Just as I as putting this issue online, I learned that Mike Dupey has died. He finally lost his long, long battle with bipolar disorder (manic depression).

No other details are available at this time. Have any thoughts and memories about this true giant of the industry? Send them to me at mike@clnonline.com and I’ll publish them in my next issue, along with my own thoughts and feelings. Tell me your Mike Dupey stories; let's celebrate an amazing life.

I’m too upset at the moment to write much now, but I will say this: If I had to choose one man who has had the greatest influence on our industry as we know it today, it would be the lovable, charming, goofy, irascible, brilliant, and generous Mike Dupey.

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COMMENTARY: THE RECESSION & SALES

The summer art fair season is fast approaching, and again this year we’ll be selling my wife Barbara’s jewelry at various events in Illinois. As I’ve mentioned before, Barbara was a notorious non-crafter, and for a quarter of a century I would drag her into craft stores to see if anything would pique her interest, thinking for the industry to grow we have to get the Barbara Hartnetts of the world involved. No dice. Then a few years ago she took a jewelry class and was hooked. But soon she realized she couldn’t possibly wear all of the jewelry she’d made, so now I spend summer weekends lugging tables and putting up tents at art fairs. (The lesson here: Be careful what you wish for.)

Last summer we saw three primary effects of the recession: 1. Sales were about the same as the previous summer, but no one used credit cards. 2. Many more jewelry-makers were exhibiting, probably trying to supplement their income. 3. Sales were ok because some cash-strapped women, who couldn’t afford a new dress, consoled themselves by buying jewelry to spruce up an old dress.

Will this season be better than last, as the economy slowly drags itself out of the recession? I’ll keep you posted.

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NEW COLUMN THIS ISSUE

Kizer & Bender. What’s an Executive of Customer Experiences and why does every retailer need one? Rich and Georganne explain.

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TAKE THE CLN POLL: HIRING STAFF

The economy may be slowly rebounding and growing out of the recession, but unemployment remains stubbornly high. If your business has employees, are you thinking of hiring more staff – or reducing your staff – in 2010? And the region you live/work in, is the unemployment rate going up, down, or remaining the same? To vote, click on Industry Polls in the right-hand column or click HERE.

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CLN POLL: RATING YOUR BANKER

No surprise: The industry isn’t real thrilled with the support it receives from bankers and other lenders. Although no one rated the service as poor, 28.6% of the voters in this unscientific poll said it was “not so good,” and 42.9% rated the service only as “fair.” The remainder were evenly split between “excellent” and “very good.”

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WAL-MART & SEX DISCRIMINATION

A federal appeals court in California ruled that a class-action suit by thousands of female employees can go forward. The suit claims sex discrimination in wages and promotions. The 6-to-5 decision upheld a previous decision giving the plaintiffs the right to sue as a group. Wal-Mart said it would appeal the decision to the U.S. Supreme Court.

The original suit, filed in 2001, covered about 1.6 million females who were employed since 1998, according to the Washington Post. The latest ruling eliminated women who quit the company before the suit was filed, reducing the number of eligible women to about a half million.

Although the court referred to a lower court the issue of whether employees can seek back pay and punitive damages, one of the plaintiff’s lawyers, Joseph Sellers, told the Wall Street Journal that some of the damage models applied to the case put Wal-Mart's potential liability at a minimum of $1 billion.

In March, Wal-Mart settled a similar but smaller discrimination case, brought by the Equal Employment Opportunity Commission in 2001 over alleged discriminatory hiring practices at a distribution center in KY. Wal-Mart paid about $12 million, the Journal reported.

Regardless of who wins the case, the negative publicity may hurt the retailer. Alyce Lomax, who wrote “Why Women Are Mad at Wal-Mart” for The Motley Fool, a guide for stock market investors, said, “However, given allegations like this, rivals Costco and Target start to look a lot less risky by comparison. Costco, Whole Foods Market, and Starbucks have far better reputations and track records for treating workers well, since each has taken a longer-term focus on employees as stakeholders.”

To read the Associated Press profile of Betty Dukes, the employee who started the lawsuit in 2001, visit HERE.

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TNNA SHOW NEWS

There are numerous events for the show in Columbus June 12-14 (with education starting June 10) as TNNA celebrates its 35th anniversary. Thus far there are 326 exhibitors in 770 booths.

1. TIPS – Trends, Ideas & Product Series is a morning of 30-minute sessions designed to learn from exhibitors about trends, product promos, new products, etc. One ticket ($35 if you pre-register) gains entry to concurrent, 30-minute sessions on June 11. No other seminars will be held during that time.

2. The keynote speaker, Ann Lofgren of Zingtrain, raises a very interesting question: “The Art of Giving Great Service – Is Giving Great Service Different in Tough Economic Times?” She will also speak at the Retailer Luncheon on “How To Measure Customer Service.” The annual TEN award presentation immediately follows the keynote.

3. The results of the new State of the Industry survey will be announced at the member meeting Monday morning.

4. A new Needlepoint Showcase will be unveiled.

5. A new “Happy Hour” networking event immediately following the show Sat. night will include music, snacks, and a cash bar, sponsored by the exhibitors.

The traditional fashion show, Sample It!, and group meetings will also be held. For more info and to register, visit www.tnna.org. Attendees who register by May 31 save $20/class.

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RAW MATERIALS: INFLATION RETURNS

Two years ago before the international economy tanked, manufacturers were being hit with astonishing increases in the prices of raw materials. Many exhibitors at the 2008 CHA summer show seemed in a state of shock over their increased costs.

That inflation was caused by increased demand by the growing economies of China, India, and other Asian countries. The recession dampened the inflationary fires for the time being, but that era may be returning.

The Wall Street Journal reported that inflation for some raw materials is back with a vengeance. Although the housing market is still in a slump, the cost of lumber is up almost 59%, which will probably boost the cost of paper. Meanwhile, the cost of rubber has increased 74% thus far this year, after rising 92% last year.

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RETAILERS GEAR UP FOR MOTHER’S DAY

The National Retail Federation’s 2010 Mother’s Day Consumer Intentions and Actions Survey, found the average person will shell out $126.90 on Mother’s Day gifts, compared to $123.89 last year. Total spending is expected to reach $14.6 billion. – and our industry retailers are planning to benefit.

Michaels is hosting a series of gift-making workshops this week. This past weekend saw workshops teaching kids to make earrings and bracelets and personalizing a coffee mug with paint markers. This evening kids can make a flower corsage; tomorrow it’s a painted clay pot, and projects the following days include a painted t-shirt, a personalized card, and cookie decorating. The cost ranges from free to $1.99, depending on the project. Additional projects are available at www.michaels.com/mothersday.

Michaels has also launched its new Facebook fan page with “The Search For America's Most Creative Mom” contest which runs through May 11. Fans can nominate their mothers, and share stories and photos of her creations, for a chance to win a $1,000 Michaels gift card. The page also features Mother’s Day e-cards, and handmade gift ideas for Mother’s Day. Visit www.facebook.com/michaels.

For the first time in company history, Jo-Ann is hosting a free make-it/take-it event in all stores this Saturday, 1-3:00 pm. Kids will have the opportunity to make two projects – a handmade flower bouquet and a fingerprint card.

Hancock stores are giving the first 175 moms through the door on Mother's Day a free rose.

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HOBBYCRAFT SOLD

The founding Haskins family has sold HobbyCraft to Bridgegpoint Capital, a UK private equity firm with holdings in the UK and Europe. The chain was originally valued at £70 million, but Retail Week reported the price was more than £100 million. Numerous firms expressed interest and some  of them bid, probably pushing the original price higher. Toy News Online reported that The Blackstone Group, part owner of Michaels, was on the short list of bidders, but did not submit a final bid.

CEO Chris Crombie, who remains with HobbyCraft, said, “We have always been very ambitious for HobbyCraft and have developed the business to become the leading specialist in its field, but there is significant growth capacity and roll-out potential yet to come, which we look forward to achieving in the next five years and beyond.”

Bridgepoint’s Jason McGibbon said, “HobbyCraft is a quality business with great potential. We have tracked its progress for some time and believe that there is now significant scope for the business not only to grow through further rollout in the UK and development of its store format, but also to create a significant multi-channel online presence.”

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CHAIN STORE DEMOS ON THE RISE?

Looks like there’s a series of scrapbook demos in chain stores on the horizon:

Provo is apparently planning an extensive demo program for its Cricut, Scrapbook Update reported. Campaigners, a company that provides demonstrators for retailers, is looking to hire scrappers to demonstrate the Cricut in stores across the country. The part-time position (weekends) pays $15/hour and will continue for 2-3 months and possibly through the end of the year. The chain(s) where the demos will take place is not mentioned, but positions are available in 26 states.

EK Success announced on its website that it is looking for demonstrators to work part-time in A.C. Moore, Jo-Ann, and Michaels stores. Applicants must be certified SDU (Scrapbook Design & You) instructors.

(Comment: Here may be a sign of the times: One of the questions on the application form asks if the applicant is proficient in any language in addition to English. According to the U.S. Census Bureau, the number of people 5 and older who spoke a language other than English at home has more than doubled in the last three decades and at a pace four times greater than the nation’s population growth. Spanish speakers accounted for the largest numeric increase: nationwide, there were 23.4 million more speakers in 2007 than in 1980, a 211% increase.)

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FLORAL ARRANGING ON THE RISE?

Floral-related crafts have been in a difficult period lately, as evidenced by the latest data in CHA’s Attitude & Usage Study, but that may be changing thanks to a source outside our industry.

The housewares/home dec chain Pottery Barn appears to be investing in educating its customers about floral arranging. The website includes inspirational photos, design suggestions, and short videos on floral arranging. CLN hears the chain is also staging in-store floral design classes. 

Does Pottery Barn see a growing interest in floral design and want to capitalize on it, or is it simply trying to start a trend? The company talks about arranging fresh flowers and does not mention the artificial option. Regardless, if the chain’s campaign is successful and increases interest in floral arranging, that surely will translate into better sales for our stores. To see the chain’s website efforts, visit HERE.

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SO WHAT IS SEVERANCE PAY?

What are severance payments to laid-off employees? Are they “wages” and therefore subject to FICA withholding tax? In the past, when an employer laid off a worker and gave him/her severance pay, 15.3% was sent to the IRA, 7.65% from the employer, matching the 7.65% from the employee. But if they are not wages, then they shouldn’t be taxed, and therefore the IRS should refund the money.

A February decision by the U.S. District Court for the Western District of Michigan affirmed the bankruptcy court’s decision in In re Quality Stores, Inc. that severance payments were not wages for tax purposes. That should make employers eligible for tax refunds – and save money if, god forbid, there are future layoffs.

Not so fast. Thus far the case only affects companies in the Michigan district, which includes Kentucky, Ohio, Michigan and Tennessee, and the IRS is expected to appeal the decision.

A report by the law firm Miller Chevalier states the U.S. Court of Appeals for the Sixth Circuit will likely side with the IRS. “Nevertheless, employers, particularly those residing within the jurisdiction of the Sixth Circuit … who made significant involuntary severance payments to employees, may want to consider filing protective FICA tax refund claims for 2006, which is the oldest calendar year for which the statute of limitations is set to expire on April 15, 2010. A decision to file FICA tax refund claims for later years may be deferred for the time being.”

To read the complete report by Miller Chevalier, visit HERE.

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MICHAELS TO RE-LAUNCH WEBSITE

Michaels hired Demandware to re-launch its website and provide e-commerce capabilities. Plans for the new site, scheduled for this summer, will add customer ratings, product reviews, a hosted social community, and user-generated content.

The revamped site will have an e-commerce platform, but Michaels does not have immediate plans for that service. “We don't have a timetable for that, but we wanted to have a platform that would have flexibility when we choose to do e-commerce,” said John Rowe, VP/General Manager of marketing and e-commerce.

U.S. TO HELP SMALL VENDORS WITH EXPORTING

Vendors, would you like to increase overseas sales but worry about the financial risks? The Export-Import Bank of the U.S., the official export credit agency of the government, offers several programs that can reduce the risk. 

“Sometimes buyers demand credit and expose your company to commercial and political risks, and sometimes buyers simply default and leave your company with a loss,” said the bank in a prepared statement.  “Without this worry, a company can enter new markets and increase its international sales with confidence.”

The Bank’s export credit insurance program covers risk in 150+ countries and provides up to 95% coverage for commercial risks (buyer insolvency, default, etc.) and political risks (war, cancellation of an export or import license, etc.). 

The cost for this insurance product is typically less than 1% of sales. It enables a company to sell on competitive “open account” terms rather than requiring cash in advance. To learn more, visit www.exim.gov/contact/contactus.cfm and www.exim.gov/smallbiz/index.html.

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KOOLER DESIGN STUDIO PASSES THE TORCH

Best wishes to the Kooler Design Studio’s Donna Kooler who has retired. The company is now led by her daughter Basha who says, “We are still going strong, with our same crew of top notch designers, needlework editors, and production crew creating high quality product for the craft industry.”

The company is working on an updated website which will include new charts from its extensive archives and direct PDF downloads of cross-stitch charts. Saying the archives are “extensive” is an understatement: 30 years worth. “Donna had the foresight to retain the rights to all of these designs,” Basha said, “and I am enjoying getting them out to a new generation of crafters.”

The company is looking to license designs to needlework and giftware companies. Visit www.koolerdesign.com.

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EMAILS: SO, WHO CAN SEW ON A BUTTON?

CLN's item on the magazine article on how to sew on a button drew some interesting comments. Nancy Jewell of Coats & Clark pointed CLN  to a website showing how thread is made. Visit HERE.

Lynda Musante of Silpada wrote, “If you were never taught how to sew on a button, you end up with clothes you can’t wear. I had taught my daughter to sew on a button while she was in middle school. She saw several friends in college tossing out clothes that they couldn’t wear anymore simply because a button had come off. She taught several girls how to sew the buttons back on. At least one said that her mother used to take her clothes to a tailor to be fixed but now she couldn’t pay for that on a student’s budget.”

Painter Linda Williford wrote, “Yes! I can believe that lots of people don't know how to sew on a button. We have two generations – my children and grandchildren – who have never touched a needle and thread. Can't imagine their generations being able to sew on a button, much less raise/lower a hem, take up a sleeve, or anything like that! But you also have to remember that these are the kids whose sense of style includes ripped jeans, faded and wrinkled shirts, etc., – things we wouldn't dare wear! So a missing button isn't a big deal to them.”

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RANDOM NOTES, RANDOM THOUGHTS 

1. Here's a promotion idea I learned from the First Baptist Church in Lafayette, IN. The church sponsored a Sidewalk Chalk Festival. It attracted 100+ artists who competed for prizes – gift cards to Hobby Lobby. The Festival attracted a large crowd and generated publicity. This sure sounds like a good idea for a retail store that sells to kids and/or art enthusiasts.

2. Another sign of business-to-business transactions occurring without trade shows: www.alibaba.com. And yet another: www.snapretail.com.

3. Entrepreneurs always launch their businesses filled with hope and confidence that their brainchild will last a long time, but surely no one has been more confident than Arthur Guinness, the founder of the Guinness brewery in 1759. The lease he signed for his new business was for – are you ready? – 9,000 years.

4. A recent article in Time highlighted the problem of heart attacks/disease in women and featured the Heart Scarves group, which knits red scarves for women fighting heart disease. The article should be read by all women and the men who love them. To read it, visit HERE. Coats & Clark supports the effort by developing and selling special knit and crochet kits and donating $3 from each sale.

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MISCELLANEOUS NEWS: RETAIL

QUOTATION. Explaining why retail sales have increased recently, David Wyss, chief economist at Standard & Poor’s said, "Thrift only lasts so long. You eventually have to replace stuff. People are making up for lost time." (USA Today)

PEOPLE. Hancock named Stacey Gross as VP, eCommerce. She has 15+ years of e-commerce experience, most recently as Dir. Of  Ecommerce Merchandising and Operations at Oriental Trading. Prior to that she worked for The Bombay Co., and KBtoys.

REAL ESTATE. The Washington Post cited Hobby Lobby, Wal-Mart, and other retailers as “moving more aggressively into the Washington region, leasing space vacated by Circuit City and other stores that went out of business, according to real estate research firm Delta Associates.”

CAKE. A.C. Moore and Michaels have begun selling the Cricut Cake for $349, listing the regular price as $399.

RECALLS. Vendors, if you’re wondering why retailers are so picky about your compliance with the Consumer Product Safety Improvement Act, consider this:  Jo-Ann will pay a $50,000 civil penalty, because of the 2007 recall of Robby Ducky kids products; they had higher-than-allowed levels of lead paint. Director of Corporate Communications Lisa Greg told the Hudson Hub Times, "We did not knowingly violate the lead paint standards but we decided it would be in the best interest of the company to pay the penalty."

AWARD. Jo-Ann has been named one of America's 100 Most Trustworthy Companies in a survey commissioned by Forbes.com. Audit Integrity conducted the survey, which ranks the nation's top 100 companies that have consistently demonstrated transparent and conservative accounting practices and solid corporate governance and management. “At Jo-Ann, integrity and accountability are core values, so we are especially proud to be recognized as a company that customers and investors can trust,” said CEO/Chair Darrell Webb.

STOCKS. A.C. Moore: $4.08, up $0.16 ... Hancock: $2.15, down $0.05 ... Jo‑Ann: $44.12, down $0.08 ... Wal‑Mart: $53.64, down $0.47 ... Dow Jones: 11,008.61, down 2.3%. (Note: All changes in price are since 4/16 and are exclusive of dividends.)

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MISCELLANEOUS NEWS 

ACQUISITION. Prym Consumer USA has purchased the O’Lipfa, Quilt Sense, and Seams So Fast brands from AC Marketech. All orders will be shipped from Prym beginning today. The customer service number is 800-255-7796 for any questions. Other Prym brands include Dritz, Omnigrid, Collins, Dritz Quilting, Belle Buttons, Creative Comfort, and Curvana.

MERGER. The Canadian Craft & Hobby Assn. named a merger committee to negotiate with CHA:  Chair Paul Laplante, Richard Brown, and Arlyce Thomson of Quilter Haven. Talks are expected to begin early this month.

BUSINESS FOR SALE/PARTNERSHIP. An energetic, mature businessman is looking to sell or semi-retire from his established manufacturing business for a  unique art materials product. Steady repeat clients from all across Canada. Business has great potential for growth, especially in the U.S. Serious inquiries only.  For more information contact info@cchacanada.org and your name will be passed on to the owner.

JEWELRY TRENDS. Noted designer/author Katie Hacker asked the readers of her blog which trends particularly interested them. The interesting, thought-provoking answers are HERE.

YARN. Last week Lion Brand Yarn was profiled on The World’s Greatest! tv series on the ION television network. "We are very honored to have been selected as a featured company on The World's Greatest!,” said CEO David Blumenthal. "This program has given us a tremendous opportunity to show knitting and crochet enthusiasts a rare, behind-the-scenes look at what we do and how we do it." Lion Brand is a 132 year-old, family owned and operated business, now in the family’s fifth generation.

YARN. Coats & Clark’s Red Heart line has added four new yarns: Red Heart® Shimmer™ has a matching strand of metallic for a hint of sparkle. … Size 5 Red Heart® Chunky™ is for trendy accessories and wearables. … Sweet Baby™ has one ply in a solid shade and the other ply is a blend of delicate shades to form subtle waves of color. … Buttercup™ is soft with tiny pompoms of color blended with a fleecy yarn. The company has also added new colors to its Pomp-a-Doodle™, Red Heart Soft™ Classic™, Baby Clouds™, Light & Lofty™, Super Saver®, and Super Saver® Jumbo. Visit www.coatsandclark.com.

AWARD. Coats & Clark’s Susan Bates has been chosen as the Best Crochet Hook by a Corporation as part of the Crochet Liberations Fronts’ 2009 Annual Crochet Awards.

TV. KS Inc. Productions keeps rolling along: The 16th series of Scrapbook Memories, hosted by Julie McGuffee and Beth Madland, uplinks to PBS stations June 20. New elements include an artist-to-artist segment and more mixed media products. Sponsors include Sizzix, Elmer’s, Sakura, Nikki Silvis, Kaleidoscope Collections, Doodlebug Design, Flower Soft, Me & My Big Ideas, Spellbinders, Blumenthal Lansing, and Hampton Art. A DVD set of the 13 episodes can be ordered at www.scrapbookmemoriestv.com.

MISCELLANEOUS NEWS: SHOWS & EVENTS

CHA. In a press release, CHA announced it expects the summer Super Show to attract 8,000+ consumers to Rosemont. For more info, visit www.craftsupershow.com. … The CHA staff reports that as of Apr. 26, the number of exhibitors for the Summer Show is up 11% compared to the event in Orlando last summer. Exhibitor’s square footage is up 10%. CHA says hotel bookings are up 54%. For more, visit www.chashow.org.

ASIA. CLN heard that attendance at the recent Canton Fair was down more than 70% because of the volcano-related air traffic mess in Europe. A U.S. visitor told CLN, “There were very few U.S. buyers at the Guangzhou fair this spring. The fair's largest buyer block is now the mainland Chinese (as much as 80% is estimated by many vendors at the fair).”

PAINTING. The Society of Decorative Painters annual convention is May 18-22 in Wichita. Once again it will offer expert painters teaching classes in oils, acrylics, fabric painting, colored pencils, watercolors, and even decorator paste, plus a plethora of social events. Another highlight: a seminar, “New Strategies for Business Success,” with Stan Clifford of DecoArt and Marian Jackson of PaintWebs. … June 16 is the deadline for project submissions to be received in the SDP office for the 2011 Wichita Conference. For more info, visit  www.decorativepainters.org.

NEEDLEWORK. The Knit & Crochet show in Manchester, NH July 9-10 looks like a winner. Some classes have already sold out and rooms at a second hotel have been added. Highlights include the Crochet Guild of America’s national conference and The Knitting Guild of America’s 25th anniversary celebration. For info and to register, visit www.knitandcrochetshow.com/register.asp.

MARK YOUR CALENDARS. Vogue Knitting announced a new knitting event, Vogue Knitting LIVE, which will be three days (Jan. 21-23, 2011) of “fashion, fiber, and education” in New York. It will focus on knitwear design, master-level knitting workshops, and technique-driven courses. The teaching staff includes Debbie Bliss, Nicky Epstein, and Deborah Newton. The marketplace will showcase a wide selection of yarns and accessories. Other events include studio tours of knitwear designers, fashion shows, a juried gallery, panel discussions with designers, meet-and-greets, etc. It will take place in the New York Hilton. More details will be announced in June and registration opens in August at www.vogueknitting.com.

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THE CREATIVE NETWORK: JOB OPENINGS