Date: July 16, 2007
Vol. XI, No. 14

Printer Version

TABLE OF CONTENTS

COMMENTARY: A DECADE OF CHANGES 

Received an email from Phil Metzger who has had to stop teaching painting to military vets at Walter Reed hospital because he's moving out of the area. The program will continue, but Phil wanted to thank all of the companies who had donated supplies. He had contacted me months ago looking for supplies, and I published his description of the program. (It's still online. Click on Category Reports in the left-hand column, then scroll down the right-hand column to "Teaching Painting to Heroes.")

The list of companies who have donated products and received his "Thank You" note was a very long one. Made me feel proud, once again, of our industry.

And if the program needs more supplies, I'll let you know.

Business-Wise. CLN launches a series devoted to the events, companies, and personalities of the last decade that have influenced the way we are today. First: scrapbooking, the strongest, longest-lasting trend in industry history. (See the complete list below.)

New Trade Show Exhibitors. The response to CLN's request for CHA Summer Show exhibitors to send info was so strong that we moved the listings here so this issue remains a newsletter and not a magazine. These aren't necessarily "new" exhibitors, but buyers wishing to do some advance scouting should check the listings which include company name, booth number, a brief description of the new products, and a link to more details.

Newsbriefs. The report sent 7/10 on A.C. Moore's hiring of industry veteran Greg Davis and Greg Sanfort's resignation from Michaels.

"Vinny Da Vendor". How does a manufacturer introduce a new product into a very crowded field? A step-by-step report on probably the largest product launch in Plaid's history. 

Industry Research. How to access The SMART Group's new market research on scrapbooking.

Note: If a column appears to be "old," click on the "Refresh" or "Reload" button on your browser.

There are conflicting research studies about scrapbooking; one says it's still growing slightly, the other says it's declining. Clearly the category appears to be consolidating: fewer stores selling the category. But none of this is conclusive evidence that consumer interest has increased, decreased, or leveled. Furthermore, no category ever performs exactly the same in every part of the country. So the question is, how is consumer interest in scrapbooking in your part of the country? To vote, click on Industry Polls in the right-hand column or click HERE.

Voters in CLN's unscientific poll aren't very optimistic about the near future of the U.S. economy. While almost half, 45.8%, think it will be flat this summer and fall, 25.0% believe it will decline slightly, and 12.5% think it will decline sharply. The optimists are in the minority – 12.5% believe the economy will grow slightly, and 4.2% predict it will show strong growth.

Voters were somewhat more optimistic about their own business: 39.1% believe their business will grow slightly and 8.7% predict they will see strong growth this summer and fall. But there are doubters – 17.42% believe their businesses will be flat, 21.7% expect a slight decline, and 13.0% predict a sharp decline.

To reduce its monthly trade surplus of $20 billion, as of July 1 China cut its tax rebates on 2,800+ export items, Reuters reported. Some manufacturers of Chinese products exported to the U.S., Europe, and other countries had received rebates as high as 17.5%, which allowed them to offer lower prices to importers.

Exporters received only a 10-day advance warning of the rebate reduction by the government, and scrambled to schedule shipments, which may cause their shipping costs to rise.

Here's an example of the effect the rebate cut is having: "It is a major problem for us and companies like us who specialize in seasonal imports," an importer told CLN. "We are being forced to re-work pricing on hundreds of items in our Spring 2008 line, which was recently mailed to our customers. This comes right in the middle of the trade show season – we'll have to re-tag all of these items in our showrooms, plus anyone who has visited and placed an order will need to be advised of the price changes.

"For instance," the importer added, "our folks were there just weeks ago to finalize pricing and item selection for Spring 2008. The Chinese factory owner, when quoting us, knew he had a certain percentage coming back from the Chinese government, and he adjusted his cost to us accordingly. But now he is finding out the rebate will be less than he anticipated at the time of the quote, so naturally he wants more money."

China's June trade surplus jumped 85+% to $26.9 billion compared to a year ago. Year to date, it's $112.5 billion, a record for six months, the Associated Press reported. Last week the Xinhua News Agency said the government was taking yet another step to rein in the surplus by eliminating an 8-year-old program that gave Chinese exporting companies low interest rates and other privileges.

Industry pioneer Bill Mangelsen (Sino Harvest Ltd., producer of Makin's Clay), who began traveling to China 35+ years ago and has lived in Hong Kong for the last 28 years, said, "Unfortunately this is probably just the beginning. There is so much China bashing going on now that every politician is using China as the source of all the problems in the U.S. There is more and more pressure from Congress, and now I saw where Obama and Clinton are using their campaigns to get China to revalue its currency. No matter that the U.S. dollar has lost 30% in the last couple of years against the British pound, the Euro, and a host of others, and yet that's ok, but China gets it from all sides.... This is just the beginning, and the one that is going to get hurt the most is the American consumers."

Meanwhile, there is a confusion about the possibility of delays thanks to container loads of products for the Fall/Christmas season clogging U.S. ports. To read a negative view, visit www.artmaterialsretailer.com/readmore_webex_1.php. Yet traffic at the nation’s major retail container ports is moving smoothly and should hit a record high in August, according to the monthly Port Tracker report released by the National Retail Federation and Global Insight, despite the threat of a short-term clerical workers' strike at the Ports of Los Angeles and Long Beach. The union contract expired June 30, but negotiations were continuing.

Creative Leisure News is 10 years old this summer. Much has changed since 1997 and these are the major factors that influence the way we are today. (Watch for Business-Wise columns with more details – and predictions for the future – on each subject, beginning with this issue.)

1. Scrapbooking. The industry has never had a major trend that remained so strong for so long. It was booming in 1997; imagine the industry today if it had then faded like so many fads. (Note: See Business-Wise for more details.)

2. Michael Rouleau. When he became CEO of Michaels, the company was close to bankruptcy, thanks to fast-paced expansion without the necessary infrastructure. When he left in 2006, it was worth more than $6 billion. Imagine if Michaels had gone bankrupt a decade ago.

3. Technology. When CLN started, 95% of the subscribers received it via fax, because they didn't have – or weren't sure how to use – email. Digital scrapbooking, auto-replenishment systems for retailers, EDI, store and factory computers talking to each other – the list goes on.

4. Media. Almost every industry consumer and trade magazine has changed hands – many of them twice – in the past decade. Plus, any mention of the industry in any national media was big news in 1997; now it's so common it rarely bears reporting.

5. Changes in the old order. ACCI and HIA merged into CHA. The Int. Needlework Retailers Guild and the Society of Craft Designers died. The chain store CEO's have retired, replaced by execs brand new to the industry.

6. Imports. They were an important major factor in 1997. Now they are dominant.

7. Investors. Michaels, EK Success, Primedia, Provo, Rag Shops – the list goes on. Investment companies with little or no knowledge of the day-to-day workings of the industry have bought numerous retailers and manufacturers with the goal of building up the value and "flipping" them or taking them public.

8. New generation of consumers. They are younger, more hip, techno-savvy, eager to make one-of-a-kind projects, and look for inspiration rather than step-by-step instructions.

9. Lower margins. This trend started long before the first issue of CLN but continues to gather steam. The U.S. public, spoiled by chain-store competition, rarely pays full price for anything any more. That has numerous consequences for the industry: vendors have less profit to reinvest in new products, marketing, etc..

10. Yarn and beads. Yarn is clearly the comeback kid of the decade. while beading has been up and down and now, up in a new way.

(Note: Agree with the list? Disagree? Email your suggestions, additions, and disagreements to CLN at mike@clnonline.com.)

CHA will host a meeting to form a Scrapbook and Paper Crafting Category Interest Group during the Summer Show. It's Thurs., July 19 7:15-9:00 pm in Room 50/51 in the convention center. The meeting is open to all interested CHA manufacturer members. The purpose is to A) form an Interest Group within CHA to allow vendors to pursue more specialized programs aimed specifically at their markets and B) to give feedback to CHA management regarding improvements or suggestions members would like to see implemented within CHA. To register, contact Sue Spivak, member services coordinator, at 201-794-1133, ext 227 or email registration@craftandhobby.org.

Highlights of the Society of Decorative Painters’ 35th annual Conference/Expo:

Newly elected officers: VP/President Elect Linda Neilson Biedermann ... Recording Secretary Judy Westegaard ... Board Members-at-Large Corkie Dunlap, Phyllis Gibbs, and Mary McLean join President Jillybean Fitzhenry, Treasurer Jo Lutness, Past President Darla Foreman, and Board Members-at-Large Barbara Jenkins, Doxie Keller, and Sheila Rouse.

Three artists achieved the Teacher of Decorative Arts certification, two earned Master Decorative Artist certification, and 25 achieved Certified Decorative Artist certification.

Service Award recipients: Prudy Vannier, Dedicated Service Award ... Mary Smith, Outstanding Chapter Service Award ... Jo Sonja Jansen and Maureen McNaughton, President’s Commendations ... Dallas Fisher, Priscilla Hauser Award for Business & Industry ... Tim Mulvey, Silver Palette.

New Product awards went to Painters Paradise (www.paintersparadise.com) for its Krafters Komfy Kushion ... What A Blast! for its antique metal pieces that are prepped for painting with a bead-blasting process ... Creative Painting Book Club for its Painter's Quick Reference: Cats & Dogs.

The 2008 Conference/Expo will be May 26-May 31, 2008 in Tampa. Visit www.decorativepainters.org for info.

"Sales were not as weak as some analysts feared," the Associated Press reported, "but the fact that June, the second most important month in the retail calendar, was nonetheless sluggish did not augur well for back-to-school shopping that begins this month."

"Consumers scaled down their shopping last month to buy necessities, which negatively affected department and specialty stores," said Rosalind Wells, Chief Economist for the National Retail Federation.

Wal-Mart's U.S. stores did better than analysts and Wal-Mart execs had expected; same-store sales rose 1.6%, but apparel and home departments were "soft." Electronics, Dell computers, food, and seasonal merchandise were the leading departments. "Consumers continue to be challenged financially, with more pressure on discretionary spending," said Eduardo Castro-Wright, U.S. Stores President/CEO. "Gas prices have moved to be their chief concern in our latest survey and they appreciate the opportunity to save on everything."

Craft industry-related chains report quarterly rather than monthly.

The Int. Council of Shopping Centers' survey of same-store sales in 50 chains reported an increase of 2.4%, down from a 3.0% gain a year ago. Electronics sales were strong; apparel was not. "The fashion must-haves of the world are not apparel, but the iPhones of the world," Craig Johnson, President of Customer Growth Partners, a retail consulting firm, told the AP. "They are wearing technology as fashion."

The stock market reacted very positively upon hearing the news that most retailers performed better than the glum predictions by analysts, but the next day the June RBC Cash Index report showed consumer confidence was at its lowest point since last August.

A sampling of retailers' same-store sales: Sam's Club, +6.9% ... Costco, +6.0% ... Target, +3.3% ... Nordstrom, +2.9% ... Duckwall-ALCO, +2.2% ... Abercrombie & Fitch, +2.0% ... J.C. Penney, -1.5% ... Macy's, -2.7% ... Gap, -5.0% ... Saks, -5.6% ... Ann Taylor, -8.4%.

Limited seating is still available for the keynote address by Genevieve Gorder, designer from the TV series Trading Spaces and Town Haul. (Fri., July 20; cocktail reception 5-6 p.m., followed by the keynote presentation from 6-7 p.m.) Pre-show tickets are $30 members/$60 non-members; purchased onsite, the ticket prices rise to $45 members/$75 non-members.

Only a few time slots are still available for complimentary, half-hour, one-on-one consultations with experts from Phoenix Multicultural on the growing Hispanic market. They're free for CHA members. To schedule your appointment, call Jeronima Pilar at 212-987-3433.

Phoenix Multicultural's seminar, "Capturing Hispanic Crafting for Holidays and Special Occasions," is Sat., July 21, 11:00 am-12:15 pm. Free to CHA members, $50 for non-members..

The new, free Celebrations floor demos will feature a full line-up of presentations from 20+ exhibitors in Hall F. Tapping into the "Celebrations: Crafting for Holidays and Special Occasions" show theme, exhibitors are bringing in some top presenters to showcase their newest products and techniques designed to show new ways to promote seasonal crafting and everyday special events. CHA will host numerous giveaways, including a digital camera, in conjunction with the demos.

Visit www.chashow.org for all show details.

Howtotvonline.com is a new website that offers craft video instructions plus patterns and complete instructions. Visitors can choose their craft by linking to channels for scrapbooking, kids crafts, cake decorating, or jewelry. Additional channels will be online soon. Plus, website links are provided to visitors for them to learn more about the products they see in the videos.

The site is the brainchild of KS Productions, producers of 15 PBS series, including Beads Baubles and Jewels, Crafts for Kids, Scrapbook Memories, and Bake Decorate Celebrate!. For more info, call 800-348-3909, email kstull@ksproductions.org, and visit www.howtotvonline.com.

In the Bead/Gem/Jewelry Group: David Federman, Editor In Chief of Colored Stone. He was executive editor of Modern Jeweler and has been a contributing editor and columnist of Modern Jeweler since then ... Danielle Fox, Editor of Stringing and Beadwork magazine's special issue publications. She is the author of the Interweave's forthcoming book Simply Modern Jewelry ... Melinda Barta, Managing Editor of Beadwork, Stringing, and the Beadwork special issue publications. She is the author of Interweave's book, Hip to Stitch ... Michelle Mach, Editor of Beading Daily, Interweave’s new online beading community, blog, and e-newsletter ... Amy Rineheart, Marketing Manager of Interweave's Beading Market Group.

In the Fiber Group: Lisa Shroyer, Editor of Knitscene. Shroyer will also continue as Sr. Editor of Interweave Knits ... Laura Rintala, Managing Editor of Interweave Knits, Interweave Crochet, and Knitscene. Rintala had been Managing Editor of Craftrends ... Katie Himmelberg, Styling Editor of Knitscene. She also continues as Assistant Editor of Interweave Knits ... Sandi Wiseheart, Editor of Knitting Daily, Interweave’s new online community, blog, and e-newsletter ... Toni Rexroat, Assistant Editor of Interweave Crochet.

Mod Podge is probably one of the most famous, influential products in the industry's history. By making decoupage much easier, quicker, and cleaner, Mod Podge helped make decoupage the industry's first great trend and gave thousands of retailers the initial boost they needed to establish their shops as bona fide businesses.

Invented by Jan Wetstone in the 1960s as an all-in-one glue, finish. and sealer, Mod Podge has become a decoupage medium of choice and is a staple in most craft rooms. Frustrated by the tedious and time-consuming process of brushing layer upon layer of varnish and sanding between each coat, inventor Wetstone "did some experimenting" in the back room of her shop and Mod Podge was born. After sharing some of her Mod Podge-coated prints, Wetstone's customers demanded that she divulge her secret – and the rest is history. She began offering Mod Podge kits in her shop and they were such a huge success that a major Atlanta department store purchased exclusive rights to them.

Eventually Mod Podge was sold to Enterprise Paints and then went through a variety of owners. In 1979, Mod Podge found a permanent home with Plaid Enterprises.

Decoupage finally gave ground to the next big trend, macrame, but is making a comeback as scrapbookers expand their creative horizons to paper crafting. Now Mod Podge is recognized worldwide and available in a variety of formulas.

The newest additions include Satin (for home dec), Hard Coat (for hard items such as furniture), and Brush Stroke (which gives a hand-painted look) Mod Podge.

Traditional Matte and Gloss Finishes continue to be available as well as newer formulas such as Mod Podge for Outdoor, Puzzles, Fabric, and Paper. Finishes include Sparkle, Satin, Brush Stroke, and Hard Coat. Like the original, all are fast drying, water-based, non-toxic, and require only soap and water clean-up.

1. It's a practice of the CHA board that each member takes a turn working in the CHA booth at trade shows. The idea is, if attendees want to talk directly to a board member, for any reason, they can go to the booth and a board member will be there to listen to suggestions, complaints, and comments. My turn in Chicago is Friday 3-4 pm. Stop by and visit!

2. The passing of James Dupey (see below) reminded me that if someone compiles a list of "Great Business Mistakes," the old Ben Franklin organization must be up near the top. If the experts at the old Ben hadn't turned down the Dupeys and Sam Walton, Michaels and Wal-Mart would be divisions of Ben Franklin today. And one of the oldest (perhaps the first) and most successful craft superstores is Mangelsen's, in Omaha. That, too, started as a Ben Franklin.

MAGAZINES. F+W Publications has named veteran industry journalist Beth Mauro Executive Editor of Scrapbook Retailer. Beth had been Editor in Chief of CNA. F+W is exploring strategic opportunities for CNA. Beth will be moderating a panel for the seminar "Digital Scrapbooking: What it is and How You Can Grow Your Business" on Friday at the CHA Summer Show, 2:00-3:15 pm.

ACQUISITIONS. The Blackstone Group, which owns Michaels with Bain Capital, is acquiring the Hilton Hotels group for about $26 billion. The group includes Hilton, Embassy Suites, Doubletree, Hampton Inn, and the Waldorf Astoria collection – about 2,800 hotels and 480,000+ rooms.

PEOPLE. Wal-Mart named Linda Hefner as Exec VP/General Manager of the home business unit for U.S. Wal-Mart stores. She will be directly responsible for the overall home strategy, brand management, product development, and sourcing for the home categories, which include fabrics and crafts. She was recently EVP of global strategy and business development for Kraft Foods. Prior to Kraft, she held many positions at Sara Lee ... Duckwall-ALCO named Ronald Mapp as Sr. VP of Merchandising. Mapp has held exec positions with Michaels and Jo-Ann's. He will report to President/CEO Bruce Dale, another Michaels' alumnus.

GIFTS. The Chicago Gift Show will run July 19-25 at the Merchandise Mart in downtown Chicago. The show also includes Beckman’s Handcrafted Gift Show July 21-24. Visit www.mmart.com/livingandgiving/showinfo.html ... "The [Atlanta Gift] market has been very active from opening bell, according to many in the showrooms we’ve visited. Most vendors reported double and triple sales compared with last market, which bodes well for continuation of an active summer market season." – Gifts & Decorative Accessories

QUOTATION. "Many people are switching from incandescent to fluorescent light bulbs to save energy, but most don't know that fluorescent fades photos faster. If you're going to go green make sure you frame you photos behind glass. Glass cuts out much of the harmful UV energy from fluorescent bulbs and will help your picture remain pristine much longer." – Image Permanence Institute

QUOTATION. "Though days of trekking to multiple stores for shears, cutting mats, storage containers, and gift wrap ended with big-box craft-and-hobby stores, [the Martha Stewart Crafts] collection takes one-stop shopping to near perfection, with the easy-to-use, color-coordinated items, all packaged in that elegant, yet familiar, color palette." – Jamila Robinson, Crafts Editor for the St. Louis Post-Dispatch

REAL ESTATE. NorthJersey.com reports the July 17 auction by DJM Realty for the unexpired leases on the 61 Rag Shop stores "... are expected to generate a retail bidding frenzy, because most of the stores are in good locations, with long-term leases and rents well below the going rate."

PAINTING. The Society of Decorative Painters is looking for corporate underwriters for its online classes at www.decorativepainters.org. Visit http://decorativepainters.org/onlineclasses/underwrite.php for more info.

BOOKS. Last week Interweave Press started its annual "hurt book" sale. Books on beading, knit/crochet, etc., are discounted and sold online only on a first-come basis until inventory runs out. Visit www.hurtbooksale.com/hurt.

SALES EXEC WANTED. Midwestern industry company – exec with 3-5 years direct sales experience, responsible for growing existing key accounts while developing new channels of distribution. Must have excellent oral/writing skills and be proficient with computers. For more info, in confidence, contact Mike Hartnett at mike@clnonline.com or call 309-925-5593.

REPS NEEDED. Terra Bella Finishes is looking for reps to cover their product line nationwide. To be considered for this new product line, email Mark Lee, President, DreamSolutions Marketing, at markhlee@insightbb.com, or call 317-770-0436.

SHOWS. To reserve hotel rooms for the 2008 Columbus TNNA show, visit www.tnna.org. The show is June 7-9 with education starting June 5 ... Offinger Management is sponsoring three shows under one roof: Memories Scrapbooking Expo™, the Bead & Art Glass Fest, and the Orlando Needlework Show in Orlando, Nov. 16-17. More than 12,000 consumers, who pay for only one ticket to access all three shows, are expected. Visit www.memoriesscrapbookingexpo.com, www.beadandartglassfest.com, and www.orlandoneedleworkshow.com.

INTERNET. Wal-Mart completed the final phase of its Site to Store rollout to 3,300+ stores. The service enables customers to order thousands of products at www.walmart.com, most of which are not available in stores, and have them shipped for free to a local Wal-Mart store.

KNITTING. Nancys Knitknacks introduced DP Wip Tubes™ which are designed to hold both the Double Pointed Needles and a knitted project. The tubes hold 5"-10" needles and are slotted to the needles connected to the project. Retail price, $8.99 for a package of 2 tube sets. Visit www.nancysknitknacks.com/dp_wip_tubes.htm.

CONDOLENCES. James Paul Dupey, 83, passed away. He was the oldest of 7 children and grew up during the Great Depression. Among his many business ventures was a Ben Franklin store in Dallas, which was managed and later purchased by his oldest son, Mike. Thanks to Mike's merchandising genius, James and Mike opened 11 more Michaels stores – the start of the Michaels chain which was later sold to Sam and Charles Wyly's public company.

CLN STOCK INDEX: A.C. Moore: $20.06, up $0.45 ... Jo-Ann's: 27.21, down $1.22 ... Wal-Mart: $49.15, up $1.04 ... CLN Index: up 0.3% ... Dow Jones: 13,907.25, up 3.7%. (Note: All changes in price are since 6/29 and are exclusive of dividends.)

To see the latest listings from the only personnel recruitment firm specializing in our industry, click on Jobs in the left-hand column, or click HERE. Openings in other industries are listed, too.

For those of you who watch what you eat, here's the final word on nutrition and health. It's a relief to know the truth after all those conflicting nutritional studies.

1. The Japanese eat very little fat and suffer fewer heart attacks than Americans.

2. The Mexicans eat a lot of fat and suffer fewer heart attacks than Americans.

3. The Chinese drink very little red wine and suffer fewer heart attacks than Americans.

4. The Italians drink a lot of red wine and suffer fewer heart attacks than Americans.

5. The Germans drink a lot of beer and eat lots of sausages and fats and suffer fewer heart attacks than Americans.

Conclusion: Eat and drink what you like. Speaking English is apparently what kills you.

REMINDERS

1. If you want a hard-copy of this issue, click on "Printer Friendly version."

2. If your company is a paid subscriber, everyone in the main office is welcome to register, free. Just click on "Work for a paid subscriber? Click Here to register" (center column, near the top).

3. If you ever have trouble with your password, click on "Trouble with your password" in the right-hand column of the main page. The computer will then email the correct information to you.

4. Creative Leisure News is published the first and third Mondays of each month.  Because July has five Mondays, your next issue will be Monday, August 6.

xxx

[ Home ] [ Business-Wise ] [ Kate's Collage ] [ "Vinny Da Vendor" ] [ "Benny Da Buyer" ] [ Newsbriefs ] [ Memory, Paper & Stamps ] [ Category Reports ] [ Designing Perspectives ] [ Subscribe to CLN ] [ Legal Q & A ] [ Scene & Heard ] [ Jobs ] [ Tech Topics ] [ Industry Research ] [ Store Layout/Design Tips ]

©Copyright 2008 by Creative Leisure Communications
(Reproduction or re-transmission without permission is prohibited.)