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Creative Leisure News
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Date:
April 1, 2002 TABLE OF CONTENTSNEW CLN STUDY: SIZE OF INDUSTRY HITS $200 BILLIONIndustry sales have hit the $200 billion mark, according to a new study released today by Creative Leisure News. In commenting on the results, Publisher Mike Hartnett said, "While the results are substantially higher than the recent HIA study figure of $25+ billion, I've been assured by the research company, Jeffrey Skilling & Co., that these figures are accurate. Skilling's experience at Enron tells me he has extensive expertise in dealing with big numbers."A copy of the study is available at the website of Arthur Anderson & Co.
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BETTY FORD CENTER OPENS SCRAPBOOK WINGThe world's most famous addiction treatment center has just opened a new wing to deal with the growing number of people "hooked" on scrapbooking."This is a very widespread problem," said Executive Director Mike Dupey. "It affects people of all ages and can hit entire families." Symptoms of the illness include carrying scissors at all times; mumbling "Stickers, I need stickers"; and constantly taking photographs of everyone, including strangers. The Center has developed a 12-step treatment program which they will publish in a scrapbook in the near future.
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HIA, ACCI, HSA, NAMTA, TNNA, INRG MERGEThe Hobby Industry Association, the Association of Crafts & Creative Industries, the Home Sewing Association, the National Art Materials Trade Association, The National Needlework Association, and the International Needlework Retailers Guild have agreed to merge and sponsor just one mega-show next year.The new organization will be conveniently known as the International Hobby Home Sewing Craft Art Materials and Needlework Trade Association, or IHHSCAMNTA. CLN has also learned that the new mega-show will be the setting for a new Survivor television series. Each hour vendors will vote to expel one buyer until only one buyer remains.
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IF YOU HAVEN'T FIGURED IT OUT -- APRIL FOOLS! COMMENTARY: WATCHING COSTSBased on our retailer reports on the first quarter (see below), it looks like 2002 will be a good, strong year, without many surprises. That being the case, companies of all types need to be aware of creeping inflation so that the year's profits aren't nibbled away by one factor or another.The post office is raising rates this summer, and gasoline prices are up (on average, about 14 cents/gallon in the past month). As travel returns to normal, hotels and airlines will stop discounting hotel rooms and plane tickets. Health insurance continues to skyrocket. Meanwhile, the Fed may start raising interest rates instead of lowering them. Don't expect to pass along price increases to your customers, whether they're retailers or consumers. Instead, look at your own operation; how can you make it more efficient, less costly to operate?
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MICHAELS OPENS SMALLER PROTOTYPELast month Michaels opened Village Crafts, a new, smaller store in Prescott, Arizona. CEO Michael Rouleau told CLN that Michaels will probably open "a couple" of additional Village stores this year as a test, and decide around the end of the year whether or not to go forward with the concept. If the 10-12,000 sq. ft. store is successful, the concept will be rolled out in areas with populations too small to support a traditional Michaels store.If these stores are profitable, they could eventually become significant competition for the independent retailers in smaller population areas. The metropolitan Prescott area has about 50,000 people. The array of product categories is similar to a traditional Michaels (including custom framing), but the assortments are narrower. For example, the store will not sell Christmas trees next fall. The stores will be supplied by the Michaels warehouses, so vendors will not have to do anything different to supply the Village stores. Why open a smaller store? "There's a limit to how much Michaels can grow with its regular stores," one vendor surmised. "Probably 1,000 - 1,100 stores, tops, and maybe 700 Aaron Brothers stores. After that, where else can they go?" With the buying power of the industry's largest chain behind it, the odds are good that the store will be a success. However, there is a possibility that this story will unfold similar to a Wal-Mart entry into crafts. In the 1980's Wal-Mart opened three craft stores, Helen's Creative Crafts. They were named after founder Sam Walton's wife, Helen, an avid crafter. To our knowledge, the stores were successful by our industry's standards, but apparently one day Wal-Mart officials realized the return on their investment was greater opening more Wal-Marts, or even the supercenters that were in the planning stages, than opening more craft stores. The project was abandoned and the three stores were sold to Michaels. It's possible that in the next few years, Michaels' officials will decide there's more money to be made opening regular Michaels stores than expanding the Village Crafts concept. So if you're an independent retailer in a smaller population area, don't start worrying -- yet.
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ANOTHER GREAT QUARTER FOR (OUR) STOCKSOur industry's publicly held retailers and its second outstanding quarter in a row, vastly outperforming the Dow Industrial Average.Jo-Ann's was the top performer, gaining 127.3% since the first of the year. Rag Shops was next with a solid 44.1% gain in the past three months, followed by Hancock, up 38.2%, and A.C. Moore, up 31.6%. Michaels, whose stock split last November, increased 3.3% this past quarter. Wal-Mart rose 5.5%. These stocks comprise our "CLN Retail Index", which rose 22% for the quarter, while the Dow rose only 2.9%. Other retailers of interest: Martha Stewart, +6.1% ... ShopKo, +85.8% ... Target, +3.3% ... Duckwall-ALCO, +39.9% ... Right Start, +46.5%. (Note: all percentages are based only on the stock prices, exclusive of dividends.) The stocks of the industry's two magazine publishers went in opposite directions. Meredith, the corporate parent of Better Homes & Garden's Craft Division, rose 21.5%, while Primedia (Crafts, Craftrends, Creating Keepsakes, Sew News, and others) fell 25.2%.
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RETAILERS' COMMENTS ON THE FIRST QUARTER1. Larry Fine, President of A.C. Moore: "As you know, we just completed a successful secondary stock offering in which we raised over $52 million. However, the craft industry is still very misunderstood on Wall Street -- because most of the portfolio managers and analysts are certainly not the prototypical craft consumer. For them, it is not a glamourous business."September 11 helped bring some visibility to the craft and fabric chains -- which, of course is good for the industry. I think our entire sector continues to do well. "Some of the success is attributed to the overused term, cocooning, resulting from Sept.11. Also, weather throughout the entire country has been very mild this winter -- as witnessed in Jan. and Feb. sales releases. "The most encouraging notion coming out of a tragic event like Sept. 11 is the fact that the whole industry was introduced to many new customers. Now it is our job to keep them coming back." 2. Cindy Kemp, Ben Franklin store in Ojai, California: "Business here has been a little soft, but people seem to want a lot of coziness in their homes and get in touch with their art; maybe it's a California thing. Also, people are wanting the special attention and customer service with a kinder heart. Lots of good opportunities here." 3. Bob Ferguson, Ben Franklin store in Redmond, Washington: "Post 9/11 momentum has continued and even picked up steam. This is quite befuddling to us, as the local economy around Washington state is really in the toilet. We have over 8% unemployment, Boeing laying off thousands every month, all dot.comers gone except Amazon, salaries dropping throughout most industries, state finances in total chaos, all taxes rising beyond reason -- and still we grow. "The only thing I can attribute it to is superior merchandising! Ha! Wish it were so, but we are just one of many with the same or similar kind of experiences. "I really believe there is a huge movement towards a crafting revolution. People are so delighted to get away from the need to be like the rest of the world and spend, spend, spend to keep up, that I think we benefit from people's need to create and be unique without spending a trainload of $$$$$$. "We have seen a huge shift towards crafts again, especially crafting that leads to quality and unique results. "Yarn is hot, but not the stuff we sell for 99 cents. Beads of every kind, but especially glass and better quality and unique beads, are soaking up huge dollars. Quilting and fabric crafting of most every ilk are getting stronger every day, but no one cares about the cheap stuff. Seasonal, feel-good products like candles, aromatherapy goods, bright spring floral accessories, and flowers are selling well. Small but bright or light-subject prints are doing great; we may not be selling $1,500 Kinkade prints, but for every $14 print we sell a mat, frame, etc. Even complementary floral items or accessories -- marbles, glass, and grass -- are hot stuff. "We sell thousands of pieces of Lucky bamboo every month, and while living things have never been terribly profitable in a craft store, it is the accessories that are purchased that make the bamboo business enormously profitable. "I hear people say every day that crafts are dying. Well, we say hooray! The more others get out of the business, the more business we do. They may not be the traditional crafts of the 70's or 80's or even the 90's, but they are hot nonetheless. "Robert Wang once told me the craft business was DEAD! Finished goods is where all the business of the future lies. He and a lot of other people believed that and moved headlong into the finished goods business, only to wind up competing with thousands of other importers, wholesalers, and retailers who are in the same business. "The need to create will never die, and if we just continue to re-identify, on an ongoing basis, what crafts mean to our consumers, we will continue to thrive." 4. Distributor: "The year has started out wonderful. Business seems to be picking up steam that I hope we don't lose later in the year. The Creative Painting show started the tole shows on a positive note. The only downer is the lack of foreign buyers. The only complaints I hear are about some of the big discounts being offered on the Internet and at the shows. Most people feel it is not necessary to do this to sell products." (Name withheld by request) 5. Regional Chain Buyer (West): "Retail is hard to figure at the moment. Overall we are doing ok -- busy one month, the next month not. It is like a roller coaster and hard to predict. "The economy is good in this bedroom community. Everyone is moving to the suburbs and they are building new homes here like crazy. Yet retail is soft, so it looks like people are putting their money in their homes. "Stitchery is hot again, especially yarn. We sell a lot to the school kids for their projects; I think this keeps the basics selling. Quilting is very strong. Scrapbooking is about the same, maybe a little growth. I think it will remain a basic craft for a long time. Wearable art is very soft -- no new trends. Beads were hot for about 6 weeks after 9/11 (flag pins), but that cooled quickly. "The painting area is flat because in part it's hard to find any new exciting items to paint on. We still sell paint and brushes, but I think a lot are for school projects. The larger home dec woods are steady, but not blowing out. Plaster painting is all but gone, and stenciling is steady but on the weak side. Mosaics are hot in some areas." (Name withheld by request)
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ACCI UNVEILS IDEA STATIONSRetailers want to see new products at trade shows, but they also need new ways to use/sell products they already carry. To encourage new projects for "old" products, the ACCI show in Chicago will include "Idea Stations."Located within each of ACCI's six new Interactive Zones, the Idea Stations will contain displays of new projects and techniques created with established and new products. All of the displayed projects include instructions which will be available for reprint on the ACCI web site. Retailers will also vote for their favorite project in the Idea Stations. The winners will be the subject of press releases and photos sent to the trade magazines for publication, and highlighted on the ACCI web site. Participation by exhibitors is free; details will be mailed soon. Essentially each project should be new, use a product at least five years old, and be in production and available for immediate shipping. The ACCI show dates are July 19-21 with education starting the 18th. Call 888-360-2224; fax 740-452-2552; email acci.info@offinger.com; or visit www.accicrafts.org.
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CRAFTS FOR THE ELDERLYIn our last issue we asked for suggestions for craft projects that can be taught by volunteers who sit "respite" with an Alzheimer's patient to give the caregiver time to relax, take care of personal matters, or just plain have a few hours of normal living. Some excellent suggestions came in that would work for those sitting "respite" -- and also for the elderly in general:1. Make the projects simple and quick. Alzheimer's patients have periods of lucidity, but there's no telling how long they'll last. 2. Use bright colors. Everyone's eyesight dims with age. 3. Motor skills and hand-eye coordination diminish with age, and deteriorate further when they aren't used. 4. Scrapbooks -- looking at them or making one, if appropriate photos are available. For many Alzheimer patients, their long-term memory is better than their short-term memory. 5. Stringing items, the way kids string popcorn for a Christmas tree. Aldastar's Pom Beadz (colorful pom poms with a hole in them) would work, as would large, bright beads for a simple necklace. Small plastic foam balls would work, too. 6. Potpourri bags. Pre-sew small bags from netting. Residents can stuff the bags with potpourri from a large bowl, then tie them with ribbon. Or add, large bright beads, too, and have them alternate a pinch of potpourri and a bead. 7. WALLIES cutouts would work well because the person simply wets the back and applies them on any smooth surface such as a paper mache gift box or a terra cotta pot. (See projects at www.wallies.com.) 8. Crochet. A crochet hook is easy to hold and the simple repetitive motion can have a calming effect on the patient. 9. Simple flower arrangements. 10. Rubber stamping. 11. Low-count plastic canvas. 12. The book, Crafts for All Abilities, published by Search Press, is for people with disabilities and is popular with nursing homes, assisted-care facilities, and special ed teachers.
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RANDOM NOTES, RANDOM THOUGHTS1. In its March 25th edition, Business Week described what Kmart must do to survive. In the discussion of Martha Stewart, commentator Joann Muller writes, "Everyday [Martha] merchandise makes up 4% of Kmart's revenues. With new product lines including crafts and holiday decor in the pipeline, sales are expected to grow at least 20% a year."Crafts? To my knowledge the author means finished items, not craft supplies. But it's yet another example of the confusion caused by mixing terms such as crafts, artisan crafts, finished crafts, and craft supplies. 2. You may have noticed that A.C. Moore's Larry Fine did not comment on specific sales, profits, trends, etc. He couldn't. It's a regulation of the Securities & Exchange Commission that top execs at publicly held companies cannot talk about such things within a certain time period prior to the release of the company's quarterly sales figures, or it might be misconstrued as an effort to influence the stock price. It's called a "quiet period." 3. CNA's Jan Evans told me about a report on CNN about how pedophiles are using the phrase, "family fun" as a code for child pornography. "Let's be careful in our use of this phrase," Jan suggests, "being especially wary of having people search for it looking for family craft activities -- what they find will certainly not leave a good taste in their mouths." 4. This was emailed from a large vendor: "Interesting. I was reorganizing some email files and took note of the fact that in the last 9 months, we had 17 emails from our buyers at a particular chain asking for price reductions, and one suggesting a program to increase sales to their consumers. Guess that tells you where their focus is."
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MISCELLANEOUS NEWSYARN. Now it's Business Week's turn to report on the increasing popularity of yarn: The March 25th edition included, "Yes, knitting -- that folksy craft practiced mainly by the over-50 set, is suddenly popular among young women. As Americans hunker down after September 11, more and more are seeing it as a way to connect."VARIETY. Some industry stores that also sell variety goods may be hurt while Kmart conducts its store-closing sales in 284 stores. The sales have already started. KMART. The court approved continuing its licensing agreement with Martha Stewart. So Martha received a payment of $12.3 million, says Chain Store Age ... Reuters profiled Jack Butler, Kmart's lead bankruptcy attorney. Butler led the corporate parent of Singer sewing machines out of bankruptcy and is a special counsel to, gulp, Enron ... Looking for a niche to distinguish itself from Wal-Mart and Target, the discounter will apparently concentrate on its inner city customers ... Detroit ABC affiliate, WXYZ aired a report on the incredible spending by top Kmart execs and $11 million worth of loans to them. Now Chain Store Age reports that five senior execs are out, two weeks after CEO Chuck Conaway stepped down. RIGHT START. The company that purchased Zany Brainy and FAO Schwarz is changing its name to FAO, Inc. The company will also change its NASDAQ stock symbol from RTST to FAOO on April 18. The company operates 64 Right Start outlets, 169 Zany Brainy stores, and 23 FAO Schwarz stores, all of which will retain their original names. VIRUS. We're never sure if these virus warnings are real or hoaxes, but we've received word that a particularly destructive computer virus is spreading -- one that completely ruins your hard drive, CNN reported. To play it safe, do not open any email with "A Card for You" in the subject line. DUCKWALL-ALCO. Net income for the year ended January 27, the company's 100th year, increased to $4.8 million ($1.13/diluted share), compared with $4.7 million ($1.04) in the previous year. Sales, profits, and margins were strongest in the fourth quarter. PEOPLE. Michaels named Amy Parker as Sr. VP of Marketing. Parker will have responsibility for market research, advertising, and all aspects of the company's brand identity. She will also serve on the Executive Committee. Parker had been Exec. VP of Sales & Marketing for TOPS Markets, a division of AHOLD USA ... Michaels created a new region along the U.S.- Canadian border that encompasses 130 stores in the northwestern U.S. and southwestern Canada. Tom Making was named the region's VP. Making (good name for a craft employee) had been a Michaels district manager after having worked for Wal-Mart's Canadian division. SEWING. Another FabShop Hop is here. Sponsored by the Fabric Shop Network, where consumers are encouraged to visit various fabric and quilt e-commerce sites (some operated by brick and mortar retailers). When they register, they're eligible for prizes. Very interesting concept with lots of potential. It runs the entire month of April. Visit http://www.fabshophop.com. WEARABLES. The Associated Press reported that spring clothing prices in department stores are substantially higher than a year ago. That should give an impetus to wearable art. Encourage customers to "revitalize" their spring clothing with crafts, rather than buy new items. The April 2nd edition of Family Circle suggested using NSI's Be-Dazzler for exactly that reason. EASTER PROMO. Last Saturday, customers at six Wal-Mart stores attempted to break the Guinness world record of 1,241 participants in a bunny hop line. The event was sponsored by Energizer, the battery company. No word on whether the effort was successful. PBS. The sixth series of Needle Arts Studio with Shay Pendray will uplink to PBS stations April 28th. In this series, the programs are expanded to an hour and include cross stitch, embroidery, needlepoint, and knitting & crochet. Sponsors include DMC, TNNA, American Needlework Guild, Embroidery Guild of America, Coats & Clark, Spinrite, Solutia, Tapestry Tent, DeElda, Piecework, Rowan, Kreinik, Vogue Knitting, Brown Sheep, Gay Bowles, Sulky of America, Needle Necessities, Family Circle Knitting, Bryson, Rainbow Gallery, Zweigart, Stitchers World, Krause, JCA, and Tahki Stacy Charles. STOCK. Michaels will hold its 2002 stockholders meeting on June 20. JOB OPENING. Manufacturer looking for two Product Managers with design experience -- one for die cut paper/foam products in general crafts and scrapbooking, and one for rubber stamps. Location not an issue. Email resumes in confidence to CLN's Mike Hartnett (mike@clnonline.com) and they will be forwarded to the employer. QUOTATION. "A thought: why is it the most successful retailers answer the phone, give you an answer, and follow up? They don't beat around the bush; they address the problem. If they don't want an item, they say so right away; if they like it, they say you will have an order by a certain date -- and you know they'll do it." -- Industry manufacturer
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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*: 38.16 ... Change**: +1.05Ames (AMES). Last*: 0.18 ... Change**: +0.03 Hancock Fabrics (HKF). Last*: 18.05 ... Change**: +0.14 Jo-Ann Stores (JAS.A) [a]. Last*: 16.14 ... Change**: +2.69 Michaels (MIK). Last*: 37.80 ... Change**: -0.70 Rag Shops (RAGS). Last*: 3.76 ... Change**: -0.27 Wal-Mart (WMT). Last*: 61.30 ... Change**: -2.45 CLN Retail Index. Last*: 100.501 ... Change**: +0.3% Dow Jones Index. Last*: 10,403.94 ... Change**: -1.9% *March 29 ** from March 15 [a] voting share Prices are exclusive of dividends
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A YARN PROJECT -- FOR THE BIRDSPeople are knitting for themselves, for family and friends, and for Warm Up America. Turns out they've even been knitting for ... penguins. Yes, penguins. Volunteers have been knitting penguin "jumpers" (a British term for sweaters) as part of a rescue program conducted by the Tasmanian Conservation Trust in Australia. Penguins preen themselves, and if their feathers have oil, they can die from ingesting the oil.When penguins are the victim of an oil spill or illegal bilge pumping, volunteers clean the penguins as best they can, then outfit them with sweaters, which keep them from preening. An article on the need for such things was published in a magazine for retired Australians, then the idea was picked up by various BBC radio stations. As of last August, a total of 3,100 "jumpers" had been received from every state in Australia, plus Belgium, Canada, the Czech Republic, Finland, Germany, Italy, Japan, New Zealand, the Netherlands, Thailand, the UK, and the USA. So many jumpers were donated that the TCT finally asked people to stop sending them. To see a photo of these very fashionable penguins and download the pattern, visit http://www.tct.org.au/jumper.htm#Tasmanian.
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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, April 15th.
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