Date: March 3, 2008
Vol. XII, No. 5

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TABLE OF CONTENTS

COMMENTARY: THEY'RE STILL STANDING 

I recently received some copies of Profitable Craft Merchandising, the predecessor of Craftrends, from 1974-5. One issue included the exhibitor list for the 1976 HIA (now CHA) show. There were 269 exhibitors back then (832 in Anaheim this year) when Jerry Ford was President and the country was still suffering from a Vietnam/Watergate hangover.

Of those 269, only 22 exhibited in Anaheim last month. (Needlework was a separate industry back then, and scrapbooking as a product category was non-existent.) The others went to other industries or out of business, or were absorbed by other companies.

I find I like performers such as Paul Simon, Eric Clapton, and the Rolling Stones more now than I did in college, because I realize just surviving is a genuine accomplishment. So, with the sound of Elton John in the background singing "I'm Still Standing," here are the survivors:

Activa; The Beadery; Bernat (now a division of Spinrite); Binney & Smith (now called Crayola); Deep Flex (now part of Yaley); Dover; Duncan; Houston Art; Kalmbach; Loew-Cornell (now owned by Jarden); Midwest Products; Offray (now Berwick/Offray); Paddle Tramps; Palmer Paint; Polyform; Scott Publications; Stanislaus Imports; Walnut Hollow; F. Weber (now Martin/F. Weber); Westrim; Wilton; and Yaley.

For more on what was in those old magazines, read "Blast from the Past," below.

"Vinny Da Vendor". A relatively small CHA exhibitor has some tough questions – and suggestions – for the show.

Designing Perspectives. Joan Green, one of the industry's top needlework designers, and Judith Brossart, veteran Editor of Crafts magazine, once the industry's largest consumer craft magazines, react to the "Designers in the Ghetto" column and why some designers are giving up free-lance work.

Industry Research. Ordering information for TNNA's The State of Specialty NeedleArts 2007 is now complete.

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

The winter shows are over. After buying or selling products and comparing notes with your peers, how do you think the year will go? A good year, recession or not, or a down year? To vote, click on Industry Polls in the right-hand column or click HERE.

The recent Anaheim extravaganza was a pleasant surprise for many voters in CLN's unscientific poll. While only 8.3% said the show greatly exceeded their expectations, 27.1% said it was better than expected. In contrast, 14.6% thought the show was somewhat disappointing, and 8.3% were very disappointed. The remainder, 41.7%, said the show was what they thought it would be.

And what had voters expected? In CLN's pre-show poll, 36.4% thought the show would be excellent for their business, and 31.8% expected the show to be "good, but not great." Only 29.6% said they had very limited expectations, and 2.3% were not sure.

Jim Bremer, whose family has been operating Tall Mouse stores in Southern California for 42 years, remembers previous recessions this way:

1. Definite interest in clothing and the reuse of clothing by using many different craft supplies to alter the appearance and often the use of the item.

2. More home-based celebrations, so party supplies and Wilton did very well.

3. Definite interest in making gifts. Note today's sad shape for paint projects. In the past we had 'Country' as a trend style and many of the paint projects, as well as color pallets, supported the trend. Today many of our wood, plaster, and other surfaces are absent, as are the number of books, project sheets, and other assistance. The guests want to paint and do painting projects – witness the popularity of canvas projects as an alternative.

4. The industry had some media support of the value of "hand made" items. Today it seems much of the media is focused on electronics, Ipods, etc.

The causes and potential length of this recession, if there is one, may be different from those in the past, says Jim, who has a PhD. in economics.

"In previous recessions the bad news was mostly focused on loss of employment – downturns in housing or the shift from manufacturing. Today it seems the news is more on housing, the loan industry, and increases in the cost of fuel, gasoline, and health care. Then the economy had significant investment in infrastructure as a viable option to redirect the economy. Today we have a war sucking our resources and the state and local economies are strained."

The media may not be helping, either. "The day after the CHA show I stopped to fill my gas tank and observed that gasoline was 68 cents/gallon less than one year ago!" Jim said. "As the price of gas went up, our TV and news coverage increased on how would the consumer adjust. People were interviewed on TV regarding what they would give up. I have not seen any coverage asking people what they are adding back with this drop in price!"

Another veteran industry retailer is Adrian Taylor, who remembers more than one recession: "Yes, in every slowdown we have done well. I think our future still depends a lot on what we are willing to do and, yes, to risk. The store that does not buy the new and promote its uses will not fare as well. Fortunately as independents we can make changes this afternoon that will have an effect on the future. We are constantly changing, scouring the vendors for ideas.

"We are hiring an events coordinator," Adrian added, "to beef up our 'events.' We know that this activity drives sales, thus the thrust to move more quickly."

Prices of Chinese products are going up – and that's not all that's changing. The Federation of Hong Kong Industries estimates 10% of the 60,000 to 70,000 Hong Kong-owned factories in China's Pearl River Delta region will close this year, the Wall Street Journal reported. The area is the prime manufacturing region for low-cost, labor intensive products such as toys.

The list of causes is lengthy: a) rising costs for wages and raw materials; b) the yuan rising 7% against the dollar in the past year; c) stronger environmental and labor laws; d) higher taxes for foreign-invested companies; and e) additional product-testing costs.

Some factories are moving inland or to other countries such as Vietnam, India, and Bangladesh, but those solutions have their own problems, the Journal reported. Moving further into China could cause some supply chain problems, and other countries have lower wages, but a much less sophisticated infrastructure.

Meanwhile, Chinese inflation has risen to its highest point in more than 11 years, jumping 7.1% in January, as snowstorms worsened food shortages, the Associated Press reported. "China needs to re-price its exports, and that has to be accepted by international buyers," Andy Xie, a Shanghai economist, told the AP.

"We are taking for granted that China will provide cheap products forever," Dong Tao, an economist with Credit Suisse in Hong Kong, told CNN. "But I think we are probably about to see the end of an era. China is exporting inflation in a big way. The rest of the world will feel that."

Despite all this, Wal-Mart Vice Chair Michael Duke said productivity improvements by its Chinese suppliers are helping to offset rising costs, MarketWatch reported. He said Wal-Mart will import approximately $9 billion worth of products this year, the same as last year – but that figure does not include goods that Wal-Mart sources indirectly from China.

In the days before the CHA show, CLN heard rumors that Delta Creative, one of the leading acrylic paint companies, was going bankrupt. Turns out the rumors were false; people learned that Delta was not exhibiting at the CHA show and concluded 2+2=5.

What has happened is the chains' relentless quest for lower prices and better margins is forcing companies such as Delta to look at developing new products for other industries. Delta has expanded its range of Kids Crafts Collections for 2008 with a theme of self expression through color. In what will be the company's most ambitious effort in its dominant 40-year history, Delta Creative has launched more than 50 items in its new DELTA KIDS product line. Delta showed its new products to its craft customers before the CHA show, so they exhibited at Toy Fair instead.

The results have been positive. Sales of the Kids Crafts Collection have grown 320% since its inception in 2005 and the company expects to double its business this year, due to placement in craft stores and such "non-craft" outlets as Toys R Us, Rite Aid, and Kmart. To see the products, visit www.deltacreative.com.

Duncan has introduced a major new line, Crafty Chica, designed to appeal to the growing Hispanic market and those consumers who enjoy Hispanic culture and art. In the past, a major new product line required extensive advertising to create consumer interest and demand. Not necessarily this time, thanks to modern technology.

The Crafty Chica is Kathy Cano-Murillo, who had built an extensive reputation on the Internet before the specific products were created.

"I call it 'enthusiastic desperation,'" Kathy says. "You do what you have to do to get results. I didn't have money for ads, but I did have the middle of the night to go online."

Kathy uses a website (www.craftychica.com), a blog, message boards, and MySpace (www.myspace.com/craftychica). "I knew the Internet would be key because it was free. Word of mouth, networking, and trading links were – and still are – crucial. When I first launched craftychica.com, I teamed up with people like Vickie Howell, Jennifer Perkins, and Jenny Hart – and hundreds more. We all traded links so when one of us would get publicity, we all benefitted. We had no idea at the time that we were actually building our platforms that would later lead to all kinds of wonderful crafty adventures!"

"The next step was blogging," Kathy added. "My take is 'crafts, drama, glitter,' so I post the good and the bad, posting fresh, interesting content everyday if possible. One day it could be a project I made and another day how I got resin stuck in my hair. I also do crafty shout-outs (cheering on another crafter who has good news), book reviews, contests, crafty movie trailers, etc. When people read and comment on my blog, I read and comment on their blogs in return to show support – and then it just takes off from there.

"MySpace is also crucial. I realized that people who are on MySpace 'live' there; they don't go to other blogs. So I double post my blog on there and have built on that. I message others, post comments, and send bulletins.

"It does take a lot of time, but I am proof that it works!"

Does it work? Consider these statistics: by the time the Crafty Chica line was introduced at the CHA show, Kathy had 10,139 friends on her MySpace page, and her website, craftychica.com, receives 1 to 3 million hits per month. Her October stats were slightly under 3 million hits, and February has averaged 59,000 hits per day.

"I love it because I feel like I really connect with each person," Kathy said. "With a magazine ad, you have no idea who is looking at it or the response. With online networking, there is a personal connection. And one thing with the Crafty Chica product line is that my site visitors and MySpace friends are supportive because they feel connected. I've been blogging about it since day one and have even asked for their opinion on things. They feel like they have a personal stake.

"So I guess the key is really wholehearted networking," Kathy concluded. "Not spam-like; you really have to do it from your heart; otherwise people will be turned off. Basically everyone helps each other and everyone sees results!"

e-Patterns.Com was launched in 2001 by DRG, publisher of CardMaker, Crochet!, Creative Knitting, Simply Beads, and Quilter’s World, plus books, and pattern books. It was only marginally successful. But as the consumer's familiarity with computers and the Internet grew, so did the website.

The site was redesigned to be more user-friendly in July 2006 and now more than 2,000 patterns are available, delivered electronically in PDF format. Last November DRG tested offering pattern books, and that, too, was a success. A similar test was conducted with magazines, and now the site has is a virtual magazine rack with issues of its magazines available for download.

End result? Sales have almost tripled since 2006, and mailing costs have disappeared.

"e-PatternsCentral.com represents the future of our business," said DRG's Internet Marketing Manager Jon Rosswurm, "and we plan to make major adjustments so that we can continue to deliver what our customers want. We welcome change and view it as a key to our future success."

Store Locator. CHA has websites for consumers (www.craftplace.org) and teachers (www.teacherplace.org). On both sites there is a place where visitors can find industry stores. For retailers to have their store's address and website listed in the locator, they should go to either site

and click the member login button at the bottom of the page. Then, enter their member ID number and password, and click send. Members can click on their record ID number to review their store's details. (The info is in draft form and won't be visible to consumers until members have approved it by un-clicking the draft button.)

Retail Owners Institute (ROI). CHA recently made arrangements for its members to receive a year of free, unlimited access to the ROI. (The cost is $499 for non-members.) The site offers a 200+ page library of financial planning and management "how-to" articles, online calculators, and courses – the equivalent of hundreds of trade show business seminars. To enter, visit www.craftandhobby.org and click on The ROI box.

For more information, or for assistance in using these services, email memberbenefits@craftandhobby.org or call 201-794-1133.

ROBERT WANG BOUNCES BACK, AGAIN

Robert Wang is resilient. He started selling macrame cord from the trunk of his car when he was a college student, eventually building his company, Wang's, into one of the largest, most successful vendors in the craft industry. Then he watched helplessly as a malfunctioning computer system caused Wang's to miss a Christmas season, leading to the company's demise.

Robert bounced back, launching Creative Co-Op and growing it until it was one of the largest importers in the gift industry. Then on Feb. 5, a tornado caused massive damage to its 400,000 sq. ft. Memphis warehouse.

Employees had to recover salvageable product from the warehouse and load it onto trucks while the company searched for replacement space, according to Gifts & Decorative Accessories. "The street was lined with hundreds of trailers," VP Lee Wang told G&DA.

The company’s warehouse system was based on random locations, so it didn’t lose all of any one item, and the company resumed shipping orders only eight days after the tornado. "We’re shipping close to 100% fill rates now," Lee Wang told G&DA.

Recently CLN came into possession of industry trade magazines from 1974-1976, issues of Profitable Craft Merchandising (PCM) and Craft & Art Market. (C&AM) Some highlights:

1. Retailer Education. There were many more distributors in those days, including Mangelsen's, Herr's, Craft World, and Eriksen's, all of whom sponsored numerous educational "clinics" or workshops for retailers, teaching them how to work with various products so they, in turn, could teach their customers.

Best Sellers. The #1 category according to magazine surveys was macrame, followed by tole & decorative painting, jewelry-making, dollmaking, decoupage, miniatures, and sand art.

Projects. Because there weren't as many instruction books and project sheets as there are today, trade magazines published how-to projects so retailers could create madeups for their stores. Among the headlines in the Dec., 1974 issue of PCM: "Waxed-Ball Decorations," "Decoupage a Christmas Purse," "Make a Straw Peasant Dolly," "Try Inkle Weaving for Unusual Christmas Ornaments," and "Cowboy Can Corral Interest"; the subhead read, "Imagination, fabric, and felt can transform a Styrofoam egg into a rope-toting cowboy."

Size of Industry. PCM said in 1974, "Crafts already account for at least $500 million of the estimated $1.2 billion annually spent on hobbies of all kinds, and continued growth is expected." (The latest CHA survey pegs craft industry sales at $31+ billion.)

Economy. Articles complained about inflation and interest rates – as high as 17%.

Articles. PCM reported that Frank's Nursery was going to add crafts. Frank's eventually became the industry's largest chain, then eventually died. In an interview with C&AM, Dave Cunningham said the financial problems of his company, Cunningham Art Products, were due to growing too fast. The company eventually died, but Dave bounced back by starting Plaid.

Quotation. In an editorial headlined, "The Industry Is Maturing," Craft & Art Market Editor Mike Jeffries said, "The point is that now, after many ups and downs, the industry seems to be passing out of its infancy and toward a period of more predictable and dependable growth."

(Note: The following email was sent to the CHA office by Mick Davies, whose company, Kaisercraft, was a new exhibitor at the CHA winter show.)

I just wanted to write a short note to thank everyone involved in organizing the CHA show in Anaheim, especially the team in exhibitor-support roles.

How do we describe our show? Uh, non-stop! Actually, we're thinking of suing CHA because we all came home with RSI and carpel tunnel syndrome from having spent four days writing orders. We had a blast meeting the U.S. scrappers and talked our heads off; we were so busy that never once did we get time to finish our sandwich (which we didn't have a chance to buy until about 3:00 pm each day anyway).

We had more firsts and records than we can remember, including never before seen sales for the period; new accounts (we nearly doubled our customer base in the U.S.); and new market growth (new accounts in Cyprus, Dominican Republic, Japan, Finland, Singapore, etc.).

As I've heard, "It takes a village to raise a child," and this baby grew up quickly thanks to everyone at the association involved with putting the show together. We owe you so much thanks for all the silly questions you answered, the communication and service, and the fact that everything came together so smoothly. Thank you for giving a tiny Aussie company prime real estate next to Basic Grey (the cheque's in the mail, ha ha). Thank you for all the last-minute changes that came after the last minute.

As this show was such a success, we're excited to announce that for the first time ever Kaisercraft will be attending the summer show in Chicago. – Mick Davies, Export Sales Manager, Kaisercraft

(Note: The results of the new TNNA research study, reported by CLN in the 2/4/08 issue, included data indicating that crochet enthusiasts spend less in specialty shops than knitters.)

Crocheters may spend less at specialty shops because most "yarn shops" are geared for knitters (classes, project ideas, supplies). So we crochet people feel like second class citizens. We spend less per project for many reasons – we are not shopping for higher-end yarns because we are not going to yarn shops; we are making more "washable" projects for the home and not as many fashion apparel pieces, and those who do afghans (a big portion of crocheters) are not going to shell out 20 bucks a skein when they need 10 skeins. – Pam Smart

(Note: The original report is in the 2/4/08 issue in the CLN Archives in the right-hand column. For details accessing the executive summary and the complete TNNA report, click on Industry Research.)

In general the industry has done well during recessions – at least better than many other industries. But during the recession in the early 90's, the people who really made out well were the stockholders of the public sewing retailers – Jo-Ann, House of Fabrics, and others. Apparently the world assumed women would be sewing clothes to save money, and the chains' stock prices shot up like a rocket. If I remember correctly, Jo-Ann's stock split because the price had risen so sharply. Finally Wall Street woke up, the recession faded, and the stock prices came back down to earth.

FINANCES. Michaels announced it was postponing the release of its fourth quarter and fiscal year earnings report from this Wednesday to Mar. 18. "Various business scheduling considerations dictated a move," a press release said. Jo-Ann releases its report Mar. 12.

CORRECTION. The Hancock financial news reported in the previous edition of CLN was for the previous year, delayed because of the bankruptcy proceedings.

HOBBY LOBBY. Sold a distribution center at 5500 W. Reno Ave. in Oklahoma City to Trammell Crow Co. for $7.9 million, or about $23/sq. ft., reported CoStar Group, a business real estate information company. HL is relocating its distribution operations at the property to Dallas this spring, CoStar reported, but Randy Green told CLN, "We are not moving our distribution center. This was a satellite warehouse that was used for various things over the last few years. Most recently, it housed product for our Hemisphere’s stores (high-end furniture and home accents). Several of these stores are in the Dallas area and we are moving the distribution there. We no longer need the Reno Ave. warehouse so we sold it. Nothing has changed for Hobby Lobby Stores distribution."

DESIGNERS. The Mankato Post Bulletin profiled local painter Carol Stoff and how she has been able to make a living in a relatively low-population area by marketing herself – a valuable lesson for all designers. To read the article, visit www.postbulletin.com and type Carol Stoff in the search engine. (To read more on the subject, read Designing Perspectives.)

KUDOS. To Berwick Offray for sending boxes of ribbon to the students of Northern Illinois University who are making special ribbons in commemoration of the students who died when a former student opened fire in a lecture hall. Volunteers are making 30,000 ribbons. "It’s outstanding. It’s touching," said Becky Harlow of Student Involvement and Leadership Development, on the NIU website. "We’ve been knocking ourselves out all over town trying to get ribbon, and here these people just send it, and that’s wonderful."

NEEDLEWORK. The exhibitor prospectus for The National NeedleArts Assn. show June 7-9 in Columbus, OH is now available at www.tnna.org. The event is expected to host 430+ exhibitors in 900+ booths and attract approximately 2000 attendees. The entire class listing will be available later this month. The hotel listings for the 2009 show in San Diego, Jan. 17-19 are also available online.

STORES CLOSING. The Ben Franklin Crafts store in Billings, MT, after 22 years and Law's Hobby Center in San Luis Obispo, CA, after four-plus decades.

TOYS. The U.S. Senate begins debate this week on legislation to ban lead in toys, require third-party testing certificates and labels on toys to track recalled products, increase civil fines to $20 million and boost the annual budget and staff for the Consumer Products Safety Commission. The House passed similar legislation late last year. President Bush has not indicated if he would sign or veto the bill.

ENGLAND. HobbyCraft will open its 35th superstore in Woking, Surrey in May.

PEOPLE. Actress Melissa Joan Hart (Sabrina, the teenage witch) announced on her blog, "I am preparing to do an online show about scrapbooking and assist in bringing newcomers to the hobby by helping them pursue it through the use of the Internet." ... Hancock named Robert Driskell, 33, Sr. VP/CFO. Jeff Nerland resigned as Interim CFO but continues as Exec VP. Mr. Driskell has 10+ years of financial management and leadership experience, most recently serving as CFO of Reeves Williams, a large privately held construction firm based in Memphis. Driskell's base salary is $190,000, plus bonus and stock options.

INTERNET. The Craft Radio Network's next live show will be on quilting this Thursday, 2-3:00 pm EST. Visit www.wsradio.com and click on Craft Radio Network in the left-hand column. The first live broadcast was at the CHA show and is available at the site,  www.wsradio.com/internet-talk-radio.cfm. To host a show on the Craft Radio Network, contact Lee at Lee@craftradionetwork.com. To advertise or be a sponsor, Jack Warren 858-623-0199, ext. 105 or email jack@wsradio.com.

CONSUMER SHOW. The deadline for online registration for the Mar. 28-29 Memories Scrapbooking Expo in Columbus, OH is Mar. 13. Visit www.memoriesscrapbookingexpo.com/ohshow.asp.

DOLLS. Cabbage Patch Kids are 25 years old this year. When the product line was launched, there were such huge shortages that it touched off an enormous doll-making trend in our industry. The trend faded when Cabbage Patch dolls eventually became readily available.

DIGITAL. Shipments of digital cameras increased 31% in the fourth-quarter from a year ago thanks to lower prices, according to the research firm IDC, Reuters reported.

RETIREMENT. A survey of 976 small business owners by Zogby Int. for Key Investment Services found that 40% are reconsidering their retirement age. Of those changing their plans, 85% are delaying their retirement date. Reasons cited for the delay: need more savings (64%) and rising healthcare costs (47%).

BANKRUPTCY. Sun Capital Partners, the private equity firm that bought Rag Shops and led it into oblivion, is at it again. It recently filed Chapter 11 bankruptcy protection for another of its holdings, the famous, long-time mail order company, Lillian Vernon.

QUOTATION. "I feel like some day, when this life is over, it'll be just me and God. It won't be my mom, it won't be my dad, it won't be the cynics that are out there. It'll just be me accountable for my life, and I want to live a life that I can say I did the best I could." – Mart Green, son of Hobby Lobby founder David Green, explaining why he donated $70 million to Oral Roberts U., a gift that probably saved the university from closing. (Associated Press)

REBATES. Don't count on consumers flocking to our stores waving their rebate checks from the economic stimulus legislation recently passed by Congress and signed by President Bush. According to a survey by the International Council of Shopping Centers and UBS Securities, 43% of the 1,000 consumers surveyed said they would use the money to pay off debt, 26% said they would save the money, and only 24% said they would spend it.

ACQUISITION. Elmer's Products purchased James Galt & Co., an international children's art/craft/activity product company based in Cheshire, England.

STOCKS. A.C. Moore: $8.57, down $.05 ... Jo-Ann's: $16.50, up $0.50 ... Wal-Mart: $49.59, down $0.38 ... Dow Jones: 12,266.39, down 1.0%. (Note: All changes in price are since 2/22 and are exclusive of dividends.)

DATA. 832 exhibitors in 274,626 sq. ft. of space ... 5,754 buyers from 61+ countries ... 1,528 in a new category of attendees, "business networkers" (attendees who, while not buying or exhibiting, contributed to the business done at the show – designers, non-exhibiting manufacturers, sales reps, teachers, publishers, service providers, and 299 members of the press).

MEDIA. Trade Show Week, a trade magazine for trade associations and show sponsors reported on the MemoryTrends and CHA winter shows. To read the article, visit www.tradeshowweek.com/article/CA6536220.html.

AWARDS. The Innovation (new product) award-winners and links: Best of Show: Helix USA, The Paper Craft Station www.helixusa.com/Products/Craft+With+Helix.html ... New Exhibitor: ScrapOnizer - ScrapOnizer Toolbox www.scraponizer.com ... Art Materials & Framing: Faber-Castell - Getting Started: Complete Manga Drawing Kit www.fabercastell.com ... Digital Imaging: Hewlett-Packard - HP Photosmart A826 Home Photo Center ... Fabric/Quilting/Needlecraft: JHB International - Button Ware www.buttons.com ... General Crafts: – Diamond Tech - Fuseworks Microwave Kiln www.diamondtechcrafts.com ... Scrapbooking & Paper Crafts: - Maude Asbury - i-makit www.maudeasbury.peachhost.com.

SPEAKERS. Many of the seminar speakers at the winter show offer written materials which can be downloaded. Visit www.chashow.org and click on "Click Here for the Winter 2008 Speaker Materials.

FUTURE. The winter show returns to Anaheim Jan. 25-28, 2009. It will be in Anaheim in 2010 too. The summer show is July 18-20 in Rosemont, IL. Visit www.chashow.org for exhibitor info.

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.

A little girl asked her mother, "How did the human race appear?"

The mother said, "God made Adam and Eve and they had children and so all mankind was made."

Two days later she asked her father the same question. The father answered, "Many years ago there were monkeys from which the human race was developed."

The confused girl returns to her mother and asked, "Mom, how is it possible that you told me that the human race was created by God and Dad says we were developed from monkeys?"

The mother responded, "Well dear, it is very simple. I told you about the origin of my side of the family while your father told you about his side."

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4. Creative Leisure News ihas returned to its traditional first/third Monday publishing schedule. Your next issue will be Monday, March 17. Happy St. Patrick's Day!

xxx

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