Date: October 1, 2007
Vol. XI, No. 19

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TABLE OF CONTENTS

COMMENTARY: THE SCRAPBOOK INDUSTRY STUDIES 

First we had The SMART Group study of independents which indicated a serious decline in the category. Then the recent update of CHA's Attitude and Usage Study revealed that consumer interest was still growing. Who's right?

Now a third study has been unveiled (see below) – this one by CKMedia, publisher of Creating Keepsakes, Simple Scrapbooks, Memorytrends, and Craftrends. The results coincide with the CHA study. But keep in mind when reading any study:

1. Is it a first-time study? If so, then ignore any trend info. It's a baseline; if a subsequent study is conducted, following the same procedures as the first study, then any statistical differences in the two could be considered a trend.

2. Do the sponsors detail the margin of error? If not, the study is meaningless. If the margin of error is, say, +/-4%, and Beads increased to 32% from 27%, then you can be confident Bead have increased. But if Beads increased to 32% from 30%, you can't be confident that Beads increased or decreased.

3. Don't try to "fit" the three studies into one picture like a three-piece jigsaw puzzle. Each study had a different methodology.

4. Every study is a bit old. It's not a picture of today, but a snapshot of when the data was collected. Things change between the collection and the compilation, analysis, and publication.

Business-Wise. CLN's series on the biggest influences of the past decade continues with ... Wal-Mart.

Scene & Heard. Ellie Joos reports on the recent Memorytrends show in Las Vegas.

Memory, Paper & Stamps. Retailer Sharon Cooke's article, "Stop Worrying about Digital Scrapbooking... ... And worry about printing photos instead," has generated some very insightful comments. If you missed it, it's still here – and the next issue of CLN will summarize the reactions.

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

Were they worth the money you spent attending or exhibiting at trade shows this year? To vote, click on Industry Polls in the right-hand column or click HERE.

It looks like industry-related trade shows may be a bit smaller in 2008, if voters in CLN's unscientific poll are true to their word. While 45.3% say they will attend or exhibit at the same number of shows next year, a whopping 35.9% say their show schedule will be smaller in 2008. Only 18.9% plan to increase their show schedule.

Both shows were held in Las Vegas the week of Sept. 12. Both were dramatically smaller, in attendance and number of exhibitors, than in the past. Both shows could easily have been two-day affairs instead of three.

The decline in size of Memorytrends appeared to be proportional, so booths were fairly busy the first day. MT appeared to be significantly larger than the Home Sewing Assn. show, but actually had fewer exhibitors. The count in the show books was 116 for HSA and 93 for MT.

Georganne Bender of Kizer and Bender, who conducted seminars at MT, wrote, "The retailers we spoke with (and we spoke with a lot, in classes, consultations, and when they stopped to say hi) enjoyed the smaller venue. Even retailers we thought might have a problem with a small show floor enjoyed spending quality time with their vendors. And they had real time to find new products and try the make-it/take-its. More than one came over to show us orders for vendors who were not there, but being aggressive retailers, they sought out vendors who were there with similar product and placed orders with them."

(To read a report on the show's new products, click on Scene & Heard in the left-hand column, or click HERE.)

The recently released study indicates the category is still growing. The Study pegged the category at $2.87 billion and has grown 12.7% in the past three years. Now 29.4% of U.S. households report one or more people over the age of 18 participating in the category in the past year; that's up from 24.5% in 2004 and 20.7% in 2001. Each scrapbook household spends on average $87.81/year on scrapbook supplies.

The data on scrapbook enthusiasts indicates they are, uh, enthusiasts; 50% consider themselves "addicts"; their #1 need is more space for supplies; 61% spent $50+ on supplies in the past month; and the median value of a scrapbooker's supplies is $2,006, up from $1,853 in 2004.

The Study also includes data on styles, photography, tools/supplies, digital, details on novice, intermediate, and dedicated scrapbooks.

The 6th annual Craftrends Consumer Participation Survey has been released and as usual reveals certain product categories on the rise and others in decline. The Study, conducted by Penn & Associates, questioned 1,000+ craft customers across the U.S. as they were leaving chain and independent craft stores. The Study had a margin of error of +/- 3. What follows is a list of those product categories whose change from the previous study exceeded the margin of error.

Papercrafts/Scrapbooking. On the rise: Paper, Stickers, Adhesives, Scissors, Albums, Embellishments, and Tools. ... On the decline: Rubber Stamps, Cardmaking, and Personal Die Cut Systems/Accessories.

General Crafts. On the rise: Beads, Wire, and Jewelrymaking. ... On the decline: Candy/Soapmaking.

Fabric/Sewing/Quilting. On the rise: Thread and Ribbon. ... On the decline: Fabric/Garment Sewing, Fabric/Quilting, Batting, and Machines/Sergers.

Art Supplies. On the rise: Spray Paint. ... On the decline: Paper/Canvas.

Needlearts. On the rise: Yarn. On the decline: Cross Stitch.

Miscellaneous. On the rise: Markers/Pens, Holiday Crafts/Halloween, Supply Organizers/Totes, and Organizers for Home/Furniture. On the decline: Bridal.

Publications. Books and Magazines showed a decline.

(Comment: One note of concern was that 53% of the respondents were 45 years old or older. The industry needs to do a better job attracting younger consumers.)

An expanded report, including data on other product categories and current data compared to the data of several previous Studies, will be available on a CD in mid-January. An order form should be available shortly at www.craftrends.com.

The 2007 Study is expected to be available in November.

The retailer is launching a new wholesale division, which will sell to furniture manufacturers, "top-of-the-bed" drapery manufacturers, and independent retail fabric stores, Furniture Today reported. The company has hired Hugh Hargett, formerly of Microfibres and Blumenthal, as Sr. VP of the division. He will build a commissioned sales force for the effort, which will also sell occasional tables, chests, wall art, lamps, and other home accents.

In a filing with the Securities and Exchange Commission, the company reported it lost $3.4 million for the month ended Sept. 1. The company also reported sales of $9.6 million. (Note: The company must make the monthly reports as part of Chapter 11 bankruptcy proceedings, and there are so many costs related to the bankruptcy that the sales/earnings report is not necessarily as accurate a picture of the a company's actual financial performance as would be a similar report from a company that is not in bankruptcy.)

Once again David Green, CEO of Hobby Lobby, made the Forbes 400 list of the richest people in the U.S. The magazine pegged his net worth at $1.8 billion, #271 on the list, and once again, his net worth equals Oprah Winfrey – their net worth has been equal or nearly equal for years.

So what does a person do when he has so much money? He buys a college.

Green, 65, is buying the shuttered Bradford campus in New Hampshire for Zion Bible College because he likes to support religious causes, he told the Eagle-Tribune. Bradford College once had an enrollment of 600 but closed seven years ago because of financial problems. Zion, which trains ministers, missionaries, and teachers for the Assemblies of God denomination, had outgrown its facilities in Barrington, RI. The cost of the property was not disclosed, but Green estimated repairs alone will cost $3 million to $5 million.

This is not the first time Green had bought property for church-related causes. He purchased the Mel Tillis Theater in Branson, MO for a church group, and a large building for Liberty University in Virginia, the college founded by the late Jerry Falwell.

(Note to independent retailers: David Green started with one store. Yes, one.)

Soon the U.S. Customs and Border Production will unveil a draft plan of its new "10+2" requirements for importers, reported The Journal of Commerce. The plan will reportedly expand the current 24-hour advance manifest filing rules and require additional information before a shipment is loaded on a ship in an overseas port.

The 10+2 regulation will require 10 additional data elements including potentially sensitive information such as the name and address of the overseas manufacturer, seller’s name and address, consignee, and country of origin, the Journal reported. The purpose is to give customs officials more time and information to determine if a container might include weapons of mass destruction.

There will be a 60-90-day period for public comment before the final regulation is determined, and then a one-year phase-in period.

1. A new study by a University of Manitoba professor reveals that in the past 20 years, more than 75% of toy recalls were due to flaws in design, not the way they were manufactured.

2. The report appeared just prior to Thomas Debrowski, Mattel's Exec VP/Worldwide Operations, traveling to China to publicly apologize to China, saying most of the recalls were defective due to the company's own design flaws, rather than the manufacturing process, the Wall Street Journal reported. (Comment: So where did the lead paint come from, New Jersey?)

3. "So Mattel pleaded guilty," emailed Sino Harvest's Bill Mangelsen from Hong Kong. "Now it will be interesting to see how many lawsuits will be filed against Mattel from anyone who could claim they were hurt by the bad publicity caused about China by Mattel. Watch and see how many lawyers will come out of the woodwork. Mattel might be in court for years."

4. The dollar hit another record low against the euro and the British pound, due to the larger-than-expected interest-rate cut in the U.S. The euro hit $1.4130 before settling back to $1.4095, and the British pound edged higher to $2.0223 from $2.0200, the Associated Press reported. Then the dollar dropped lower a few days later.

5. Since the last issue of CLN, there were at least five more recalls of Chinese-made toys and jewelry because of lead. One recall was about 16,000 toy rakes imported by Jo-Ann's. The 24"-long rakes, which have a yellow duck head attached to the green handle, were sold Jan.-Sept., 2007. For more info visit www.joann.com.

(Note: An email from Wayne Schwartzman of McGill, Inc.)

As you know, most manufacturers of products made for the craft category have been forced to go to Asia for their goods in order to remain competitive. McGill had, until a few years ago, manufactured many of its products in the U.S. and we continue to do so, but only a very small percent.

A few weeks ago China’s longstanding policy of rigidly pegging its currency to the dollar was changed. The peg was removed to allow a very managed float to occur. This reevaluation of the Chinese currency has resulted in sharp price increases of goods imported from China.

Second, for many years China has taxed exported goods. But in order to increase the competitiveness of Chinese companies, the government instituted a rebate of the previously collected export tax. In other words, the government returned to the exporting company varying portions of the export tax. In many cases this tax rebate accounted for a large part of the Chinese companies’ profits. Now this rebate has been severely decreased, causing further price increases.

Reviewing the increased prices for the products McGill makes in Asia, I decided to see if McGill could manufacture in the U.S. at costs equal to or less than Asia. To my surprise, I found several products that could be manufactured in the U.S. I’m now pleased that I kept the machinery that for many years made quality U.S. made products. – Wayne Schwartzman, McGill Inc., www.mcgillinc.com

CHA is expanding its initiatives for the License & Design section for the Winter Show. New efforts include A) expanded show hours – pre- and post-show hours for attendees to explore L&D section while enjoying snacks and beverages; B) a central location on the show floor; C)

enhanced turnkey booth package with hard wall and hardwood floor booths, which saves $2,000+ compared to other industry-specific events; D) L&D exhibitors can nominate art directors from other industries and CHA will choose 10 and give them all-expense-paid trips to the show; E) a comprehensive L&D Power Marketing kit; F) special on-site promotions; G) free lead retrieval system; H) free Designer Showcase event.

The L&D section is already twice as big as last year; as of Sept. 24 there are 30 exhibiting participants in 3,000+ net sq. ft. For exhibit info, call Anthony Licata at 800-822-0494, ext 201 or email alicata@craftandhobby.org.

CHA Designers can also sign up for a table to display their work at the Designer Showcase, Feb. 11, to privately show their work to editors, publishers, and manufacturers. To reserve space, visit www.chashow.org and click on License & Design. Complete the registration form and email it to designershowcase@craftandhobby.org or fax it to 201-797-0657.

The overall stock market may have been like a roller coaster in the third quarter, bot not for retail stocks. A.C. Moore's stock dropped 19.6%. Jo-Ann's stock was rising toward the end of the second quarter due to rumors that the company would be sold; those rumors subsided and the stock fell 28.5%. Wal-Mart stock sunk to a three-year low before ending the quarter with a decline of 9.3%. The CLN Index fell 16.1%, while the Dow rose 3.4%, NASDAQ rose 3.8%, and the S&P 500 increased 1.6%.

Target's stock outperformed Wal-Mart's again, but was essentially flat. The big loser among the stocks covered by CLN was Martha Stewart Omnimedia, which fell 32.2%.

The results for the first three quarters of 2007 aren't very positive, either: A.C. Moore, -27.3% ... Jo-Ann's, -13.5% ... Wal-Mart, -5.4% ... CLN Index, -14.9% ... Dow, +11.5% ... NASDAQ, +11.9% ... S&P 500, +7.6% ... Target, +11.4% ... Martha Stewart Omnimedia, -46.8%.

The only "insider trading" that occurred during the quarter was from former CEO's. Wal-Mart's David Glass who remains on the board, sold 84,900 of his company shares for $3,802,197, while Jo-Ann's former CEO, Alan Rosskamm sold 50,000 shares for $1,076,000.

You make the observation in Business-Wise that retailers are driving so hard for "cheap, cheap, cheap" that they are going to end up with stores full of product that is so shoddy as to be unsellable. I agree, think we are already 75% there. On the other hand, it must be noted that our society has become driven for "more! more! MORE!," and consumers can't afford it unless it's "cheap cheap cheap."

I do believe that there is hope on the horizon, however. I have noticed a trend away from "cheap" toward "less but better." Let's hope our independent craft stores (and boutique stores in any industry) can hang on while consumers figure it out. – Trish Hansen, MoonSong Design

(Note: This was written in reaction to "Stop Worrying about Digital Scrapbooking... And worry about printing photos instead." by Sharon Cooke, owner of Scrapbook Clubhouse, Westbrook, CT. To read that article, click Here.)

YES! [Getting consumers to print their photos] is exactly what we're up against. I'm sure if you conducted a poll the numbers would agree with you. Someone has uncovered the truth lurking in the background. Most of my customers have been so busy pointing fingers at the big-box stores and digital scrapbooking as culprits in their demise, that I don't believe anyone else has thought this through quite so clearly & concisely. – Pam Riddell, www.maps2memories.com and The Riddell Group (a sales rep company)

Sharon's article is still available in the Memory, Paper & Stamps section.

In a report on the "The New Generation of Consumers," CLN wrote: "They don't care about our traditional definitions and rules. They will mix and match designs and blur what we think of as separate product categories. They might be perfectly happy to personalize a pair of blue jeans with duct tape from a hardware store. That may not sound like a 'craft' to us, but they're happy."

Ann Krier's comment: "Eclectic is a style! It encompasses all styles. If you create it and you like it, who cares what name (style) you call it? This has always been my definition of Art and, incidentally, Craft: freedom to do as you please so that it is pleasing to you, the artist/crafter/creator/queen/painter.

"Younger crafters have less formal training as most art education funding is gone. Younger 'crafters' and 'artists' are relying on their OWN gut feelings as to 'how to' create their own artwork and crafts instead of the 'formal' training many of their parents received. I think this is referred to as the human process known as creativity!

"It is funny how an industry that THRIVES on creativity is really big on packaging the creative experience into a kit, and when they miss the mark because it is too "kit-ty," they wonder why it doesn't sell. Martha Stewart, anyone?" – Ann Kristen Krier, Design One World, www.annkrier.com and http://lifeandtheStateofCrafts.blogspot.com

1. Dow Chemical has produced a new brochure, Great Decor in a Flash, Without a Lot of Cash! It has a number of home dec products – using Styrofoam brand foam. Dow is inserting it in various craft publications with a collective reach of 1+ million consumers. The projects have very modern designs and it does not have step-by- step instructions. Most consumers can figure out how to replicate these projects, but if they do want specific instructions, they're at www.styrofoamstyle.com. This is one time when having the instructions online instead of in the publication reduces costs for Dow without damaging the appeal. Also, this is a classic example of reinventing a product. (To read my first impression of Styrofoam, click on Kate's Collage in the left-hand column, and then The Craft Fur Duck in the right-hand column. The projects in the new brochure are light years apart from that project.

2. The controversy about Blackwater in Iraq reminded me of the cruise Barbara and I took in April. We met a couple on the ship and exchanged the usual pleasantries: "What do you do?" "Oh, I publish a business newsletter for the craft industry. What do you do?"

"I run a security company in Iraq."

I asked him what we should do there. "I have absolutely no idea," he said. "It is a complete disaster. All I know is, I've made a lot of good friends there, and we have ruined their country. We can't just leave these good people."

Barbara and I returned to Tremont, IL and the craft industry. He – and his wife – went back to the Green Zone.

COMPANY FOR SALE. The owners of Reminders of Faith are liquidating the business. RoF produces scrapbook papers, cardstock, vellum, Christian theme packs, and books. To see the product lines, visit www.remindersoffaith.com. For more info, email Kathy Brundage kathyb@remindersoffaith.com or Sandra Joseph sandraj@remindersoffaith.com or call 800-699-4964. (Note: This is the only scrapbook company CLN knows of that has penetrated the large Christian market. RoF also has customers in Australia, South Africa, and Great Britain.)

JOB OPENING. CHA is looking for a Public Relations Manager/Specialist to work in the Elmwood Park, NJ office. Contact riapert@aol.com.

HALLOWEEN. The National Retail Federation’s Halloween Consumer Intentions and Actions Survey, conducted by BIGresearch, reveals that consumers expect to spend more on Halloween this year, with the average person planning to spend $64.82 compared to $59.06 a year ago. Total Halloween spending for 2007 is estimated to reach $5.07 billion.

STORE LEASES. A.C. Moore bought leases for shuttered Rag Shop stores in Newton, Howell, and Middletown, NJ. Dollar Tree bought 11 leases, and Jo-Ann's rented space in the windows of the Bergenfield and Edgewater Rag Shop stores, urging passers-by to visit the nearby Jo-Ann's at Palisades Center mall, reported NorthJersey.com.

MILITARY. A.C. Moore stores in Fayetteville, NC, Savannah, GA, and Columbus, GA joined forces with Connect and Join to sponsor a Military Family Appreciation Day event last Saturday, with free craft activities and a 10% discount card for military families. For more, visit www.connectandjoin.com.

SHOWS. TNNA has added the Best Western to its list of hotels for the Long Beach Show. Education begins Jan. 9; the show runs 11-13. For info, visit http://www.tnna.org/winter_show.php#hotels. ... Online registration for the Photo Marketing Assn. show Jan. 31-Feb 2 is now open. Visit www.pmai.org/index.cfm?ci_id=35081.

PRODUCTS. Would you believe combining scrapbooking with.... 550-piece puzzles? The Great American Puzzle Factory has four, complete with scrapbook supplies. Visit www.greatamericanpuzzle.com or www.namits.com. Interesting concept, especially for retailers looking to sell something relevant, yet out of the ordinary.

BOOKS. New holiday titles from DRG: Sew It for Christmas (30 projects, 176 pps., $24.95) ... Gift Wrap in a Snap (20 projects, 32 pps., $10.95) ... Surprise Holidays (13 projects, $7.95). For more info, visit www.drgnetwork.com.

INTERNET. Check www.craftgate.com to see a new virtual community that combines the functions of yahoo groups with MySpace.

PAINTING. Martin/F. Weber announced that the popular Susan Scheewe® PBS painting series, Scheewe Art Workshop will be included in Create™ TV’s November schedule. Check the online schedule at www.createtv.com.

AWARD. Industry pioneer David Ladd, CEO of Walnut Hollow, has been named the 2007 Conservationist Lifetime Achievement Award winner by Gathering Waters Conservancy for his dedication to environmental sustainability in business, as well as decades of untiring land stewardship in his native Iowa County (WI) and across the state. "Mr. Ladd has permeated his community with a notable environmental ethic," said Charlie Luthin, Exec Director of the Natural Resources Foundation. "His legacy will be long regarded and remembered." (Comment: Dave has been a strong proponent of conservation before there was a conservation movement.)

RETAIL IS HARD ENOUGH. Without a twin-engine plane crashing into your parking lot. That's what happened to the Hancock store in Chattanooga. Three people were hospitalized but were expected to recover, tv station WTVC reported. To see a photo, visit http://security-goomba.livejournal.com/19821.html.

KNITTING. A recent edition of the Kansas State Collegian student newspaper included instructions on how to knit a scarf. Meanwhile, the Ithaca (NY) Journal reported numerous Cornell and Ithaca College students have formed Stitch 'N Bitch groups that meet in coffee shops and stores. They have traditional Friday night Happy Hours – but they knit instead of drink.

PEOPLE. Our best to Beth Hess, who resigned from Memorytrends to join her family's real estate/construction business in North Carolina. ... And to Andrew Carter, who resigned as Sr. VP for AMACO, but remains as a consultant for the parent company.

MAGAZINES. Spin-Off magazine, published by Interweave Press, celebrates its 30th anniversary with a new look and a tagline – "It’s About Making Yarn by Hand." The redesign debuts with the Fall 2007 Special Anniversary Issue, now on newsstands and in stores.

YARN. Last week on an episode of Wheel of Fortune, Vanna White showcased her new yarn, Vanna's Choice, talked of her love of crochet and the St. Jude Children's Research Hospital. Lion Brand, manufacturer of the yarn, donates a portion of the sales to the hospital.

CONDOLENCES. To the family of famed designer/painter Laurel Burch who passed away at age 61. She wrote three books for C&T Publishing, Laurel Burch Quilts, A Laurel Burch Christmas, and Laurel Burch Legends. Her designs were licensed to fabric companies and manufacturers of a wide variety of products. To learn more about this truly remarkable artist, visit http://www.marinij.com//ci_6923487.

CLN STOCK INDEX: A.C. Moore: $15.76, down $1.77 ... Jo-Ann's: $21.10, up $1.80 ... Wal-Mart: $43.65, up $0.33 ... CLN Index: 81.42, up 0.4% ... Dow Jones: 13,895.63, up 3.4%. (Note: All changes in price are since 9/14 and are exclusive of dividends.)

To see the lastest listings from the only personnel recruitment firm specializing in our industry, click on Jobs in the left-hand column, or click HERE.

I am not making this up: This what I heard from the cockpit in Minneapolis on my flight home from Memorytrends:

1. "Unfortunately, there is something wrong with the plane, so everyone will have to de-plane while we get another aircraft."

2. "Unfortunately, we have the new plane in place, but the computer system at the airport is down, so no one can board the aircraft just yet."

3. "Thanks for your patience. We're all set to go except the aircraft does not have any fuel. We'll have to wait until the plane is fueled."

4. "Now we have fuel, but we must move the luggage from the old plane to the new one."

5. "Unfortunately, a weather system is moving in and we'll have to fly around it. That requires more fuel than we have, so we'll have to wait until we have more fuel."

6. "Unfortunately, now we have too much fuel, given the weight of the aircraft, so we will taxi off to the side and run the engines until we've burned off some of the fuel."

7. "Thank you for flying Northwest Airlines."

P.S. My luggage didn't make the flight.

REMINDERS

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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 normally published the first and third Mondays of each month, but because I'll be attending a CHA board meeting, your next issue will be Monday, October 22.

xxx

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