when the old Ben died. But Ken bounced back, and was running another store in Florida when he was diagnosed with cancer. After a long, tough battle, he succumbed, leaving his wife and two daughters.One problem with this industry is we're all so far away from each other that it's difficult or impossible to gather together for non-business reasons. Friends of Ken felt the same way, so they rented space at the Anaheim Marriott, and we all came together to tell stories about him and raise our glasses to our gone-but-not-forgotten friend. Ken's family flew from Florida for the occasion, so his two girls could hear how much his friends cared for their dad. September 11th taught us there are many things more important than business. Ken's friends know that; let's hope we all do.
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HIA SHOW REPORTATTENDANCE. Final numbers are not yet available, but the figures after the first two days showed a decrease of about 6%, mostly from the international sector. We heard the Hobby Industry of Japan usually organizes groups to attend HIA, but didn't this year, afraid of liability in case there were more terrorist attacks. Considering Sept. 11 occurred only 4+ months ago, the attendance could have been much smaller.CATEGORY TRENDS. There was nothing radically new. The categories we cited in our previous issue as strong for 2002 (click on the "CLN Archives" button, then on the Jan. 21 issue) were indeed strong at the show. Memory, paper, jewelry, yarn, etc. And yes, fabric painting is rebounding. PRODUCTS. Most "new" products were line extensions, and many vendors were showing how their products could be applied to a wider variety of categories. PRODUCT AWARDS. Buyers Choice award went to Martin/F. Weber ... Innovations awards were won by Adhesive Technologies, Copic Maker, Creative Impressions, Far & Away, Greg Markim, IKoso Kits, K1C2, Lake City Crafts, Preservation Technologies, Printworks, Uniek, and Xyron. All of these awards were at the Innovations (new product) display near the buyer registration area and were voted upon by the retailers. MOOD. Chains and independents alike were upbeat. Most had a good fall and cleared out their seasonal merchandise effectively, so their inventory and cash flow were in good shape. As is true with every show, when buyers arrive in a good mood, soon the vendors are in a good mood, too. VENDORS. "Most seemed cautiously optimistic about the year," said CNA's editor, Karen Ancona, "and nothing much occurred at the show to change that opinion." INDEPENDENTS. There is a growing fear among vendors that they have too many eggs in the chain-store basket, and mounting resentment about the chains' increasing demands. (At a recent "partnership" meeting, one chain asked a vendor for well over $100,000.) The result is vendors taking a second look at independents; some are developing programs specifically for independents, usually in the form of better services, or customizing assortments for individual stores. We'll report on these programs as the details are determined and released. DESIGNS. There was something for everyone's tastes, but it appeared there were more upscale, Martha-Stewart-level projects than ever before. It's ironic in light of Sept. 11, but there appeared to be less Americana and more international designs -- from the Asia, Africa, even Ireland. More metallic effects, too. READYMADES. There were so many at the show that gift retailers would probably have found it very productive. The low-cost, already-painted items are probably hurting professional crafters, too, because they can't take a raw item, paint it, and sell it profitably for less than the readymade. Those painted readymades may also be hurting decorative painting. PIONEERS. One of the true industry pioneers and a real queen of the industry, Hazel Pearson, walked the show. Hazel Pearson Handicrafts was one of the first genuine success stories in the fledgling industry in the 1960's. Hazel is 88 now, and needed a walker to see the show, but she liked what she saw -- and we loved seeing her ... Grace Herr has a new book, Pedestals, published by Grace Publications. Grace and her husband, Doug, founded Herr's in the 1970's. MONEY. HIA announced that a portion of its investments may be in danger, due to the purchase of investment products from a company now being investigated by the Securities and Exchange Commission. HIA has used the same company for its CD investments since 1994 and many CD's have matured during that time. Every one was paid off on time and in full, up to the time that the SEC froze the company's accounts. HIA also has adequate operating funds and, if necessary, a line of credit to easily fund ongoing operations. HIA BOARD. The board of directors elected Jane Anne Davis (Duncan) and Richard Brown (Spinrite) to fill vacated positions on the board. Richard is the first Canadian to serve on the board ... Elected to regular three-year terms are Mike McCooey (Plaid), Steve Stringer (Hobby Lobby), and Jane Marski (Hanna's Home Accents) ... Reelected to another three-year term are Jim Bremer (Tall Mouse) and Andrew Carter (AMACO) ... The general membership elected Howard Hoffman (Toner Plastics), Sandy Wilmot (Books N Things), and Maureen Ruth (Meredith) to the Nominating Committee. SCHOOLS. Preliminary results from HIA-funded research on the effect of crafts on learning were extremely encouraging. Learning increases in direct proportion to the time in a lesson spent on crafts, and the more time devoted to craft projects, the more the learning carries over to other subjects. Final results will be reported soon and could be a public relations bonanza for the industry. DATES. Next year the show is Jan. 26-29 in Anaheim, then moves to Dallas in 2004, Atlanta in 2005, Las Vegas in 2006, and back to Anaheim in 2007.
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TALK ON THE SHOW FLOORMARKETS. Watch for both eBay and Amway to get much more involved in the industry. We hear Amway may form a division that competes with the Creative Memories home-party company.PRICING. I told one of our top independents about a vendor's plans for special services designed for independents. He was very dubious. Here's why: He carries the vendor's full line, selling each item slightly discounted for about $6. Three items in the line sold poorly. After a while, Costco started selling those three items packaged together for about $5. That hurt the independents' sales of all the vendor's items because the 3-for-$5 package destroyed the perceived value of even the strong sellers. "The vendor can give me all the services he wants, but if he destroys the perceived value of the line, those services don't mean much." DEALING WITH CHAINS. Lots of complaints about the chains' increasing demands on the vendors. But one exhibitor who has been successful with chains disagreed. "It's not the fool who asks the question. The buyers are supposed to ask; it's their job. If what they ask for would destroy your profits, even endanger your company, you have to tell them no." SELLING INDEPENDENTS. During the panel of independents sponsored by CNA and Promotions Unlimited, a question was asked about how a vendor could help them, or regain their interest in the vendor's products. The primary answer: "Don't lie to us." PROFITS. One individual who has seen the financials of a number of companies said he was amazed at the companies with strong sales but no profits. He cited one company (not by name) with sales over $10 million who had a net annual loss of $10,000. PROCRAFTERS. One of the industry's top designers and a procrafter said, "Professional crafting has gone way down because we've made it so hard on them by not selling to them, ignoring them at shows, and so on. The industry used to get a lot of creativity from mom-and-pop retailers, but that's gone. The void could be filled by professional crafters, if we'd let it happen by encouraging them instead of being so negative towards them." SHOWS. Word that two large exhibitors are dropping out of the July ACCI show has some vendors considering smaller booths, and a few are thinking of canceling. But one large exhibitor said, "I'd exhibit even if I didn't care about the independents. I can have good meetings with my chain buyers -- go over the first half of the year and tweak plans for the second half. Without the show, I'd have to make separate trips to each chain." INVENTORY. An ongoing problem with all the fancy checkout scanning equipment: when a customer brings six colors of floss or paint to the counter, the clerk often takes one bottle or skein, scans it, then punches "x 6" on the cash register. Now the computer tells the retailer -- and the manufacturer, via EDI -- that six bottles of one color were sold.
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SHOW COMMENTS ABOUT SCRAPBOOKING1. It will last far longer than any other industry trend because a) consumers take 9 billion photos a year; b) the products are so consumable; c) the need to connect with family is strong after Sept. 11; and d) there's no competition from readymades.2. As more and more consumers use digital cameras, the scrapbook category will be challenged to make it as easy as possible for the consumers to transfer their photos from the computer onto paper and into scrapbooks. Does that entail stores buying a high-end printer for their customers to use? Possibly even offering computer-scrapbook classes? (Hint: most community colleges and private technology training businesses have computer labs that can be rented for an evening to stores.) 3. Many traditional retailers may think (today or in the future) that interest has flattened; it could be some sales have been siphoned off by new scrapbook specialty stores. Another possibility is those who have gotten into scrapbooking have already purchased most of the tools and higher-ticket items they need.
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WHY NEW PRODUCT INTROS ARE DECLINING...If it seemed to you that there were fewer new products at HIA, here's why:1. Many companies, frustrated by how difficult it is to get new products on the shelves of the major retailers, are looking to grow by acquiring companies that already have shelf space. 2. Worry about rip-offs -- one exhibitor had four major new lines that were shown in a nearby hotel suite rather than at the booth. 3. Vendors' margins are decreasing, which results in less money for new product development. 4. Until recently about half the products unveiled at HIA were prototypes. If the exhibitor didn't receive a strong response from buyers, the products were scrapped. Now many prototypes are shown to the chains before the show. If the chains don't order, the prototypes are canceled on the spot and never brought to the show. (Note: Years ago I walked a show with one of the industry's savviest retailers. When we finished, we commented that there weren't many new lines. "That's ok," he said. "I don't need new products as much as I need new ways to sell what I already have in my store."
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... AND ACQUISITIONS ARE INCREASINGThe Janlynn acquisition of the Leisure Arts' kit division is only the beginning of many more such acquisitions that will occur in 2002. Numerous "name" companies (vendor and retail) are in negotiation to buy or sell. Note: Many of the deals are virtually completed, but because some deals go awry at the last minute, we won't report them until they are truly finished. Yogi Berra was right: "It ain't over til it's over."1. Many vendors believe buying a company is a lesser gamble than developing new products. 2. Chains are encouraging key vendors to make acquisitions, so the chains can reduce the number of vendors from whom they order. 3. Low interest rates make it easier to finance a deal.
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FAITH POPCORN LOVES US"If I had to be in a business other than trend forecasting, it would be your industry," futurist and trend forecaster Faith Popcorn told the keynote audience at the HIA show. The author of EVEolution: Marketing To Women and the originator of the "cocooning" concept believes crafts is in the perfect position to take advantage of the current trends in society. Some key thoughts:1. "Connecting your female customers to each other connects them to your brand." Help your customer become a member of a group. For retailers that means forming customer clubs for quilting, sewing, painting, etc., and offering classes and family crafting days. For vendors it could mean chat rooms and bulletin boards on the website. 2. "Anchoring -- spirituality is here to stay." She suggested combining quilting and Zen in a class or group. (That sounded silly until a retailer told me he changed his traditional knitting classes, which usually attracted about three 55 year-olds, to a knitting-yoga class, which fills up every time with 20- and 30-year olds.) Other suggestions included a Bible craft class for kids, participating in the Warm Up America program, and more spiritual designs for manufacturers. 3. "Future Tense" -- anxiety caused by world and local events -- is Popcorn's explanation for why scrapbooking is so popular. It's "a reminder of less anxious times." 4. "If you market to one of her lives, you're missing all the others." Crafters aren't just crafters; they're mothers, workers, etc. The possibilities for retailers would include in-store child care, lunchtime classes for working women, and projects for classy jewelry for business suits. 5. "If she has to ask, it's too late." Anticipate consumer needs by reading the chat rooms and bulletin boards on various craft-related sites. 6. "Market to her peripheral vision." Help paint murals around town, donate supplies to civic projects, perhaps decorate Christmas trees at the local bank or city hall. 7. "This generation of women will create the next generation." That means working with schools, classes for kids, and craft birthday parties. 8. Other thoughts: Sept. 11 created a permanent, not temporary, change in our lives and society ... "Warning: Objects in the future are closer than they appear."
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RANDOM NOTES, RANDOM THOUGHTS1. In a previous issue, I mentioned that Stan Brown of Stan Brown's Arts & Crafts would be attending his 40th consecutive HIA show, and I wondered if anyone could beat that record. Well, Dick Thompson, the veteran sales rep in the Northwest, has attended every show since 1957, and distributor Don Lumadue (Hobby Crafts) has been to every show since 1958. (Note: Don is a poet who has given readings all over the country. To read his work, go to http://poetpoet.diaryland.com.)2. Mike McCooey of Plaid once said, "A good year is only one good idea away," and I saw an example of that at the show. Blumenthal/Lansing's new line, Favorite Findings, was such a hit that Gerry Rogers is already convinced the company will have a good year. 3. I co-moderated the panel of independent retailers sponsored by CNA and Promotions Unlimited, and was struck again by how savvy our remaining independents are. If they've survived the discount and craft chains, they'll be around a long time. Any vendor who ignores independents as they pursue our handful of chains is dangerously shortsighted -- or stupid.
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MISCELLANEOUS NEWSWAL-MART. Reported excellent January sales in exercise and diet products, and "stay-at-home" items such as fabric, sewing machines, candles, and scrapbooking supplies, according to Reuters. "We saw a double-digit increase in sales of scrapbook-making materials, such as fabric, different colors of pages, and graphics, in the first two weeks of January," a Wal-Mart spokeswoman told the news service.NEW PRODUCTS. (New HIA-product info sent to us too late for our last issue.) Stencil Ease featured 25+ new patterns, including a 9-pattern "Under the Sea" mural from Jeannie Serpa. There were also new Home Decor Series, European Classic Collection, and Stencils by the Yard Collection patterns ... MagEyes offers MagEyes PLUS, with a Double Lo or Double Hi lens and a 5x loupe attached that switches easily to either eye, and HatEyes magnifiers with lenses that flip up under the hat brim when not in use ... Sakura of America offers Gelly Roll Moonlight and Gelly Roll Dark Stardust gel ink pens. Moonlight has 10 ultra-bright and pastel colors which are luminous in the daylight, with the five ultra-bright colors glowing under black light ... Dark Stardust is available in 12 glittering colors and writes on vellum without bleeding through. CRAFT MONTH. Promotional materials, plans, and strategies for celebrating March as National Craft Month are available to HIA members at the website: www.hobby.org. PEOPLE. Erik Mandelberg has joined the sales force of Lion Brand Yarn. He will work with key accounts and marketing/product development ... Former Jo-Ann's Sr. VP Bruce Schwallie is now Sr. VP for Longs Drug Stores ... We've heard but couldn't confirm by our deadline that popular industry veteran Gwen Edwards is now a floral buyer for Michaels. MAGAZINES. Two new consumers magazines: Simply Scrapbooks, published by Primedia, and Crochet, published by the Dynamic Resource Group. Both are bi-monthly and have websites: www.simplescrapbooksmag.com and www.crochetmagazine.com ... Craft Home & Style has apparently ceased publication, at least temporarily. LAWSUIT. Michaels announced its subsidiary, Aaron Brothers, has settled a lawsuit in California regarding overtime pay for store managers, assistant managers, and managers in training. No terms were disclosed, but the company is taking a $5 million pre-tax charge against earnings in its fourth-quarter report, to be released this Thursday. SHOWS. Watch for announcements from Promotions Unlimited about its July show. The dates are being adjusted and arrangements are being made so attendees will be transported free to the ACCI show. That way, retailers can hit two shows with one trip. REYNOLDS. Ed Robertson is the new Business Team Manager for the Bright Ideas division of Reynolds Consumer Products. Lynda Musante continues as Manager of Arts and Crafts Marketing and Development. Bill Shugarts has joined the company's Logistics group, with responsibility for coordinating overseas sourcing and development. RUMOR. The Grace Publications of our industry has not been sold; a religious publisher was sold, and some people mistook it for the Grace Publications we know. SOFTWARE. Fibre-Craft has purchased demand-and-supply-chain software from MerciaLincs, an Atlanta-based software company. It will be used for demand forecasting, strategic inventory planning, requirements planning, and sales and operations planning. CLOSING. Toys R Us is closing 64 stores. QUILTS. Kathy Lamancusa's new book, Quilts Are Forever, should be arriving in bookstores late this week. It has contributions from a number of well-known industry people. QUOTATION. "In times of crisis and stress, people draw more into the home. It's not only Wal-Mart, but almost every store that's strong in the home category is doing well." -- Kurt Barnard, President of Barnard's Retail Trend Report (Reuters) KMART. Said it will announce store closings next month. The number of stores to close is expected to be in the hundreds ... Reuters reported Kmart's 240,000 employees had about 14% of the pension money in company stock ... The company received an anonymous letter, possibly from disgruntled employees, accusing the discounter of irregular or misleading accounting practices. Kmart asked the SEC to investigate and said it has launched an internal investigation ... The company predicts it will emerge from bankruptcy in 2003, and wants to continue selling Martha Stewart lines. BROTHER. The Brother Home Appliance Division won the conglomerate's President's Award for strong sales/profit growth with its home sewing and embroidery technology products ... Brother is starting commercials on the Home and Garden TV network for its new Disney "Home Collection" embroidery machines ... Retired stockbroker Tina Feakes won 1st place at the Machine Embroidery Enthusiasts convention for digitizing artwork into fashion by using Brother's PE-Design software. QUOTATION. Lanny Davis, former attorney for HIA and later an advisor to President Clinton, on advice he'd give the Bush administration regarding its dealings with Enron: "Tell it early. Tell it all. Tell it yourself." (Chicago Tribune) CONDOLENCES. Roy Morgan, 50, VP of Purchasing for Dee's Delights, died suddenly on Jan. 21. Roy had worked at Dee's, a Cincinnati-based miniatures and dollhouse distributor, for 25 years. Memorials may be sent to the National Assn. Of Miniature Enthusiasts, P.O. Box 69, Carmel, IN 46032. MEDIA. The Chicago Tribune is the latest major media outlet to describe how craft retailing is booming these days -- citing Jo-Ann's as an example.
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THE CREATIVE NETWORK: JOB OPENINGSTo see a sampling of the current job openings and to contact The Creative Network, click on the "Jobs" button in the left hand column.
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THE CLN RETAIL INDEXA. C. Moore (ACMR). Last*: 27.60 ... Change**: -2.28Ames (AMES). Last*: 0/24 ... Change**: +0.12 Hancock Fabrics (HKF). Last*: 14.75 ... Change**: +0.30 Jo-Ann Stores (JAS.A) [a]. Last*: 11.10 ... Change**: +1.45 Michaels (MIK). Last*: 34.78 ... Change**: +3.10 Rag Shops (RAGS). Last*: 3.15 ... Change**: -0.50 Wal-Mart (WMT). Last*: 59.26 ... Change**: +2.91 CLN Retail Index. Last*: 150.88 ... Change**: +4.0% Dow Jones Index. Last*: 9,907.26 ... Change**: +1.4% *February 1 ** from January 21 [a] voting share Prices are exclusive of dividends
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THE UGLY HALL OF FAMEA number of industry veterans at the HIA show started comparing notes on the ugliest projects we've ever seen in the industry. Here are a few nominees:1. A "Craft Fur Duck." Two plastic foam balls glued together, then glue on yellow fake fur and a plastic duck face. (Yes, the industry once sold plastic duck faces.) 2. An outdoor scene created entirely by gluing pistachio nut shells to velvet. 3. A macrame bikini. 4. A huge wall clock made of plastic foam cups. 5. A macrame wedding cake. Nominations are still being accepted. Email your nominations to me or call 309-925-5593. Please, don't send pictures!
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REMINDERS1. Paid subscribers are invited to have their website evaluated by Lynn Carlisle of Carlisle Communications. She'll check the site and provide a confidential assessment and suggestions for improvement. Just email mike@clnonline.com or ljc@carlislecommunications.com.2. If you want a hard-copy of this issue, click on "Printer Friendly version". 3. If your company is a paid subscriber, everyone in the main office is welcome to register, free. 4. If you want to recommend CLN to a friend, use the "Tell Your Friends" box on the home page. 5. Creative Leisure News is published on the first and third Mondays of each month. Your next issue will be Monday, February 18th.
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