Date: June 15, 2009
Vol. XII, No. 12

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TABLE OF CONTENTS

COMMENTARY: WHEN TO CHANGE, WHEN NOT TO 

When times turn tough for a successful business, the owner is faced with a conundrum: do you continue with the philosophies and strategies that made the company profitable in the first place, or is it time for a change? And if so, change what? Of all the things a company makes and does, how do you know which are universal, time-tested principles and which maybe don't work so well any more in these changing days?

A report in the Wall Street Journal on the bankruptcy of General Motors said, "In the end, though, GM was a victim of its own success – its path to bankruptcy paved with the very management, marketing and labor practices that made it the world's largest and most profitable company for much of the 20th century."

Scene & Heard. Ellie Joos' analysis of the New York National Stationery Show.

Kizer & Bender. Attitude can be the difference between a store's growth and decline.

Category Reports. A profile of Carol Gantz who received The National NeedleArts Assn.'s highest honor, the Tribute to Excellence in Needlework (TEN) award at last week's show in Columbus.

Business-Wise. To be a better salesperson, employee, or friend you have to be a good listener. Here are seven basic principles.

Newsbriefs. The June 4 email reporting Michaels' and Hancock's earnings reports.

(Note: To read the columns, click on the column title. If it's not the column you expected, click on the Reload or Refresh button of your browser.)

How do you read CLN? Online? Or print a hard copy and read that? To vote, click on Industry Polls in the right-hand column or click HERE.

It looks like the various chambers of commerce have some work to do, either improving their members' benefits or showing how those benefits are worth the cost of the dues. While 57.9% of the voters in CLN's unscientific poll said their business is a member of their local chamber, 71.4% of those believe the benefits they receive aren't worth the cost of the dues.

For those voters who are not chamber members, 57.1% of them had been members but have quit.

Note: Is your local chamber of commerce a real help to your company? If so, tell CLN so readers can take it to their own chamber and suggest that the good ideas and programs be duplicated. Email your thoughts to mike@clnonline.com.

Attendance. Once again the event offered hundreds of classes, some expensive, but they were well attended. Classes started on Sunday; the show didn't open until Thursday evening. Attendance Thursday evening looked very strong, but seemed lighter than usual Saturday morning. The show usually attracts 14,000-16,000 attendees.

Trends. More Czech glass and Swarovsky crystal, but less silver because of the fluctuating cost ... The discounts ("Sale! 50% Off!") on basic beads appeared greater than usual, but lampwork prices seemed higher.

Exhibitors. Most would be incapable of selling en masse to retailers. They don't have the packaging, UPC codes, etc. Consequently, it's a great place for independents to shop if they want to carry products consumers won't find in chain stores.

Sales. As always, exhibitors had mixed results; some had an excellent show while others were disappointed. The overall amount of money changing hands was probably down, given various anecdotal evidence that hard-core beaders, scrappers, etc., are using their stash rather than adding to it. Overheard: 1. "Last year I spent twice as much as I had budgeted, but this year I'm sticking to it." 2. "I'm not buying anything this year; I'm just here to see the trends."

Sponsors. Kalmbach Publishing maintains the size of the show, despite the fact that the convention center has plenty of additional space and there's a waiting list to exhibit. The philosophy is, if you make the show successful for current exhibitors, they will return. Additional vendors with the same attendance figures would simply give exhibitors a smaller slice of the pie.

Miscellaneous. Much of the bead category operates as a separate industry – no trade association, trade magazine, or trade show, per se. Many exhibitors are similar to gypsies, traveling from one consumer show to another. ... The magazines have a different perspective than magazines in other categories: They can't publish only projects that call for materials/beads in wide distribution, because so few products are carried by every shop. Instead, they publish projects to give readers an idea or concept. That can be frustrating for some readers who, like many crafters, decorative painters, and cross-stitchers, want to replicate the project.

To get a glimpse of the appeal of beading, visit www.htrnews.com/article/20090607/MAN04/906070378/1398. Excerpt from the article by Suzanne Weiss of the Manitowoc (WI) Times Herald: "What's nice about the hobby is that you can make a necklace the exact color and length you want at a fraction of the price you might pay in the store. The downside is, I've spent much more on this hobby than I would otherwise have spent on jewelry."

1. Founder Chris Skinner will step down as Chief Creative Officer, effective July 1 to become a Senior Adviser for an 18-month transition period. He has also stepped down from the board of directors and the executive committee.

2. Karin Sloan will be promoted to VP - EK Success and Dimensions Product Lines, reporting to Kevin Fick, Group President of Paper & Specialty Crafts. She will oversee the product development activities for all EK Success product lines including the Dimensions lines currently being integrated into the company.

3. Larry Hermansen's is VP – K&Co and Key Licensed Product Lines. Larry will report to Kevin Fick.

4. Amy D’Alessandro, VP-Martha Stewart, Perler, Needle and Paint Crafts, will have a larger leadership role which will include the integration of the product development function of the Paint, Needle Craft, and Perler businesses into EK offices in Clifton, NJ.

1. CHA has added a resource page for members regarding the Consumer Product Safety Improvement Act, including summaries of the CHA task force meetings on CPSIA. Visit www.craftandhobby.org.

2. Billboards are now up promoting the CHA SuperShow (consumer) July 31-Aug. 1 on the heavily traveled I-4 interstate.

3. The SuperShow will include an attempt to break the world record for the largest crop. It's a charity event benefitting the Leeza Gibbons Memory Foundation (Friday, July 31, 5-11:00 pm; tickets are $10). Exhibitors are encouraged to donate product for a raffle and goody bags to be given to attendees (350 pieces minimum). Scrapbook celebrity appearances (from a make-it/take-it to a photo op) can also be arranged. For more info, email Amie Lee Kolodziej at akolodziej@craftandhobby.org.

4. CHA has revamped its consumer site, www.craftplace.org and it's impressive. CHA member designers, manufacturers, publishers, and others can contribute projects and info. To learn more about how your company can participate and benefit, visit http://tinyurl.com/CHA-CraftplaceManual.

Mrs. Grossman’s, the originator of Stickers by the Yard, has joined the Lucidiom EQ Design Alliance, so her exclusive stickers and coordinating folded card templates are now available for retailers with Lucidiom APM kiosks. Through the partnership, Lucidiom customers purchasing Mrs. Grossman’s Birthday Stickers from the counter display receive complementary folded card content for the Lucidiom APM. Additional products and card themes are in development.

"Mrs. Grossman’s celebrates its 30th anniversary this year, and I can think of nothing more fitting than marking the occasion by moving our trailblazing sticker company into the digital age with these new APM card templates and matching stickers," said Jason Grossman, president of Mrs. Grossman’s. "What started with red heart stickers on rolls has evolved into a timeless business that allows consumers to customize their digital creations. We look forward to introducing additional products through the Lucidiom EQ Design Alliance."

Soon retailers may be charged less for accepting Visa and MasterCard. Senate Majority Whip Richard Durbin (D, IL) introduced the Credit Card Fair Fee Act of 2009 that would require Visa and MasterCard banks to negotiate over "interchange" fees that are currently imposed on merchants on a take-it-or-leave-it basis. A similar bill, H.R. 2695, was introduced by House Judiciary Committee Chair John Conyers (D, MI). Interchange is a fee averaging close to 2% that Visa and MasterCard banks charge merchants when a credit card is used to pay for a transaction.

"This bill is the next step in the credit card reform process that Congress began last month," National Retail Federation Sr. VP/General Counsel Mallory Duncan said. "Congress can’t claim to have fixed credit cards without addressing the billions of dollars in artificially inflated prices that result from credit card interchange fees. This legislation shows that lawmakers are ready to finish the job and protect consumers from these rapidly increasing fees."

Internet Retailer has a fascinating article on how the Obama administration will affect e-commerce – in both positive and negative ways.

Positive. The stimulus package should bring broadband access to more people; that should make them more likely to order products and services online. The stimulus package signed into law in February allocates $7.2 billion to be spent by the end of next year to extend broadband Internet access, especially to rural areas. That could mean an increase in e-commerce sales by as much as $4.5 billion, Internet Retailer reported.

Negative. With state and federal governments scrambling for more revenue, look for legislation requiring e-commerce sites to collect sales tax. That legislation is supported by the National Retail Federation whose brick-and-mortar members are at a price disadvantage because they have to collect taxes.

To read the article, visit www.internetretailer.com/article.asp?id=30598.

C&T Publishing has launched a creative way to promote its lines of Blank Board Books, Canvas Books, Timtex, Lutradur®, and other products – and help their retail customers and industry designers at the same time.

The company has formed Creative Troupe, a group of designers, and the program works like this: a retailer can request a model for one of the C&T product lines; the call goes out to the Troupe, and the retailer receives a model.

For being a part of the Troupe, designers receive cash rewards, product samples, publicity for themselves and their blog and/or website, product discounts, teaching tools and referrals, etc.

"We connect the designed projects with retailers who have been thrilled to have beautiful models to display in their stores," C&T's Megan Wisniewski told CLN. "We took some designed models from Creative Troupe members to the recent NAMTA show and art material store owners were placing orders and signing up to receive the models."

C&T's August releases: Alex Anderson's Hand & Machine Appliqué, Alex Anderson's 4-in-1 Essential Sewing Tool, Patchwork Party by Sandy Bonsib, Barbara Brackman's Encyclopedia of Appliqué, and 100+ No-Sew Fabric Crafts for Kids by Mary Link. To learn more, visit www.ctpub.com/client/client_pages/creative_troupe.cfm.

To read CLN's initial reports on the earnings releases, click on Newsbriefs in the left-hand column. The complete reports are available on the companies' websites. Some industry reactions:

1. "This CFO is a much happier guy after seeing this Michaels statement. It means we can expect pretty smooth payments on receivables for the short term ahead." – Major Vendor

2. "It is certainly amazing that nowhere did Michaels cite the fact that the big turnaround was due to lower interest rates on massive floating rate debt." – Independent Retailer

3. "I thought [Michaels' new CEO] John Menzer did a great job on the conference call with analysts. He sounded like another Sam Walton." – Industry Consultant

4. Shortly before Michaels' earnings announcement, a CNNMoney.com article quoted analysts as predicting the pace of store bankruptcies will pick up because of the "severe lack of credit availability." The article cited the credit rating agency Moody's Investors that currently rates about 20% of retailers at "Caa1" or lower, "indicating our view that the number of defaults in the retail industry will rise in the next 12 months as the recession deepens." Among those rated "Caa1" or lower were Barneys, Blockbuster, Eddie Bauer, Claire's Stores, Guitar Center, Michaels, and Rite Aid.

Hancock. In a conference call with analysts, CEO Jane Aggers said Hancock had a "distinct advantage" over many other retailers who are scaling back, because Hancock went through that process – closing stores, laying off employees – during the bankruptcy period. The company had closed about 180 stores, bringing the total to 264, the Northeast Mississippi Daily Journal reported. "For the first time in a very, very long time, we can concentrate on customers and operating our business," Aggers said.

Aggers said first-quarter sales improved in apparel, quilting, and sewing, but there was a "significant" drop in more expensive items such as decorator fabrics, home accents, and sewing machines. The average ticket was down 3.5%, but same-store sales were up 2.3%, a sign that there were more customers, but each consumer wasn't spending as much.

In Lufkin TX, a regional center of about 40,000, the sewing market is having problems, thanks to Hancock having closed its doors a year ago, and now Wal-Mart is phasing out fabric. That leaves the local alterations business, A Stitch in Time, to shop at Hobby Lobby (whose sales have increased) or order from catalogs, the Lufkin (TX) Daily News reported.

"Sewing is becoming a lost art, which is really sad," Stitch in Time owner Tammy Jennings told the Daily News. "We need to teach the younger generation how."

But is the problem a lack of consumer interest, or a lack of stores?

In Houston, sewing is making a huge comeback, according to a report by KTRK, the local ABC affiliate. The report quoted retailer Linda Hayes who said her store, House of Sewing, has seen a boom in business: "We are teaching a whole new generation how to sew."

The report also cited another independent local store, Sew Crafty; the local Jo-Ann; and sewing schools Sew Crafty and Sew Contempo, who all reported an increase in the number of consumers wanting to learn to sew.

But when there's a void in the marketplace, it tends to be filled, and these trends could be a breeding ground for new independent stores. The owner of another local Lufkin business, Alterations by Shern, is thinking of opening her own fabric store. "I depend on Wal-Mart for getting my zippers and other sewing items and I hate that they've stopped carrying them, but maybe I can start up something myself," Shern Hall told the Daily News.

One way to be a successful independent is to be more than a retailer. Consider Y2Knit:

1. Owners Jill and Susan Wolcott have a yarn shop in Funkstown, MD.

2. Jill and Susan wrote YNotKnit: Step-by-Step Instructions for Continental Knitting and Knitting Basics, the first how-to-knit books devoted to the Continental method of knitting.

3. They produce and sell the Y2Knit Pattern Collection, 150+ patterns with the recent publication of several patterns for release at TNNA.

4. They also sponsor Y2Knit Knitting Getaways, the latest being Experience Tuscany 2009, which is already sold out.

To learn more, visit www.y2knit.net.

The following is from Cari Clement, Director of Fashion & Design for Caron International.

"The arts & crafts movement in fashion is definitely growing; it was particularly evident after having attended the Renegade Crafts Fair in Brooklyn this past weekend. They had to move the event to accommodate more exhibitors (300+), and it even flowed over into an adjacent park. It was all the indie crafters – young, cool, occasionally edgy – but catering to loads of their peers, many with kids in tow. I was probably one of the 10 over-50 people there. Nearly every booth contained some component of recycled material – but all also contained components that can only be found at stores within our industry. And there were many more guys involved than I expected. THIS is the growing arts & crafts movement, and it’s great to see the new direction it’s taking – and the passion that everyone had for what they make and how interested they were in talking to you about it.

"But these are city kids – with few of our industry crafts stores within walking/subway distance. It’ll be interesting to see if their embodiment of craft extends to their rural/suburban counterparts – but I bet the urban crafters get a lot of what they use online, which includes buying from our customers."

Editor's Note: There are Renegade Crafts Fairs scheduled for 2009: Los Angeles (July 11-12 at the California Market Center) ... San Francisco (July 18-19 at Fort Mason Center Festival Pavilion) ... Chicago (Sept. 12-13 on Division St. between Damen & Hermitage). There will also be a Renegade Craft Fair Holiday Sale in Chicago (Dec. 5-6 at the Pulaski Park Fieldhouse) For more info, visit www.renegadecraft.com/brooklyn?site=bk.

"I think this is a great time for the craft industry. It's a matter of the 'suits' fine-tuning their messages. People still want nice things and we can show them how to make them affordably. Where is the disconnect?! I think the problem is that most of the people in charge aren't crafters, so they're sending out the messages that worked when the economy was strong, and not taking the initiative to work a little harder and come up with new and more relevant messages.

"Plus, the inability of so many of these companies to fully grasp the power of the Internet is mind boggling. It's not enough to have a blog, Facebook, and Twitter, you have to CONNECT with your followers. Folks should be hiring viral marketing craft experts to do these jobs for them; the return on the investment would be significant." – Margo Potter, The Impatient Crafter™, margot@margotpotter.com, www.margotpotter.com, http://margotpottertheimpatientcrafter.blogspot.com

1. This month marks the 35th anniversary of the UPC code, which consists of a row of 59 machine-readable black and white bars and 12 human-readable digits. The first live use of a UPC code took place in a Marsh Supermarkets store in Troy, OH on June 26, 1974, when a cashier scanned a package of Wrigley’s gum.

That brings to mind the problems UPC codes caused when they were first introduced in our industry. For example, sometimes the retailer forgot to tell the check-out clerk to scan each item. A cross stitcher is buying eight skeins of DMC floss, each a different color. The clerk scans one, punches 8 on the register, and now the retailer and DMC think the store is out of a particular color, but has lots of inventory in the other colors.

2. Just how vague is the Consumer Product Safety Improvement Act? Because it's so vague, it goes far beyond toys, jewelry, and crafts. Among the groups looking for exemptions to some of the regulations are the Footwear Distributors and Retailers of America, the United Dance Merchants of America, the Bicycle Suppliers Assn., the Motorcycle Industry Council, and the Specialty Vehicle Institute of America.

THE JOYS OF RETAIL. A Hancock store in Memphis burned down when a garbage company truck accidentally hit the store's gas meter. There were no injuries, but it took more than an hour for 100 firefighters to get the blaze under control, the Commercial Appeal reported. ... An armed robber tied up a clerk at a Hobby Lobby in Columbia, MO and fled with the contents of the cash register, the Columbia Daily Tribune reported.

JOBS. Wal-Mart continues to expand. The company expects to hire 22,000 workers to fill positions at new stores this year, CNNMoney.com reported. The positions will include corporate and store-level jobs.

VOTE OF CONFIDENCE. A.C. Moore's CEO Rick Lepley bought 5,000 shares in the company.

STORES. Hobby Lobby continues to expand in New York. Next month the company will open a 47,000 sq.-ft. store in Elmira, its fourth in the state. ... Hobby Lobby is opening a store in Newman, GA this month; the 66,000 sq.-ft. facility will be HL's 23rd in Georgia.

KIDS. Michaels is continuing its make-it/take-its for kids, this time offering projects kids can make for Father's Day. Projects included a Thumb Doodles card in which kids use their thumbs to create characters and designs, and if they buy a $2.50 T-shirt, they can decorate it with materials provided by Michaels. "Our Mother's Day gift events were incredibly popular, and we want to offer inexpensive, creative ways for families to honor dads, too," said Michaels' Chief Marketing Officer Stuart Aitken. Visit www.michaels.com/fathersday. ... The Hobby Lobby in Mishawake, IN is offering summer art camps for kids 6-10 and a "camp" for for adults, too.

TOYS. Part of Toys R Us' acquisition of FAO Schwarz includes Schwarz will stop operating toy boutiques in 260 Macy's stores.

CHARITY. The Wal-Mart Foundation announced it will award $8+ million in academic scholarships to help ease financial concerns for college-bound students. The 2,695 winners of the 2009 Sam Walton Community Scholarship will receive $3,000 for tuition, books, etc., for the '09-'10 academic year.

DOLLAR STORES. While a number of chains are struggling, former Michaels execs Bob Sasser and Bob Rudman have led Dollar Tree to record sales and profits. In the first quarter same-store sales rose 9.2%, margins and customer traffic increased, and earnings rose 37.5% to $0.66/share. The chain now has 3,667 stores.

QUOTATION. "The most active retailers [looking to expand] include Bed Bath & Beyond and its various concepts, Best Buy, Forever 21, HH Gregg, Hobby Lobby .... We have multiple executed leases or an active lease or LOI negotiations with each of these retailers that I just mentioned." – Dan Hurwitz, President/CEO of Developers Diversified Realty, a major business real estate firm, in his conference call with analysts following the release of the company's first-quarter earnings report.

ECONOMY. U.S. sales in May rose slightly, which can be interpreted in two ways: positive, in that a year ago consumers were spending their economic stimulus checks; negative, in that much of the increase was probably due to higher gas prices. ... The Reuters/U. of Michigan consumer confidence survey rose again for the fourth month in a row to the highest level in nine months.

COMPANY FOR SALE. Scrapbook/paper manufacturer established in 2003 and currently doing business with major chains, distributors, and independents in the craft industry. The company is relocatable. The large image library has images that could be licensed in other industries such as gift and textiles. Currently uses 40 independent reps in the U.S. and Canada, and has a web presence. Gail Czech of The Creative Network is assisting the owner with the sale. For more info, in complete confidence, email Gail at gail@creativenetworkinc.com or call 360-604-0802.

WEB. Former staffers of the now defunct Simple Scrapbooks magazine have launched a new site, Write. Click. Scrapbook. SS editorial board members Tina Cockburn, Elizabeth Dillow, and Marnie Flores were the driving force and SS founder Stacy Julian is on board, too. Visit www.writeclickscrapbook.com.

GOOD CAUSE. TNNA once again supported the program that member Jen Funk-Weber, a children's book author and owner of Funk & Weber Designs in Sutton, AK, created to celebrate reading and stitching. The Needle and ThREAD: Stitching for Literacy 2009 Bookmark Challenge took place Mar. 19 through May 7. Participating independent needlework shops and guilds collected 1,023 hand-stitched bookmarks and donated them to libraries and schools during National Children's Book Week (May 11-17).

WHAT GOES AROUND. The 6/10 edition of the New York Times included a report on the resurgence of... macrame. Instead of plant hangers, though, it's high fashion. The article cites the women’s-wear line Ohne Titel, macrame belts by Esteban Cortazar for Emanuel Ungaro, sandals and ankle-strapped moccasins by Rachel Comey, a macrame vest by Kate Moss, and a leather satchel by Jimmy Choo. (Note: CLN also saw a number of examples of macrame being used in jewelry-making at the recent Bead&Button show.)

CELEBRITIES. More than 120 of Duncan's Tulip One-Step Tie-Dye kits were distributed to the Hollywood celebrities who tie-dyed a t-shirt or tank top at the recent MTV Movie Awards Celebrity Gift Boutique. Those who participated included actors Eric Estrada, Fred Willard, Marilu Henner, and soap opera stars; Caridee English, winner of America’s Next Top Model; Mrs. California 2009; Slash, former lead guitarist of Guns N' Roses; and others. To see images from the event, visit www.flickr.com/photos/ilove2create.

ADVERTISING. The media research firm Borrell Assoc. predicts spending on direct mail will slip 39% over the next five years, Media Life reported. The cause? Same as it has been for the decline in newspaper and Yellow Page ads: Increased ad spending on the Internet.

JOB OPENING. Sales manager for a growing yarn company. Should have 5-7 years experience in the sales area of knitting yarns and a proven track record of managing a sales team. Must be willing to relocate to the Southeastern U.S. and be willing to travel. Send resumes to xyzyarn@gmail.com.

PAINT. Chroma has developed an aggressive new Artist Friendly Pricing Program on the 75-color line of 80ml tubes of Atelier Interactive Professional Artists' Acrylic. The program offers lower costs to the retailer, as well as higher MAP discounts that are passed on as lower prices to the consumer. This program is guaranteed through 2010. For more, call Debra MacDonald at 800-257-8278 or email dmacdonald@chromaonline.com.

PAINT. Fredrix Artist Canvas has partnered with the Wyland Foundation, the U.S. Forest Service, NOAA, and the National Aquarium in Washington to kick off FOCUS (Forests, Ocean, Climate – and Us), a nationwide outreach program using art to introduce young people to the role forests and oceans play in regulating the climate. Fredrix is the official artist canvas for FOCUS. The program's launch was last Thursday, attended by Wyland, political bigwigs, and hundreds of local Washington students who painted murals inspired by the FOCUS program.

QUOTATION. "It's not the time for the faint of heart, but the good news is a lot of your competition's out of the way. And the ones that are still opened, a lot of them are sidelined by their own attitude." Dave Ramsey, Fox Business Network, on Good Morning America

STOCKS. A.C. Moore: $4.33, up $0.97 ... Hancock: $1.08, UNC ... Jo-Ann: $20.75, down $0.86 ... Wal-Mart: $54.63, up $0.10 ... Dow Jones: 8,799.26, up 3.5%. (Note: All changes in price are since 5/29 and are exclusive of dividends.)

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

Note: The Creative Network is offering a $1,500 rebate to any company who hires a permanent or contract worker from The Creative Network during June or July.

If you can start the day without caffeine,
If you can always be cheerful, ignoring aches and pains,
If you can resist complaining and boring people with your troubles,
If you can eat the same food every day and be grateful for it,
If you can understand when your loved ones are too busy to give you any time,
If you can take criticism and blame without resentment,
If you can conquer tension without medical help,
If you can relax without liquor,
If you can sleep without the aid of drugs,
Then you are probably the family dog. 

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