Date: July 6, 2009
Vol. XII, No. 13

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TABLE OF CONTENTS

COMMENTARY: KEEP OUR STORES FAMILY FRIENDLY 

The toy industry (and some of our industry's vendors) is worried about Wal-Mart reportedly shrinking the size of the toy and craft departments and reducing the number of vendors. A recent New York Times report said, "Many chains, including Wal-Mart, will carry less inventory and fewer brands."

That prompted toy industry consultant Richard Gottlieb to point out that when department stores, Sears, and other chains dropped toys in the past, the stores were no longer a family destination and sales ultimately declined. That's a wise lesson for our industry to remember. A store with products for kids, and perhaps hobbies for men and boys, will be a family destination, rather than a place where mom goes off alone when she can find the time.

"Benny Da Buyer". Retailers write about having lower prices than Michaels, the cost of personal service, creating and selling locally unique products to tourists, and the importance of staying positive.

Scene & Heard. A report on the recent TNNA's summer show in Columbus, OH.

Kizer & Bender. How retailers can take advantage of consumers' "staycations."

Tech Topics. What if your data and applications were available any time from any computer or smart phone? That day is here, thanks to "cloud computing."

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

Recently CLN asked readers about their local chambers of commerce. Now it's time for our trade associations. Are you a member of CHA, TNNA, NAMTA, or other trade association? If you're a member of one or more of them, are the benefits worth the dues? To vote, click on Industry Polls in the right-hand column or click HERE.

Here's a sign of changing times: When CLN was launched 11 years ago, subscribers had a choice of receiving it via email or fax; 95% chose the fax, so they obviously read a hard copy. Many probably didn't have email.

Today, 76% of subscribers "almost always" read it online and another 12% "usually" read it online. Only 12% say they read it online about half the time and print a hard copy the other half. No one said they "almost always" print and read a hard copy.

This trend certainly helps explain the decline of hard-copy newspapers and magazines such as Time, Newsweek, and Business Week.

Scrapbook Update is reporting that CK Media has been sold to New Track Media, a Cincinnati-based publishing/investment company that publishes Love of Quilting, American Woodworker, Woodwork, and Sky & Telescope magazines. It also owns Keepsake Quilting and Keepsake NeedleArts, retail store/e-commerce operations in Center Harbor, NH; QNNtv, an Internet television operation specializing in quilting; and Quilters Club of America.

New Track Media was founded in 2006 by Boston Ventures, an investment firm, and Stephen Kent, former CEO of F+W Media, which publishes Memory Makers, Decorative Artist's Workbook, and other magazines.

CK Media is a division of Sandler Capital, a New York-based investment firm, which purchased the craft group of magazines from Primedia, another New York investment company. CK publishes Creating Keepsakes, Paper Crafts, McCall's Quilting, Quilter's Home, Quilter's Newsletter, Quiltmaker, Sew News, and Creative Machine Embroidery. It had published but eventually cancelled Craftrends, Simple Scrapbooks, Digital Scrapbooking, Memorytrends and Sew Simple magazines; it also produced, then cancelled the Memorytrends trade show.

Scrapbook Update also reported that a number of key CK execs were laid off, including CEO Will Marks; CFO Rich Hybner; VP/Group Publisher Dave O'Neil; VP/Editorial Director Lin Sorenson; Creating Keepsakes Editor Brian Tippetts; and the production departments in CK's Golden, CO and Bluffdale, UT offices. CLN's requests for confirmation by New Track and Sandler Capital went unanswered.

Sandler bought the Primedia crafts group in Sept. 2006 for a reported $130-$132 million, approximately 40% higher than the second offer, according to CLN sources.

"It was a financial disaster from the get-go," a former employee told CLN. The company's flagship, Creating Keepsakes, suffered a public relations nightmare two years ago when a mistake in the handling of its Hall of Fame competition infuriated many subscribers. Then the magazine's circulation fell below Meredith's Scrapbooks Etc., and finally in recent months CK's creditors agreed to a settlement of 25 cents on the dollar so CK would avoid bankruptcy.

The show was about the same size as it's been in recent years, but far smaller than in its heyday. The crowd was as enthusiastic as ever, but it was smaller – and older. Many of the major art material companies appear to have abandoned the market, leaving it for those vendors – DecoArt, Martin/F. Weber, Royal Langnickel to name three – who continue to support the organization. But a long talk with a board member made CLN hope SDP had bottomed out and is on its way back. There's too much talent, too much potential for consumer enthusiasm, for the industry to allow SDP to wither away.

With the drop in the number of independent paint shops and the chains shrinking the number of publications carried, shows/conventions such as SDP, Artist Expo Houston, Creative Painting in Las Vegas, and HOOT (Heart of Ohio Tole) in Columbus, OH are the main source for pattern packs, unusual wood pieces, classes, etc.

Trends. The line separating decorative painting and fine art is definitely blurring. Plus, online efforts continue: Interactive Artist magazine, which includes video and written lessons, a media library, an artist showcase, and other features, reports a growing circulation (www.interactiveartistmagazine.org). DecoArt has launched a massive online art school in support of its Traditions line. Although still in its infancy, the school has attracted many of the top decorative painting teachers from around the world (www.tradisionsartschool.com). The school was launched in conjunction with Art Apprentice Online (www.artapprenticeonline.com).

Before the public portion of the convention, SDP members Erika Joanne Frei and Elaina Appleby taught a class of kids in a summer program at Friendship House, a local United Way social agency. The resulting media attention (newspaper and tv news) helped convention attendance. Erika and Elaina are the authors of Kidz Can Paint! published by Leisure Arts.

On a sad note, Jerry Hauser, the husband of SDP founder and industry icon Priscilla Hauser, passed away June 14, just days before the convention opened. Priscilla asked that, in lieu of cards/flowers, friends make a donation for Jerry to their favorite animal charity or shelter.

Schedule: Artist Expo Houston (www.artistexpohouston.com), July 21-25 ... HOOT (www.heartofohiotole.org), Aug. 10-15, Columbus ... Creative Painting (http://members.cox.net/vegaspaint), Feb. 21-26, 2010, Las Vegas ... SDP Convention (www.decorativepainters.org), May 18-20, 2010, Wichita.

"Our same-store sales are up mid-single digits," Scott Nelson, assistant vp of real estate for Hobby Lobby, told the Oklahoma City Journal Record. "We’re just not seeing the effects of the economy at this point." Nelson did not specify sales in particular categories such as crafts, fabric, home dec readymades, etc.

As a result, Nelson said the company will continue to open 25-30 new stores per year. Half or more will be new construction; the others will be in vacated stores.

1. CHA is sponsoring a free webcast this Wednesday to update members on the latest CPSIA developments. Visit http://cha.impactlearning.org/store/seminar/seminar.php?seminar=2431  

2. The government's website on the Consumer Product Safety Improvement Act has been redesigned, allowing interested parties to find information by topic from the main page. Visit www.cpsc.gov/about/cpsia/cpsia.html.

3. Because of a deadlocked vote by the Consumer Product Safety Commission, tracking labels are required on children's products and packaging manufactured on or after Aug. 14. "The CPSC has not issued any definitive complete guidance on the tracking-label requirement and is unlikely to provide extensive guidance in the near future," the Toy Industry Assn. said. "Manufacturers must now determine, in good faith and based upon experience in the industry, when it is or is not practicable to place a permanent tracking label on the product and/or packaging."

4. Life just became more complicated for vendors wishing to export kid-related products to Europe, which has developed its own new regulations that do not correlate with the U.S. CPSIA regulations, Playthings reported. To read the article, visit www.playthings.com/blog/1320000732/post/1270045727.html

5. CHA will sponsor a free seminar, "CPSIA: The Consumer Product Safety Improvement Act of 2008 – What You Need To Know" on Wed., July 29, 7-9:00 am, during the Summer Show in Orlando. Visit www.chashow.org.

CLN has reported that it looks as though Wal-Mart will be reducing the size of its craft department and the number of vendors from whom it buys products. An explanation for that may be found in a recent article by the Associated Press.

The AP said the recession is causing a new, more affluent customer to shop at Wal-Mart, and now the company is trying to adjust so that consumer remains a customer after the recession ends. This new breed of customer spends about 40% more than the traditional Wal-Mart shopper, the AP reported.

The strategy calls for wider aisles and lower shelves, which means fewer but pricier SKU's, such as expanded electronics and brand names. This, of course, is exactly the opposite of founder Sam Walton's strategy, who believed fabrics and crafts attracted his kind of customer.

1. Officials report advance pre-registration 26 days prior to the show is only 1% below the same period last year. The show will be smaller due to fewer exhibitors (and some probably in smaller booths). At last count the show floor will cover 100,000 net sq. ft., 18% less than last year. (Comment: Most trade shows are smaller this year – smaller booths, attendees not bringing as many staff members, etc.)

2. The deadline for submitting new products for the Innovations showcase has been extended to July 17. The cost is $50/product. To submit an application or to learn more about the Innovations showcase, email Allison Adoff at aadoff@craftandhobby.org.

3. New workshops have been added to the trade show: 1. W0801: Love & Christmas Mini PiZatas (Bilingual workshop) PiZatas de Amor y Navidad (Taller bilingue), Wed., July 29, 7:00–9:00 am, sponsored by Kiki Art ... 2. W0805: Tips, Tricks & Templates, Wed., July 29 7:00–9:00 am, sponsored by The Crafter’s Workshop ... 3. W1006: Champagne Dreams Earrings, Wed., July 29 6:00 – 8:00 pm, sponsored by Soft Flex. For details, visit the Education Section at www.chashow.org.

4. The trade show badge will give you free admission to the final day of the Orlando Gift Show and Orlando Cash & Carry Show, Tues. July 28 in the same convention center.

Chroma Inc. has launched a new program to support teachers and ultimately increase sales. The company will not only provide free Atelier Interactive Professional Artists' Acrylic and Mediums supplies for in-class demos, but also free paint for the entire class to share. There will also be an enclosed rebate form for the students to receive a free Medium with proof of purchase of Atelier Interactive Acrylics.

To learn more about the program, email Jennifer VonStein at jvonstein@chromaonline.com or call 800-257-8278. To learn more about the paint, visit: www.chromaonline.com/chroma/products/atelier_interactive. (Comment: Supporting teachers has always been a good investment.)

Retailers, how would you like to offer every how-to book on the market without the hassle of shelf space or inventory control? Publishers, want to publish books without printing them? Designers, can't find a publisher? Publish your book yourself. The day for all of these things may not be too far off.

The answer is "print-on-demand technology," made possible by the Espresso Book Machine manufactured by On Demand Books, the Boston Globe reports. It prints books in a store while the customer waits.

It's being tested at the Northshire Bookstore in Manchester Center, VT. The machine can print 85,000 book titles from major publishers, plus thousands of titles in the public domain that are available on the Internet.

Access to even more books is on the horizon. "The idea is that soon we’ll be able to print out any book that’s ever been printed,’’ Northshire's manager, Chris Morrow, told the Globe. "That could really change people’s image of the small bookstore.’’

Northshire has also found an unexpected, lucrative market in local authors, poets, essayists, and others who want to publish their own books. The store offers editing and design/layout services for an additional fee.

The cost for the machine? $79,000-$95,000 or leased for $1,250-$1,650/month.

Wal-Mart announced it supports President Barack Obama's push to require large employers to offer health insurance to workers, Reuters reported. A letter to President Obama signed by CEO Mike Duke said, "We are for an employer mandate which is fair and broad in its coverage." The letter was co-signed by Andy Stern, the president of Service Employees Int. Union and John Podesta, CEO of the Center for American Progress.

(Comment: Hmmm, CLN wonders if there's a quid pro quo here: Wal-Mart supports employer-mandated health care in return for the White House putting on the back burner the proposed legislation making it easier for employees to form a union.)

Because of bankruptcies and store closings, commercial real estate owners are being much more flexible with tenants, reports Retail Traffic, which cited Jo-Ann as an example. The article quoted Adam Rabin, Jo-Ann's director of real estate, who reported that landlords at most of Jo-Ann's 763 locations have been amenable to concessions, such as "keeping the rents flat when the lease called for an annual increase to the company paying only 25 cents per square foot for the space just to keep the lights on."

In return, Jo-Ann's agreed to waive some lease options, such as terminating leases early because of poor sales. Basically, the only times landlords have refused Jo-Ann's requests have been in cases where Jo-Ann was already paying below-market rent, Retail Traffic reported.

The first half of 2009 was a great time for our industry's publicly held retailers. A.C. Moore' s stock rose 250+% from Dec. 31 to June 30. That increase caught the attention of the Philadelphia Inquirer who called the retailer "the biggest gainer in the first half of 2009 among local stocks that ended at $3 per share or higher."

Others fared well, too. Hancock's stock rose 120%, and Jo-Ann's stock increased 33.4%.

Wal-Mart stock lost ground, however. Despite all the publicity about cash-strapped consumers turning to the discounter rather than department and grocery stores, the stock fell 13.6%. The reason, according to the Associated Press: "Stock in Wal-Mart and a few other discounters such as Costco Wholesale Corp. have fallen this year as investors turn to beaten-down shares of more upscale companies like Macy's Inc. and Williams Sonoma Inc., which investors believe don't have much further to fall."

As CLN reported in an earlier issue, small businesses are being hurt by their lines of credit being reduced by banks and credit card companies. Now the problem has caught the attention of the New York Times. The Times cited statistics from the National Small Business Assn. that claimed 59% of small companies use credit cards to finance their businesses, up from 44% at the end of last year, but now that's becoming less of an option.

The Times also reported that the credit card reform legislation recently passed by Congress did not cover small businesses, but some members of Congress, led by Senator Mary L. Landrieu (D, LA), is trying to extend the law to include small companies. "The way that the economy is going to come out of a recession is not by big business hiring but by small business hiring," Landrieu told the Times.

There is a ripple effect, too. Credit scores are hurt when banks cut credit lines, which makes the credit card situation even more difficult.

CLN asked a small vendor about the credit card, credit limit situation and he responded with this:

"A few years back we applied for a line of credit with Wells Fargo. Along with our letter congratulating us on our new line of credit was a Wells Fargo VISA card. I called the bank to ask about it and they said, 'That is your line of credit.'

"Only now do I realize what a deal this was to Wells Fargo. First, they don't really give us their money. Sure, they need to loan the money to VISA but they get to pool the risk with every other VISA card holder. VISA is free to change the rates and set the rules. (They also have good lawyers paid for by high fees). Then, not only does Wells Fargo get interest from VISA, but they get to take a cut of everything we spend.

"I hear the pundits bemoaning the fact that small business is being run on credit cards. It is not small business's fault! Our banks have been out-sourcing loans to the credit card companies.

"The reason that credit card use by small businesses is up from 44% to 59% is because the banks have taken everything else away."

(Note: A recent CLN poll revealed most voters were members of their local chamber of commerce but did not think the benefits were worth the cost. That drew this response.)

First, my wife is the Events Coordinator for the Chamber of Commerce in Broomfield, CO. It is actually growing in membership despite these economic times. Her reason is simple: Businesses that want more contacts can do it cost effectively by being a chamber member and networking at the events.

Chamber members that wait for business to come to them are lazy. Like anything in life, the more you use and work it, the more you will be rewarded. It is not who you know, but who knows you when they need your business of service. You get known by volunteering and working with a chamber at events, after hours, and in seminars.

My wife’s chamber has a Toastmasters Club associated with it, which helps members to learn how to speak, listen, and learn leadership skills for their businesses. Toastmaster/Chamber members can sharpen their "elevator speeches" and clearly and concisely deliver their company’s message to probable prospects.

If I owned a retail craft store, I would let every member in the chamber know that I had ribbon for dog groomers and car dealerships, shears for cleaners and laundry services, plants and silks for office spaces, etc. The opportunities are endless. – Brad Beck, National Sales Manager, Design Master Color Tool

1. Yours truly will be on a panel, "PR for Manufacturers: How To Deliver Your Message in a Shrinking Newshole" at the CHA Summer Show (S107, Tues., July 28, noon-1:00 pm). Leaders of major public relations firms will be on the panel with me. Do you have any issues, problems, suggestions you'd like me to address? Email your thoughts to mike@clnonline.com.

2. Perplexed about how and where to spend your advertising/marketing budget for your business? Read the blog, Advice by John Boggs. John is the former head of advertising for DRG, publisher of numerous industry-related magazines. Visit http://advicebyjohnboggs.com/Blog.

INTERWEAVE. Named Kathleen Cubley Editor of KnittingDaily.com. Sandi Wiseheart has moved into a new role as a regular blogger ("What's on

Sandi's Needles?") for KnittingDaily.com. Cubley was Director of Editorial and Production at Mountaineers Books and teaches knitting at her local yarn shop, A Grand Yarn in Spokane, WA. KnittingDaily.com has 300,000+ knitting community members,

WALNUT HOLLOW. Named Ken Philips as Dir. Sales. He has worked for Midwest Products and Smithers-Oasis, and has management experience in retail buying and store operations. Reporting to Ken will be sales, inventory management, and customer service functions. He will report directly to the President, Sandy Bartelt.

BIG PICTURE SCRAPBOOKING. Announced that Co-founder and CEO Paula Wessells is leaving "to pursue personal interests." Co-founders Stacy Julian and Kayce Rehn will continue to operate the site at www.bigpicturescrapbooking.com.

KANDI CORP. Anounced the appointment of industry veteran Frank Keim as National Sales Manager. Frank reports directly to Kandi CEO Dave Riba.

SCRAPBOOK UPDATE. Editor Nancy Nally accepted a role as a contributing writer on the GigaOM Network website. GigaOM Network content is also carried by the New York Times, CNN, Business Week, Fortune, and Salon.com. One site in the network is WebWorkerDaily. Visit http://webworkerdaily.com. She will continue publishing Scrapbook Update.

KIDS. A.C. Moore is sponsoring "Summer Fun" make-it/take-its for kids each Wednesday afternoon in July and August. ... Toys 'R' Us lost $35 million in the last quarter due to a $242 million, 8.9%, drop in net sales to $2.47 billion, but the loss was $1 million less than a year ago. Same-store sales for TRU’s domestic business fell 5.4%.

CROCHET. Crochet Today has switched publishers, from SoHo to Future Plus Int. (www.futureus.com/index.php), an international special-interest media group that is publicly traded on the London Stock Exchange. The editorial staff remains the same. There will be six issues/year, plus two specials ("Holiday," on sale Sept. 8, and "Baby," on sale Jan. 5.) The company publishes CrossStitcher, Simply Knitting, Scrapbook Inspirations, PaperCraft Inspirations, Cross Stitch Collection, and The Knitter. For ad and freelance design submission info, visit www.crochettoday.com/about.

CRAFTS. U.S. Business Review published an excellent profile of Fibre-Craft. The company was founded in 1953 by John C. Abens Sr., father of the current CEO John, Jr. It was a spinoff of Kirchen Bros., John Sr.'s uncle’s artificial flower business. To read the article, visit www.usbusiness-review.com/content/view/1299/31.

HOBBIES. Highlights of the 25th anniversary iHobby Expo™ (Oct. 22-25 in Chicago) will include appearances by actor Michael Gross, best known for portraying Steven Keaton on NBC's Family Ties, and Steve McMichael, a star of the Chicago Bears Super Bowl championship team of 1985. Gross is an avid model railroader and McMichael is a radio-control car enthusiast. Exhibit space last year sold out and attendance at the consumer portion was 15,556, a record. For show info, call 973-283-9088 or visit www.ihobbyexpo.com.

JEWELRY. Plaid has a new jewelry line, Petals-a-Plenty™, exclusively at Michaels. The 113-sku line of 3-D jeweled flowers, charms, pendants, and beads have a vintage, antique look of oxidized brass.

FABRIC. Westminster Fibers introduced a line of decorator fabrics, For Your Home, with Vicki Payne, host of the PBS series For Your Home and Glass with Vicki Payne. The line has 17 different patterns in 4 major coordinating colorways, each 54" in width and retailing for $15 a yard. Visit www.freespiritfabric.com.

YARN. The fashion show sponsored by The National NeedleArts Assn.'s Yarn Group at the recent summer show can be seen at www.yarngroup.org. It features 100+ knit and crochet garments and accessories from 65 companies. It's also available at YouTube.com/userYarnGroup, which includes the fashion show from last January's show.

SIGN OF THE TIMES. Kodak will retire its Kodachrome film this year after 74 years as an industry icon, the first commercially successful color film. Today it represents just a fraction of 1% of Kodak's sales of still-picture films. Newer films and digital imaging technologies have led to the decline.

QUOTATION. When Lee Scott, former CEO and still chair of Wal-Mart's exec committee, was asked if there was anything he had wanted to accomplish before he left his CEO position, he said, "... one place I would have liked to have done more is helping people understand that Wal-Mart jobs, retail jobs in general, are good jobs." (Reuters)

SEND CARDS. To a brave little 7-year-old, Vincent Scatena, the grandson of FloraCraft's Jim Scatena, who is battling serious heart problems. He's been hospitalized for more than a month, and has several more weeks in the hospital for recuperation. Send cards to All Children's Hospital, 801 6th St. South, St. Petersburg, FL 33701.

SHOWS. Future TNNA dates: The Fall Needlecraft Market is Sept. 26-27 in St. Charles, MO; the Winter Trade Show is Jan. 9-11, 2010, in Long Beach, CA; and the Nashville Needlework Market is Feb. 20-21, 2010. Visit www.tnna.org for info.

THE JOYS OF RETAILING. A Hancock store in Salt Lake suffered smoke damage when someone set off firecrackers in an adjacent Rite Aid store that started a fire, the Salt Lake Tribune reported. ... The Hobby Lobby in Greer, SC was robbed at gunpoint, TV station WSPA reported. The robber pulled a handgun on a clerk at about 6:20 pm, forced her into an office where she had to put the money into a bag, and then he fled the scene.

JOBS. Today CHA launches its Career Center where member companies can list job openings and job hunters can post resumes. Employers, visit http://careercenter.craftandhobby.org/post.cfm.

CONDOLENCES. To the family of industry veteran John Ruiz, who passed away last month. John's long and varied career included stints in the west coast division of Morilla and as exec vp for color manufacturing for the Shiva division of the Standard Brands Paint.

STOCKS. A.C. Moore: $3.41, down $0.92 ... Hancock: $1.04, down $0.04 ... Jo-Ann: $20.32, down $0.43 ... Wal-Mart: $47.79, down $2.05 ... Dow Jones: 8280.74, down 5.9%. (Note: All changes in price are since 6/12 and are exclusive of dividends.)

To see the latest listings by 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 July.

So after landing my new job as a Wal-Mart greeter, I lasted less than a day. About two hours into my first day on the job a very loud, unattractive, mean-acting woman walked into the store with her two kids, yelling obscenities at them all the way through the entrance.

As I had been instructed, I said pleasantly, "Good morning and welcome to Wal-Mart.

Nice children you have there. Are they twins?"

The ugly woman stopped yelling long enough to say, "Hell no, they ain't twins. The oldest's 9 and the other's 7. Why would you think they're twins? Are you blind, or just stupid?"

So I replied, "I'm neither blind nor stupid, Ma'am, I just couldn't believe someone slept with you twice. Have a good day and thank you for shopping at Wal-Mart."

My supervisor said I probably wasn't cut out for this line of work.

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