Date: October 5, 2009
Vol. XII, No. 19

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TABLE OF CONTENTS

COMMENTARY: TRADE & CONSUMER SHOWS 

If you're wondering why CHA has added another consumer show to the 2010 winter show in Anaheim (see the report, below), you probably didn't see the enthusiastic crowds at the first show in Orlando. For those of us who are not in direct contact with our industry's consumers, it was a huge emotional boost to see thousands of them so enthusiastic about our products.

Assuming the CHA staff promotes the consumer show the way they promoted the Orlando show, it should be a huge success. Vendors who will be exhibiting at the trade show anyway should think seriously about the consumer show, too. All retailers should plan to at least walk the consumer show to see what products and techniques excite the crowd.

Mike's Blog. In light of the healthcare debate in Congress, here is a reprint of a Business-Wise column on the subject – and a followup: what has happened to little Katelyn, a 12-year-old girl who couldn't swallow after surgery for a brain tumor.

Kizer & Bender. Twelve simple, basic actions retailers can take to improve their profits.

New! Trade & Consumer Groups. A brief description, contact info, and links to industry-related trade and consumer organizations.

Industry Research. The links to CHA's Craft Supershow Survey results and the updated Attitude & Usage survey.

The N Files. Maria Nerius analyzes the history and current status of professional crafters.

(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.)

Since Congress continues to wrestle with healthcare legislation, it's probably too early to know exactly what it will mean for business in general and your business in particular. But what do you think now? Worried a new healthcare law will hurt, or hopeful that it will improve the status quo? To vote, click on Industry Polls in the right-hand column or click HERE.

Sales and profits are expected to pick up next year, according to CLN voters. More than a fifth, 20.6%, believe their sales will increase 10% or more, and a whopping 41.2% believe sales will increase 1-9%. That outweighs the pessimists; 5.9% think their sales will decline 10% or more, and 8.8% think sales will drop 1-9%. Almost a quarter, 23.5% predict their sales will be flat.

Voters in CLN's unscientific poll aren't quite as optimistic about profits. Almost a third, 32.4%, expect their profits to increase 10% or more, while 20.6% believe profits will rise 1-9%. But 5.9% think profits will drop 10% or more and 17.7% expect the decline to be 1-9%. Almost a quarter, 23.5%, expect results similar to this year.

As a result of the success of the July consumer show in Orlando, CHA has scheduled a similar event immediately preceding the 2010 winter trade show. It will be Fri. and Sat., Jan. 22-23, with the trade show opening the following day and running through Jan. 27.

As in Orlando, manufacturers and distributors cannot sell during the consumer show, but can conduct workshops and demos, do market research, and/or partner with an exhibiting retailer. Retailers can sell at the show.

CHA will host conference calls to address any questions or concerns. The calls are Wed., Oct. 7; Tues., Oct. 13; Mon., Oct. 19; and Thur., Oct. 22. Each is 2–3:00 pm Eastern Time. To register, email your first and second date preferences to Allison Adoff, at aadoff@craftandhobby.org after which you'll receive an email confirmation.

CHA made the decision to host a second consumer show after seeing the results of the survey of attendees, which is available at www.craftandhobby.org/promotions.html. Based on the Orlando experience and assuming similar efforts to promote the event, CHA officials expect 10,000-12,000 consumers to attend.

To clarify some issues that members may have, CLN received the following answers from CHA's President/CEO Steve Berger:

CLN: Usually there are seminars, workshops, meetings, etc., scheduled for the day before the trade show. Will those kinds of things still be scheduled?

Berger: Yes, there will be two shows going on simultaneously, the Supershow for consumers and the trade show for the industry. All of the pre-show workshops, education, and meetings will still be scheduled. When looking at the venue, we understand that there may be some overlap on Saturday, primarily for attending retailers. CHA is looking at scheduling to minimize the overlap, and we recognize that this is not the ideal scenario, but this year with the logistics of holding the Supershow ahead of the trade show, that overlap was impossible to avoid.

CLN: For manufacturers who want to exhibit at both shows, will it be set up, like Orlando, where they don't have to physically move from one spot to another?

Berger: To accommodate companies wishing to exhibit in both shows, a turn-hall option will also be used in Anaheim.

(Editor's Note: Although the Anaheim convention center appears to be one huge building, certain "halls," like in Orlando, can be walled off. Only a certain portion of the entire building will be open for the consumer show. When the consumer show is over, the wall that isolated the show will open. Vendors who had exhibited at the consumer show can remain where they are. Vendors who do not wish to exhibit at the consumer show can set up as usual.)

CLN: Any final decision about the 2010 summer show – location and a consumer show?

Berger: We are still reviewing our options. Part of that includes ongoing analysis of new venues as well as working with Orlando to see if we can remedy some shortcomings to our satisfaction. We anticipate that a final decision on the summer show venue should be announced by December 1. The show will definitely be in July.

The acquisition is in effect now. American Crafts will continue to offer current Pebbles' product lines and plans to introduce new products. Pebbles will remain a separate brand under the American Crafts umbrella.

Pebbles produces basic scrapbooking supplies, including patterned paper, craft chalk and stencils, Snapshot photo stickers, decorative Chips chipboard shapes, self-adhesive Candy Dot embellishments, themed die-cuts, color-coordinated ribbon spools, etc.

Pebbles was founded in 2001 by Brenda Birrell as an extension of the Pebbles in my Pocket retail stores in Orem, Salt Lake City, and St. George, Utah. The stores will remain under Birrell’s ownership and management, and the core of Pebbles’ design team will join American Crafts.

American Crafts has been producing scrapbook products since the early 1990s. In addition to patterned paper, the company produces Thickers, albums, pens and markers, Premium Ribbon, Fla!r embellishments, Remarks stickers, Minimarks rub-on transfers and other embellishments.

Retailers interested in ordering Pebbles products for their stores can contact American Crafts at 800-879-5185.

Aldik has been a leading importer of silk flowers and naturals for 60 years, but fell victim to retailers' direct importing initiatives and other challenges, and closed on June 30. But veteran Aldik employees Mike Stadlberger and Zury Segal acquired the name from the company's creditors and formed Fifth Element Design, doing business as Aldik, Gifts & Decorative Accessories reported.

Stadlberger and Segal, former heads of the Aldik marketing, import, and product development departments, acquired all intellectual property including licenses, phone numbers, web domains, customer and product information, but the remaining inventory had been liquidated before the purchase.

"We are now moving forward with completing a product selection for the new Aldik; we also do have some stock now and more arriving over the next few months," Segal told G&DA. "We are currently working with several of the ex-Aldik customer service, product design management and marketing staff, and look forward to growing that team in the future."

The report below regarding CHA's updated Attitude & Usage Study refers periodically to the Study's "margin of error." You heard it often in last fall's election. If a poll showed Barack Obama had 54% of the voters in a poll and John McCain had 46%, and the margin of error was 4, then Obama had 50-58% and McCain had 42-50%.

Essentially computing the margin of error requires a formula to determine if the data in a study is, in fact, reliable. It's complicated math, but it boils down to this: the larger the number of survey respondents, the smaller the margin of error.

CHA's overall Study has a reasonable margin of error, because of the relatively large number of respondents, but when that pool is broken down into 39 product categories, the margin of error skyrockets and the results are less, uh, reliable. For example, The Study reported Scrapbooking/Memory Crafts' sales in the past 12 months dropped 1% to $2.554 billion. But the margin of error was 16.2%. Consequently, the true sales number is somewhere in a range of a 15.2% increase and a 17.2% decrease.

So the report below includes only categories whose loss or gain exceeds the margin of error. The complete Study is available to CHA members under the "Research" tab at www.craftandhobby.org.

The results of CHA's updated Attitude & Usage Study seem to mirror the U.S. job situation: the losses continue, but at a slower pace. The updated study, which covers the 12 months ending June 30, puts the size of the industry at $27.022 billion, down 9% from a year ago, with a margin of error of 11%. The previous decline was 14%.

The overall level of crafting remained the same at 56% of U.S. households. Consumers are crafting as much, but spending less; the amount spent dropped 9% to $432. Painting and Finishing Crafts saw the largest drop, down 11%. Consumers spent less per project, down 5% to $29.30, and worked on 4% fewer projects, 14.8.

Scrapbooking/Memory Crafts continued to be the largest selling category at $2.554 billion, well ahead of Art & Drawing at $1.646 billion.

Major categories showing an increase larger than their margin of error: Jewelry Making, +27% to $1.2 billion; and Crochet, +21% to $1.2 billion. Categories showing a decline larger than the margin of error: Beading/Bead Crafts (not jewelrymaking), -56%; Fashion Fabric Painting & Decorating, -47%; Quilting, -26%; and Decorative Painting, -22%.

When asked what new crafts they expected to try in the coming year, respondents chose Scrapbooking/Memory Crafts, Home Dec Sewing, Quilting, and Decorative Painting.

Some results were similar to previous studies. "Heavy" crafters comprise only 28% of all crafters, but spend an inordinate amount of money, 64%. The "stash" element remains a factor. Respondents labeling themselves as "Heavy" crafters reported spending less on Scrapbooking/Memory, Quilting, and Cross Stitch.

Independent stores held steady vs. a year ago, while Art Stores' increased 9%. Fabric and Craft Stores were down 12%, and Craft Chain Stores declined 5%, no doubt due in part to their self-reported declines in customer framing. Discount store sales were down 4%.

The new 2009 Halloween Consumer Intentions and Actions Survey conducted by BIGresearch for the National Retail Federation (NRF) offers some interesting data for our industry:

1. Consumers are expected to spend an average of 15.4% less on Halloween – $56.31, down from $66.54 last year. Total spending is expected to reach $4.75 billion.

2. Nearly one in three (29.6%) consumers say the state of the U.S. economy will impact their Halloween spending plans. Of those who will be affected, 35.4% plan to use last year’s decorations without buying new ones, and 16.8% intend to make costumes instead of buying readymades.

"The overriding theme for Americans’ Halloween celebrations this year will be, ‘How creative can I be, and how little can I spend?’" said Phil Rist, ExecVP Strategic Initiatives, for BIGresearch.

If consumers follow through with their intentions, sales of Halloween readymades may be disappointing, but fabric and accessories for sewing costumes may increase, and some consumers will make Halloween decorations, which should boost general crafts.

Ellen Davis, NRF's VP, told the Cincinnati Enquirer that she expects crafts stores such as Michaels and Hobby Lobby to earn a larger share of market.

Michaels expects that to be the case. An online survey of its customers indicated that 92% said they plan to celebrate the holiday, which falls on Saturday, and 49% will host or attend a Halloween party or other event.

"It's clear that people are looking forward to celebrating Halloween this year regardless of budget," said Exec VP of Merchandising Philo Pappas.

The company has a Halloween-only section at its website at www.michaels.com/halloween, and will sponsor special in-store events Oct. 10, Oct 25, and Oct. 31 for the holiday, plus there are three new how-to webisodes featuring Jo Pearson at www.WhereCreativityHappens.com.

Jo-Ann and Hancock were the big winners this past quarter. Jo-Ann's stock rose 25.7% and Hancock's increased 22.7% – outperforming the Dow, which rose 15%. A.C. Moore's stock was up 4.8% and Wal-Mart's stock increased only 1.2%

For the first three quarters of the year, however, the big winner is A.C. Moore, up 268.2%. The others: Hancock, +170.0%; Jo-Ann, +67.7%; and Wal-Mart, -12.6%. For the nine-month period, the Dow increased 10.7%.

Magazine publishers received a jolt when Wal-Mart decided to cut in half (40' to 20') the space allocated to magazines, and move the department to the back of the store, adjacent to electronics and entertainment. Wal-Mart's Project Impact merchandising strategy is dividing departments into "win," "place," and "show," and magazines have been labeled "show," the lowest priority, Retailing Today reported.

This move may affect the industry beyond publishers, however, in light of the recent data revealed in CHA's updated Attitude & Usage Study. Consider: 1. Once again consumers in the study picked magazines as the #1 source of project ideas. 2. Beginners are more likely to shop in discount stores.

Assuming the considerably shrunken department will offer fewer industry-related magazines, then beginners, who tend to shop at Wal-Mart according to CHA research, will not see as many projects to inspire them and help them evolve into enthusiasts.

Furthermore, the back of the store is a destination spot; customers go there for a specific reason, yet newsstand magazine sales are often impulse sales. "The category will suffer from a lack of traffic," predicted Retailing Today, "and those shoppers who do find the department and actually put a magazine in their cart will have more time to change their mind, possibly deselecting the item...."

"Flat" is the word from Deloitte & Touche, a major accounting firm. Chief Economist Carl Steidtmann explained to Retailing Today: "Although there are signs that suggest the economy is nearing the end of its darkest days, many consumers remain burdened by restricted credit availability, high unemployment and foreclosures."

Another factor is U.S. consumers have started saving money again – the rate is at historically high levels.

Deloitte's Retail group expects total holiday sales to reach $810 billion, excluding motor vehicles and gasoline, the same as last year's November - January period., which was a decline from the previous year. "We are seeing certain economic indicators move in the right direction. These small improvements are part of the reason that retailers may avoid another negative season," Steidtmann said.

"It’s reflective of this 'new normal' we’re in," James Russo, VP for Global Consumer Insights at the Nielsen Co. told the New York Times. "Flat is good."

A study by the Int. Council of Shopping Centers predicted retailers will see a 1% increase in same-store sales in November and December and 1.5% in January, the best performance in three years. Last year, same-store sales dropped 5.8% in November and December and declined 5.4% including in January, the worst performance on record, MarketWatch reported.

While at Personal Stamp Exchange, I helped develop a national contest which boosted sales for our retailers, created great hype for us, and provided us with some wonderful samples to use in our catalog. This is how we did it:

Retailers were required to purchase a minimum (reasonable) $$ single order to participate. We provided a contest "kit" to them which included forms, rules, posters for their windows, etc. Rather than choose a theme, we chose a product line and customers could use only those products (with the addition of reasonable items we didn't carry).

Each retailer sponsored an in-store contest; entries were displayed in the store and voted on (over a period of weeks) by customers. We provided the prizes for the in-store winners (1st, 2nd, 3rd).

The winning entry from each store was forwarded to us, and all of those entries were then judged by our staff. Everyone voted, from the janitors to the CEO, not just the folks in the art department. Top three entries were pictured with credits in our next catalog along with substantial prizes. Winning customers were awarded free product which the store submitted as an order. (The store was given $xx in credit from us.) It was win-win all the way around; everyone loved it and everyone received a gift for participating. – Trish Hanson

The previous issues of CLN have reported on the disappointing sales of seasonal products. Here's an interesting analysis:

I recently spent the weekend with three girl friends from high school. We're in the "about to retire" age bracket. I can tell you that my not really crafty friends are not only down-sizing, but passing a life time supply of seasonal decorations on to the next generation.

The next generation (compared to us) is our late-to-mid-30's children who are busy with their children. Unlike us who had the privilege of spending a few years as stay-at-home-moms, some of our children are either under-employed or working more than one job just to make ends meet. Either they have no time or don't have the money for seasonal decorations.

Among our customers, I have heard reports that Halloween decorating is not popular, but decorating for fall is. Christmas is popular but, if time and money are required, winter decorating is more popular. Hence, the popularity of snowmen that can remain on display many weeks past Christmas. – Donna M. Frost, Quarry House Distributors, quarryhouse@conversent.net.

1. In the last issue CLN reported on a very unique craft store, The Craft Retreat, in Glendale, AZ. The store now has a free newsletter; sign up at www.thecraftretreat.com.

2. CLN has been questioned about Washington considering new disclosure endorsement statements required for online publications. As I understand it, the Federal Trade Commission has received numerous complaints about bloggers raving about a product and not disclosing that the blogger is being paid by the manufacturer, either in cash or free product.

If the FTC enacts any regulations, CLN will report it.

3. Media Post recently published an extensive report on the new trend by retailers to reduce the number of SKU's on their shelves. It cited Wal-Mart's "Win/Play/Show" strategy that is designed to focus on high-growth categories and reduce assortment levels by 15-18%.

That might make sense for certain retail industries, but could prove disastrous for many craft categories. For example, suppose some beancounter decides to reduce a craft store's acrylic paint or embroidery floss assorting to the top-selling 30 colors. Many painting and cross stitch projects call for using a number of colors, at least one of which is probably not a best seller.

If a painter or stitcher can't buy all the supplies she needs for a project, she won't buy any.

MISCELLANEOUS NEWS: PEOPLE

CHA. The board of directors renewed the employment contract with President/CEO Steve Berger to run through 2011. Steve has served as President/CEO for six years.

DARICE. Named Judy DeFrancesco as Sr. Business Analyst, Project Manager. Judy has 20+ years of retail experience at Christopher & Banks and Macy's.

Michaels. Added Krista Lasche and Anita Cosme to its Strategic Sourcing team as Product Managers. Krista will be part of the Paper Category Management team. She had worked at Horizon Group USA as a Strategic Sourcing Manager/Crafts and Sr. Product Manager. Anita will partner with the Stickers Category Management team. Anita had been a Sr. Product Development Manager/Accessories at Wal-Mart.

WEB. Former Simple Scrapbooks Founding Editor and current Big Picture Scrapbooking co-founder Stacy Julian has a new website. Visit http://stacyjulian.com/index.php.

RESEARCH. Former Michaels exec Stuart Aitken is the COO of DunnhumbyUSA, a market research/consulting firm.

AWARDS. Who's the "greenest" retailer in the U.S., according to Newsweek? Kohl's.

QUOTATION. "This fall season, warm colors, rich textures, and creative details stand out. Interest in homemade crafts and do-it-yourself decorating projects has never been stronger."– Susan Atchison, Manager of Trend Development for Jo-Ann (Livonia, MI Observer & Eccentric)

MICHAELS. Last Thursday CEO John Menzer and CFO Elaine Crowley made a presentation at a Deutsche Bank High Yield & Leveraged Finance Conference. A copy of the presentation is available at www.michaels.com under the "Corporate Information" section.

THE JOYS OF RETAILING, I. A clerk in the photo department of an Arizona Wal-Mart thought bath-time photos of little girls on a memory card were suspicious and turned them over to the police, the Associated Press reported. The children were taken away from the parents for a month, but neither were charged and now the parents are suing Wal-Mart and the state.

THE JOYS OF RETAILING, II. Two women entered a Hobby Lobby in Aiken, SC and shoplifted $500 worth of scrapbook stickers. They were caught on tape but have not yet been apprehended, reported station WJBF.

CHAINS. One chain blooming in the recession is Dollar Tree, led by CEO Bob Sasser, a former Michaels exec. The stock is up approximately 20% this year, and the company plans to increase the number of its stores from 3,717.to 3,800 by year's end. Sasser thinks the prosperity will continue after the recession ends. "We are getting new customers and our traffic is up and we believe, only anecdotally, that these customers are forever changed by what has occurred in America," Sasser told Reuters.

FINANCE. A CIT debt-restructuring plan has been approved by the lenders' board and bondholders' steering committee. But CIT, one of the largest lenders to small businesses, also is seeking approval of a prepackaged reorganization plan in case it has to file for bankruptcy. The National Retail Federation estimates approximately 2,000 vendors depend on the company, the Associated Press reported.

ACQUISITION. F. A. Edmunds acquired Connexxions, the manufacturer of Thergonomic Hand-Aids, The Craft-Glove, and FlexThimbles – products designed to provide comfort and relief from the pain and stiffness associated with arthritis, tendinitis, carpal tunnel syndrome, and other repetitive motion activities at work, in crafts, hobbies, and stitching. Direct inquiries to F. A. Edmunds; call 800-447-3516 or email info@frankedmunds.com.

HOBBIES. The 25th iHobby Expo™ is Oct. 22-25 in Rosemont, IL. There will be 230+ exhibitors (60 first-timers) in 650 booths in over 60,000+ sq. ft. of space. For show and registration info, visit www.ihobbyexpo.com.

FLU. The government has published a booklet advising small businesses how to prepare for the flu season. It can be downloaded at www.flu.gov/professional/business/smallbiz.pdf.

SHOWS. The 2010 Int. Art Materials Trade Assn. (NAMTA) show will be in Indianapolis Apr. 15-17. Hotel reservations are now available. Call 704-892-6244, email info@namta.org, or visit www.worldofartmaterials.com.

MEMORY. Kim Guymon has launched a new website for her photo-book services. Visit www.photobookbiz.com. ... Scenic Route is holding a liquidation sale and will close. Visit www.scenicroutepaper.com.

FINANCE. Colorbök successfully completed a balance sheet recapitalization with its existing debt and equity stakeholders in order to better position the company for continued growth. As a result, the company raised new equity capital and eliminated $21 million of debt from its balance sheet.

PBS. Matt and Shari, hosts of HGTV's long-running popular show, Room by Room, are coming to PBS next year. Their series, homeconomics, will be produced by KS Inc. Productions, a leading producer of numerous industry-related how-to programs, including America Sews with Sue Hausmann, Quilting Arts, Bake Decorate Celebrate!, Beads, Baubles & Jewels, Scrapbook Memories, Hands On Crafts for Kids, and Knitting Daily TV. It will be taped in the spring and uplinked in late spring/early summer. Together with its website, mattandshari.com, the series is expected to reach 50 million households. For info on underwriting the series, call Ellie Joos at 908-459-9269 or email eleapple@hotmail.com.

AWARDS. At the recent Society of Decorative Painters convention, the Dedicated Service award was given to Darla Foreman; the Outstanding Chapter Service award to Phyllis Baker, Apple Valley Painters; the President’s Commendation to Maureen Van Herpe and Phyllis Gibb; the Priscilla Hauser Award for Business & Industry to Larry & Cheri Rol; the Silver Palette award to Kay Baranowski; and the SDP Scholarship to Patsy Johns. New Product awards went to DecoArt: and Multimedia Artboard. The publication award went to Patricia Rawlinson Designs.

LAWSUIT. Quickutz and its major supplier, Bai-Win, filed a joint motion with the court requesting the dismissal of the case in which Bai-Win alleged Quickutz owed $700,000 in unpaid bills to Bai-Win, Scrapbook Update reported.

NEEDLEWORK. The Kooler Design Studio is now offering its most popular kits, reissued in chart form. Visit www.koolerdesign.com.

TOYS. The NPD Group said U.S. toy industry sales fell 3% during the 12 months ending August 2009, outperforming categories like apparel, consumer technology, and video games, all of which dropped 5% or more.

STOCKS. A.C. Moore: $3.95, down $0.02 ... Hancock: $1.30, up $0.16 ... Jo-Ann: $25.88, down $2.16 ... Wal-Mart: $49.08, down $1.03 ... Dow Jones: 9,487.67, down 3.5%. (Note: All changes in price are since 9/18 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. 

Recently a rumor has floated through the industry that the 2010 CHA summer show would be in.... are you ready for this? ... Austin, TX. No offense to the good folks in Austin, but it certainly was a surprise. It was on a website, hence the rumor. The website also said the 2011 CHA winter show would be in New Orleans.

But it turns out these CHA shows are not our CHA shows. This particular CHA is ...are you ready for this? ... the Coon Hunters Association.

Makes you curious what their make-it/take-its are like.

(Note: Ever wonder why this website is clnonline.com and not simply cln.com? Cln.com was already taken when CLN was launched, taken by a chain of newspapers in various cities named Creative Loafing News.)

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