Date: September 21, 2009
Vol. XII, No. 18

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TABLE OF CONTENTS

COMMENTARY: A NEW BLOG 

Well, I've been dragged into the 21st Century: I've started a blog which clearly will be a work in progress. The first entry describes one of the goofier things that happened to me while attending a board of directors meeting of ACCI, one of CHA's predecessors.

Mostly the blog will be my thoughts on industry-related issues. Sometimes I have ideas or a historical perspective on industry issues, but they may not be immediately relevant – or too long. (Did you know the most common compliment I get for CLN is that it can be read in 10 minutes?) Sometimes I may just rant; we'll see.

To read the first entry, which includes my wet encounter with a rhinoceros, visit http://michael51346.wordpress.com.

NEW! Mike's Blog. Learn why Mike vowed to wear a raincoat to future board meetings, and why he may never again be invited to a family wedding.

Kizer & Bender. Most mothers shop with their kids; if you can make the experience more pleasant and less stressful, they will spend more time – and money – in your store.

The N Files. Maria Nerius has worn many industry hats in the past quarter of a century. Here are 10 things she learned along the way.

(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.)

Regardless of what type of business you have, when you begin to put together a budget for next year, you have to start with some assumptions. Will your sales increase, decrease, or stay the same. What about your profits? To vote, click on Industry Polls in the right-hand column or click HERE.

It looks like our industry's trade shows will be a bit smaller next year. More than a third of the vendors (38.7%) who voted in CLN's unscientific poll said they would exhibit at fewer shows and/or take smaller booths, and 6.5% are still thinking about it (unsure). Only 16.1% plan to exhibit at more shows or take larger booths, while 38.7% will maintain the same show schedule as this year.

Buyers are not cutting back quite as much. Almost 7 out of 10 (69.2%) plan on attending the same number of shows as they did this year, and 7.7% plan on attending more events in 2010. Only 15.4% will reduce the number of shows – or the amount of time spent at them – and 7.7% have not yet decided.

The Sept. 9 issue of Time included an article, "Walmart's Latest Move to Crush the Competition," which indicated that the company is boosting its efforts in certain departments to wipe out competition. The departments cited were drugs, toys – and crafts – and the major targets are Rite-Aid, Toys R Us, and Michaels. This is a reversal of recent reports that the discounter planned to reduce the number of vendors and the size of the craft and toy departments.

"Sales at Michael's Stores, the country's largest specialty arts-and-crafts retailers, have sagged, and Walmart sees an opportunity," wrote reporter Sean Gregory. "Stores are chock-full of scrapbooking material, baskets, and yarns."

Retail consultant Burt Flickinger III, managing director for Strategic Resources Group, told Time, "Look, they're selling the stuff that accounts for 80% of Michael's business, at 20% of the space," says Flickinger. "It's very hard for any company to compete with that."

The change is part of the new "Project Impact" program that will remodel 70% of the company's approximately 3,600 stores in the next five years.

A Wal-Mart spokesperson told CLN, "Regardless, we've not shared anything public on specific increases or decreases in inventory on toys and crafts overall as it relates to Project Impact – only that their presentation and placement in the store is different and aligned with what customers are looking for in an easier shopping experience. (Crafts is now near seasonal and cards/stationeary, and Toys is located with Entertainment.)"

Lutz Muller, who broke the original news of Wal-Mart reducing its craft and toy department for TD Monthly, told CLN, "I am tracking the layout of the converted supercenters – with particular focus on the toy space – and can tell you that the space allocated to toys is definitely down from pre-impact levels by about 50%. I can also tell you that store traffic is up in the renovated stores versus those with the old lay-out.

"Wal-Mart operates this on the 80:20 principle," Lutz explained, "which also applies to the craft department (which is down 75%) on the premise that as long as you stay with the top brands, and within these with the top SKUs, you can halve your space and still grow both in terms of business and consumers."

The CHA Nominating Committee released the names of its candidates recommended for election by the general CHA membership: Sara Davies (Crafter's Companion), a manufacturer; Kim Donahue (Tall Mouse), an independent retailer; Emma Gebo (SIERRA'S) and independent retailer; Julie Stephani (HomeArts/North American Media Group), a magazine editor; and Chuck McGonigle (Colorbok), a manufacturer. Chuck is currently serving as an interim board member due to the vacancy created by the resignation of Rebecca Jones (Jo-Ann's Stores). The nominees will be running for a three-year term.

Nominating Committee Chair Sara Naumann (Hot Off The Press) stated, "We're delighted to announce the slate of nominees for the 2010 CHA Board of Directors. Each person has a strong professional background and brings a unique perspective to a very diverse Board. If confirmed by the membership, I'm confident the candidates will be wonderful additions to the Board and provide a fantastic service to the industry."

The Nominating Committee is comprised of three members of the CHA Board of Directors and three members-at-large elected by the general CHA membership. In addition to Sara, Craig Curtis (Petersen-Arne) and Larry Olliges (Dee's Crafts) served as the board representatives. The members-at-large were Ryann Juden (Piggy Tales), Pam Riddell (The Riddell Group), and Ed Rogala (Midwest Products).

The candidates will be officially elected by a proxy ballot which will be mailed to each member company's voting contact by Nov. 20, 2009. The confirmation of the election will be confirmed at the CHA annual business meeting Jan. 26, 2010 in Anaheim.

The Strang-Thatcher Corp. (dba Ben Franklin Crafts) in Richmond, VA has become a member of the Sierra Pacific Crafts group. The six stores were recently sold to Pepe Piperno, the veteran head of Sbar's.

SPC started as a group of retailers in the Northwest but has now spread to the point where members span both coasts and Hawaii. SPC now has 30 corporate members who operate 148 stores. That's more stores than A.C. Moore, which operates 132 stores. SPC collective sales are approximately $450 million, while A.C. Moore's sales in the last 12 months were reported as $494.8 million.

The Craft Retreat in Glendale, AZ is not your typical store. While it does sell product (75% scrapbooking, 20% other crafts such as metal embossing, polymer, etc, and 5% decor/gift items), the key to the store is education. There is a wide variety of classes, from painting and home decorating to quilting and pottery painting and beading – plus "Crop til You Drop" and "Paint til You Faint" events. Donna Dewberry is teaching One Stroke painting in March, and the store has two kilns to fire painted pottery pieces.

Furthermore, owner Susan Richardson is not following the traditional model that a craft store has to be only a craft store. "I'd like to eventually expand into classes that aren't necessarily craft related. – basically any leisure learning. I've started it by offering home decor, makeup make-overs, etc. I just want to be able to offer things of interest to entertain and open minds," she told CLN. Visit www.thecraftretreat.com to see learn more and see a schedule of events.

She has been influenced by Leisure Learning Unlimited, a Houston educational company that offers an unusual variety of classes and workshops for crafts and much more (motorcycles, boating, cooking, computers, etc.) Visit www.llu.com.

1. The National Retail Federation's report on retail industry sales in August (which exclude automobiles, gas stations, and restaurants) rose 0.7%, the first increase in six months. The NRF said sales, including back-to-school sales, would have been even better without the "cash for clunkers" program which siphoned off consumer dollars.

2. U.S. discount, grocery, and restaurant chains are hiring a larger percentage of job applicants than seven months ago, according to a survey by Kronos, a software company that produces software for human resource departments, Bloomberg News reported. Kronos analyzed the 8.9 million job applications received by 68 retailers. In July, 2.99 of every 100 applications resulted in a hire, compared with 2.75 in January, a three-year low.

3. The job placement firm Challenger, Gray & Christmas, in its annual holiday hiring forecast, said [Christmas season] job opportunities "might improve slightly over last year, but only because 2008 saw the lowest seasonal employment growth in nearly 20 years," the Kansas City Star reported.

4. This email from an importer of seasonal goods: "Business is absolutely down. Everyone's seasonal programs have to be hurting for the simple fact of advance purchasing. Folks are just not comfortable at all ordering based on selling in six months! They're doing good to place an order for a month from now, let alone half the year. Home decor is suffering badly. They are buying what they need, not what they want. That is apparent even at the grocery stores: just watch the carts next time – staples in them, not ice cream, cookies, etc."

5. Li & Fung, a huge supplier of a variety of products for Wal-Mart and other chains, says its orders from U.S. customers are increasing. "We’re starting to see a little bit of a creep-up in spending," President Bruce Rockowitz told Bloomberg Television.

In addition to the health care legislation, Congress is considering other bills that, if passed, will affect vendors and retailers:

1. Congress is considering three bills that would regulate the so-called interchange fees – which credit card companies charge merchants. It generally amounted to 1-2% of a total sale and totaled $48 billion in 2008, the Washington Post reported. Two bills (one in the House, one in the Senate) would allow retailers to enter into collective bargaining agreements to negotiate with banks when setting fees, and the third would make it easier for merchants to steer customers to other forms of payments and set minimum and maximum amounts for credit card purchases.

The Post reported that retailers in other countries pay lower fees, and a recent study indicated that if U.S. retailers paid the same swipe fees as those in Australia the past four years, the net savings would total $125 billion.

The Government Accountability Office is doing a study of the fees, as required by a law signed by President Obama in May that bans many unfair credit card industry practices.

2. Congress is also considering a reform/extension of the Family and Medical Leave Act, which would allow all employees to take as much as 12 weeks of paid leave in a year for qualifying family, medical, or military-exigency reasons. It would convert FMLA to a paid-leave statute: the Labor Department would manage a new Family and Medical Leave Insurance Fund subsidized by employees and employers who would contribute 0.2% of employee earnings.

Retailers across the country hosted Fashion's Night Out on the eve of New York Fashion Week. Hundreds (thousands?) of stores in 12 cities across the country stayed open late and hosted a wide variety of shopping and social events.

Was it a success? Not financially. "There may have been 700 in-store events to choose from in New York City alone, but consumers kept their wallets snapped shut," wrote Forbes.

But one store that could claim a success was a boutique, Tia's Place, in Grand Central Station, where consumers could make a T-shirt or wristlet using Tulip's Fabric Spray Paint.

"Everybody loved loved loved the sprays ... they were such a hit," said host Erica Domesek, who operates the P.S. - I made this website (www.psimadethis.com) which is "... a movement. It’s a call to action to re-imagine, re-use, and re-invent."

A manufacturer noted that the last issue of CLN included negative references by retailers and me about the sales of seasonal items and asked, "Is there an overall declining interest in seasonal categories, or is it a temporary reduction in sales of seasonal categories when the economy is weak? Do you believe that this decline applies with the same magnitude to both pre-made seasonal decorations and also craft materials used to make seasonal decorations?

CLN's take: Based on reports from independent and chain retailers, consumers are probably making seasonal items rather than buying readymades because basic craft supplies are selling ok. There may also be a carryover with home dec in general, which is down, according to the latest reports from Home Depot and Lowe's.

As the importer of seasonal goods said in "Signs of Improvement...." consumers are buying what they need" – and they can probably get along without another plastic pumpkin.

What do you think? Email your thoughts to mike@clnonline.com.

The industry's relative success or failure during the critical fourth quarter may depend on how these questions – among many others – are answered:

1. Will seasonal goods continue their lousy sales performance? They are a critical component for general craft stores – chains and independents alike – in the fourth quarter.

2. Last year during the depths of the economic morass, there were numerous signs that more consumers were making gifts. Will that trend continue? Economists say the recession is technically over, but the unemployment rate is higher than a year ago.

3. Are enthusiasts finally – finally – using up their stash and ready to buy again?

4. How many kids will make presents for mom and dad?

5. How many scrapbookers will make Christmas cards and realize there's more to paper crafts than scrapping? How many crafters will make Christmas cards and discover the pleasures of paper crafting – and maybe they ought to try scrapbooking after all.

In the previous issue CLN wrote about enthusiasts' stashes, "Surely their previously purchased supplies are beginning to dwindle. When that happens, their purchases should increase." But a subscriber begs to differ:

"Setting aside the room that is JUST the stuff we sell in our E-Tail store, obviously you have never really looked at a serious knitter/beader/quilter's stash. I literally have 20 or so 25 gallon or larger bins of just yarn. This does not include yarn intended for specific projects or weaving – just knit & crochet. Then there are about 75 shoe boxes containing 1/4 to 5-yd. cuts of fabrics and maybe only 25 full bolts (usually 10-15 yds). And we won't even talk about beads, okay? My stash, by the way, is considered low-medium.

"If you take a look at eBay, people are also dumping their yarn and fabrics at almost silly prices, and it will get worse now that eBay is offering five free (until it sells) listings per month.

"I do have an opinion about what will continue to sell well, but it ain't the consumables; it's the tools, hooks, needles, even some of the speciali tools that can be reused for multiple projects.

"It would not be unreasonable to suggest that any serious crafter of any persuasion who has been at it for more than five years can very likely work for at least another year or more from her stash, only adding the occasional sale bin skein or fat quarter and maybe thread to stitch it together. Comments and civil disagreement are always welcomed." – Wheat Carr, wheat@ItsAllJustString.com 

CLN will begin offering two link sections for individuals interested in learning more about our industry. One will be a listing of the industry-related trade associations and consumer groups. The other will be individuals and businesses that offer to industry companies, such as public relations, personnel recruitment, product and/or project design, sales representation, marketing consultations, graphic design, licensing, etc.

Send CLN a short paragraph listing your services or organization, contact info, and a url if you have a website. Send the material to mike@clnonline.com.

Chroma has launched its new Student Art Competition with $12,000 in prizes. It's open to students who are at least 17 at the time of entry, are enrolled in a minimum one-year art program, and who are legal residents of the U.S., Canada, UK, New Zealand, or Australia. Entries will be displayed on the Chroma website. For details, visit www.chromaonline.com.

Contests can be an excellent way for manufacturers and retailers to boost sales, but they can be dangerous. Some thoughts:

1. Displaying the entries on the website virtually guarantees increased traffic there. Retailers can achieve the same effect if they display the entries or photos in their stores.

2. Storeowners should not be the judge. Most entries will lose, and the some entrants may question why they didn't win.

3. Some judging options: a) use an art teacher from a local college or b) have the customers vote – charge 10 cents/vote and give the money to charity.

4. Retailers should be leery of scrapbook contest pages that include photos of children or babies. If one "baby" wins and another loses, the losing mothers may think their child has been rejected, even if the judge had correctly chosen the winner on the basis of the quality of the graphic design and photograph.

5. Prizes don't have to be huge. They could be gift cards to the store.

6. Most people have never won anything. Consequently, give every entrant who didn't win a prize an "Honorable Mention" certificate. (This is particularly true for retailers who sell picture frames.) Remember to include the store or company logo on the certificate, so when the entrant hangs the certificate on the wall, it's advertising the store or company.

7. A contest can be a major public relations opportunity. Retailers should take photos of the winner receiving his/her prize and of the winning entry and send them to the local newspaper. Manufacturers should do the same and send the material to appropriate magazines.

Courtesy of the U.S. Census Bureau:

36 million: The estimated number of potential trick-or-treaters in 2008 – kids 5 to 13 – across the U.S. The number is up about 65,000 from a year earlier. Of course, many other children – older than 13, and younger than 5 – also go trick-or-treating.

1.1 billion pounds. Total production of pumpkins by major pumpkin-producing states in 2008. Illinois led the U.S. by producing 496 million pounds. The value of all pumpkins produced by major pumpkin-producing states was $141 million.

1,233. Number of U.S. manufacturing establishments that produced chocolate and cocoa products in 2007, employing 38,794 people and shipping $13.2 billion worth of sweets. California led the nation with 143 manufacturing establishments.

466. Number of U.S. establishments that manufactured non-chocolate confectionery products in 2007.

23.8 pounds. Per capita consumption of candy by Americans in 2008.

2,011. Number of costume rental and formal wear establishments in the U.S. in 2007.

1. As you have read, my wife Barbara and I sell her jewelry at area art fairs and such. This summer we are seeing some differences, which are probably indicative of the change in the economy: A. Almost no one is using a credit card. B. The number of people selling their finished work is up substantially. The pie is being divided into more and more pieces. C. Sales were as good as last spring, but as the unemployment rate has risen, the sales have declined. D. Sponsors of un-juried shows are selling space to some non-crafters hawking all sorts of non-craft (readymade) products.

2. Here's a sign of the times: The Time article about Wal-Mart Sept. 9 was not in the hard-copy issue. The only place you could read it was online.

3. In terms of graphics, the most interesting industry-related website I've seen in a long time is www.psimadethis.com.

PEOPLE. Jo-Ann named Brent Beebe VP/General Merchandise Manager for the craft division, effective Sept. 28. He reports to COO Travis Smith. Beebe had been VP/Merchandiser of the home electronics division of Fred Meyer, the super-center division of Kroger. ... Former Jo-Ann exec Alan Huggins has been promoted from VP of Operations to President of Lowe's Canada. ... Borders appointed former Jo-Ann Exec VP, Operations Michael Edwards as Exec VP/Chief Merchandising Officer.

PACKAGING. NBC News reports there's a movement to change the packaging of numerous products to make it easier for consumers to open the package. Approximately 6,000 consumers are injured trying to open packages each year, according to government researchers.

NEEDLEWORK. Emily Pannier, owner of Chandail Needlework in Houston, is the September Featured Retailer online at www.worldofneedlepoint.com. The site is produced by The National NeedleArts Assn.'s Needlepoint Group and features info on the history of the art; Shop Finder and Artist Finder search engines; and Market Buzz!, new designs that debuted at TNNA's recent Summer Market. Advertising on the site is available. Call Sherry Mulne at 614-237-0700 or email bdirect@columbus.rr.com.

THE JOYS OF RETAILING. Apparently three men robbed two others who were chasing them. They ended up in front of the Hobby Lobby in Corpus Christi, TX. The chase ended when one man accidently shot himself in the leg. Police are investigating, reported tv station KRIS.

PRICING. The most anticipated new book of the season is The Lost Symbol by Dan Brown, author of The DaVinci Code. The publisher has printed five million copies. Yet the discounting has already started. Amazon, for example, has cut the price from $29.95 to $16.17.

QUOTATION, I. "You can't cookie-cutter the world. There's a clear movement in understanding that retailers have to localize," – Marshal Cohen, senior retail industry analyst for market research firm NPD Group (Los Angeles Times)

QUOTATION, II. "There's nothing like a good old-fashioned recession to make you run a better business." – Millard Drexler, Chair/CEO of J. Crew (Associated Press)

QUOTATION, III. [While discussing the upcoming Christmas season] "The customer will use every bit of intelligence, price comparisons, and shopping on the Internet." – Mike Duke, Wal-Mart CEO (CNNMoney.com)

BOOKS. An expanded paperback edition of his Sam Wyly's memoir, 1,000 Dollars and an Idea, is now available. The former chair of Michaels added a new chapter on last year's economic crash. He argues for a tax on carbon consumption and against excessive government regulation of the financial markets.

STOCKS. A.C. Moore: $3.97, up $0.45 ... Hancock: $1.14, up $0.02 ... Jo-Ann: $28.04, up $1.78 ... Wal-Mart: $50.11, down $1.57 ... Dow Jones: 9,830.78, up 4.1%. (Note: All changes in price are since 9/4 and are exclusive of dividends.)

RESEARCH. CHA will hold a conference call to update members on the results of the latest Attitude & Usage Study. The call will cover data and trend highlights from the updated research (12 months ending 6/30/09) followed by a Q&A session. It's Fri., Sept. 25, 2:00 - 3:00 pm EST. Participation is limited and will be scheduled with pre-registration, on a first-come, first-serve basis. To register, email Allison Adoff at aadoff@craftandhobby.org and include "Research Presentation" in the subject line.

ACQUISITION. Colonial Needle acquired Lee's Needle Art. Lee's is a wholesale manufacturer of fine hand-painted needlepoint canvases and self-finishing leather accessories with needlepoint canvas inserts. The accessories include wallets, jewelry cases, credit card holders, purse mirrors, cell phone pouches, checkbook covers, and handbags. Effective immediately, orders for Lee's products will be shipped from and inquiries should be directed to Colonial Needle. Call 800-963-3353) or e-mail terry@colonialneedle.com.

WEB. Retailers and vendors wondering if using Facebook, etc., is worth it, take note: A new Retail Advertising and Marketing Assn. survey conducted by BIGresearch indicated that women with children at home are more likely to use Facebook (60.3%), MySpace (42.4%), and Twitter (16.5%) than average adults (50.2%, 34.4%, 15.0%, respectively). Plus, 15.3% maintain their own blog.

PEOPLE. Creating Keepsakes Contributing Editor Becky Higgins announced she has departed the company. Last Thursday the CK staff hosted a farewell tribute to Becky on the CK blog at www.creatingkeepsakesblog.com.

BEADS. The 11th series of Beads Baubles and Jewels is fed to PBS stations Nov. 4. Hosted by Katina Forte and producted by KS Inc. Productions, the series is sponsored by Interweave, Rio Grande, Beadalon, TOHO, Tambrook Bead & Trade, Bead Stopper, and The Bead Goes On. A DVD set of the entire series is available at www.beadsbaublesandjewels.com.

YARN. Coats & Clark has introduced Red Heartฎ Stripes™, a line which features a special print process that, when knitted or crocheted, results in a striped and patterned look duplicating intricate color work patterns. Visit www.redheart.com/Default.aspx?tabid=75&yarnid=e760. ... Another new novelty yarn from Coats is Red Heartฎ, Pomp a Doodle™ which features fluffy pom-poms strung together by twisted yarn cording. Visit www.redheart.com.

CCHA. Details of the revamped Canadian Craft & Hobby Assn.'s annual and general meetings in Toronto Oct. 19 and Calgary Oct. 26 are available at the website, www.cchacanada.org.

AWARD. The Quilter's Hall of Fame announced its 2010 inductee will be retailer/author Jean Wells Keenan. She has written almost a dozen books for C&T Publishing. The induction will take place next July at the headquarters in Marion, IN.

INSURANCE. The average cost of employer-sponsored health insurance for a U.S. family rose 5% this year to $13,375, according to the annual poll of U.S. businesses by the Henry J. Kaiser Family Foundation. Workers paid a quarter of that, $3,515. Total premiums have risen 131% over the last ten years, while wages rose 38% and inflation increased 28%, the Kansas City Star reported.

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 cowboy appeared before St. Peter at the Pearly Gates. "Have you ever done anything of particular merit?" St. Peter asked.

"Well, I can think of one thing," the cowboy offered. "On a trip to the Black Hills out in South Dakota , I came upon a gang of bikers who were threatening a young woman. I directed them to leave her alone, but they wouldn't listen. So I approached the largest and most heavily tattooed biker and smacked his face, kicked his bike over, ripped out his nose ring, and threw it on the ground. I yelled, 'Now, back off or I'll kick the daylights out of all of you!' "

St. Peter was impressed. "When did this happen?"

"Just a couple of minutes ago."

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