Cross stitch and decorative painting, once dominant industry categories at approximately the same time period (80’s-90’s), are not what they once were. They have been supplanted by scrapbooking, yarn, and jewelry-making. Why? Those questions came to mind when I was editing Leigh Berggren’s very interesting piece about the younger consumer. Here’s my theory:

With cross stitch and decorative painting, you judge the quality of your work by how well you duplicated the model, whether it’s a cross-stitch chart of a Santa Claus or a painting of a bowl of fruit.

Younger consumers want to make something unique. Scrapbooking fills the bill, since the heart of every page is a unique photograph. Knitters and crocheters can follow a pattern, but choose their own colors. And countless magazine articles showing young, glamorous celebrities knitting made the category “cool” for younger consumers.

Even jewelry-making is unique. A bead magazine editor once told me she doesn’t expect readers to precisely duplicate a given project because it probably used beads that are not in general distribution. The editor is showing an idea, a concept, rather that a project to be blindly replicated.

No single factor causes the rise or fall of a category, but a challenge for needlework and painting designers and teachers looking to attract a younger audience should be how to allow consumers to make their projects unique.

Does this make sense? These categories were soooo popular, it would be great for the industry if they regained their appeal, much like yarn has. Email your thoughts to me at mike@clnonline.com and let’s start brainstorming.

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NEW COLUMNS THIS ISSUE

“Vinny da Vendor”. Leigh Berggren, the new owner of Discount Needlework.com discusses the challenges the industry has of attracting younger consumers to needlework – and, truly, to every category. She has clever, insightful ideas.

Category Reports. A veteran manufacturer and exhibitor who has exhibited at both explains how and why the Quilt Market and Quilt Festival are different from CHA’s trade and consumer shows.

Kizer & Bender. Ten tips to survive in a tough retail economy.

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

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TAKE THE CLN POLL: CHA’S ANNIVERSARY

It was seven years ago this summer when ACCI and HIA announced they had merged to form a new organization, the Craft & Hobby Assn. Has it been good for the industry to have one trade association for the overall “craft” industry? Are you pleased or disappointed with the results? To vote, click on Industry Polls in the right-hand column or click HERE.

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CLN POLL: SPRING/SUMMER SHOWS EARN A “C”

The industry’s spring/summer trade shows may not have received that positive a grade from CLN’s voters, but they are looking more optimistically toward the second half of the year.

Only 7.7% of attendees and exhibitors gave the shows an “A” grade, and 34.6% awarded the shows a “B.” A “C”grade was given by almost half the votes, 46.2%, while 11.5% assigned a “D.” At least no one flunked the shows. The shows earned a 2.39 grade point average, based on A = 4.

Yet 42.3% of the voters are now more optimistic about the second half of the year, and only 19.2% are more pessimistic. The rest are unsure one way or another.

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A.C. MOORE: LOSSES CONTINUE

Sales for the second quarter ended July 3 declined 4.3% to $99.9 million, primarily due to a decrease in same-store sales of 5.9% that was partially offset by the operation of two additional stores. The net loss for the quarter was $9.7 million ($0.40/share), compared to a net loss of $8.1 million ($0.38) a year ago. According to StreetInsider.com, analysts had expected a loss of $0.28 on sales of $106.08 million.

Sales for the first two quarters are down 3.7% to $205.2 million. Same-store sales dropped 5.3%, but there was that increase in store count by two. The net loss was $17.2 million, ($0.71) compared to a loss of $12.5 million ($0.60) for the same period a year ago.

CEO Joe Jeffries, stated, “We will not be satisfied until we return to sustained profitability. I am confident that we have both the right team and strategy in place. We will continue to focus on our merchandise plan, remodel program, and store level execution to drive improved performance.”

The current store count is 135.

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 JO-ANN REPORTS SALES INCREASE

Net sales for the second quarter ended July 31 increased 4.7% to $439.3 million and same-store sales increased 4.4%. Traffic increased 3.8% and average ticket increased 0.6%.

Large-format store sales increased 3.9% to $238.2 million and same-store sales rose 3.0%. Small-format store sales increased 5.4% to $192.4 million and same-store sales increased 6.2%. Internet sales through Joann.com increased 16.0% to $8.7 million.

Sewing same-store sales increased 5.1%, thanks to strength in nearly all of its fabric and sewing notions categories. Non-sewing same-store sales increased 3.5%.

Net sales for the first two quarters increased 4.6% to $919.6 million and same-store sales increased 4.2%.

The company will report earnings for its second quarter on Aug. 25 and will host a conference call that will be broadcast live over the Internet at 4:30 pm EDT.

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CONSUMER SHOW ATTENDANCE DISAPPOINTING

No official announcement yet, but CLN has heard the recent CHA Craft SuperShow in Rosemont had an attendance of approximately 4,300 - 5,300. That’s less than the approximate 8,000 in Orlando a year ago or Anaheim in January. On April 27 a CHA press release said 8,000+ were expected in Rosemont. The number of exhibitors listed in the show books was down from Anaheim about 23%, from 97 to 75.

The smaller crowd was not due to a lack of media coverage, including The Chicago Sun-Times, The Daily Herald, The Chicago Tribune, Crain's Chicago, Timeout Chicago, three local tv stations, radio Disney, 40+ local suburban newspapers, and radio commercials. More than 1 million in-store fliers were distributed across the greater Chicagoland area. 

As has been true in the past, attendees were very enthusiastic. The addresses of attendees were varied, including Israel, Alaska, New York, Mexico City, and Puerto Rico, and many visitors had to drive 1+ hour to see tv personalities and celebrity crafters such as Julie McGuffee, Wendy Russell of She's Crafty, Drew Emborsky (the Crochet Dude), the DoubleStitch Twins, and others. A popular event was the Fashion Fever fashion show hosted by the National Sewing Council.

Mary Colucci, Exec Director of the Craft Yarn Council, said, “It's difficult for us to compare the Chicago show to Orlando because we had a much smaller booth in Florida and we did not do any make-it/take-its. However, what we found similar in both Orlando and Chicago was that traffic for us was heavier on Friday than on Saturday. I'm not sure why this is but it could be people's summer schedules/vacations. We also felt that the Chicago show attracted more people from around the country than previous CHA SuperShow. Overall, we were very pleased with the show, but we felt traffic was not as strong as it was in Anaheim. Again, summertime may be a factor.”

Bill Gardner of Clover Needlecraft added, “Traffic on Friday was better than I expected. Our make-it/take-it chairs were full the entire day Friday, but Saturday we had a couple of empty chairs most of the time. I'd like to see more vendors selling things other than scrapbooking and rubber stamping.”

Another vendor, who took out a second, “retailer,” membership because of his e-commerce site, reported his sales may not have covered his expenses, but the staff came home with a wealth of suggestions from consumers on extending and improving product lines. So now the owner is trying to determine if the un-quantifiable consumer feedback is worth the expense. Will he exhibit again? “50/50,” he says.

Although a final contract has not been signed by CLN’s deadline, the next consumer show may be Jan. 21-23 in Anaheim.

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THE NEXT BIG THING?

It may not be a product category, but technology. Just as UPC codes revolutionized so much of our industry, so may the QR code. Wikipedia described it this way: “A QR Code is a matrix barcode (or two-dimensional code), readable by QR scanners, mobile phones with a camera, and smartphones. The code consists of black modules arranged in a square pattern on white background. The information encoded can be text, URL, or other data.”

Consider the possibilities: a consumer with the right type of phone could scan the QR code on the package, and instantly be able to watch a YouTube video explaining or demonstrating the product. A business can have a QR code on its front window that, when scanned, takes the viewer to an explanation about the company. The current issue of Entertainment magazine includes short summaries of upcoming movies – each with a QR code. Readers can scan the code and watch the movie trailer on their phones.

Consider the possible consequences: increased sales for numerous products because the traditional packaging cannot show all of the product’s uses and possibilities. Knowledgeable sales clerks have long been a strength of independent stores. But with the appropriate phone, any chain store clerk could, in effect, explain any product in the store. To learn more, click HERE.

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READY TO DROWN IN PAPERWORK?

Beginning in 2012, a new federal law will require every business to issue an IRS Form 1099 Information Reporting document to any vendor who provides services or property valued at more than $600 a year. The result could be a mountain of paperwork for businesses large or small.

For example, a business that spent $600+ at a trade show hotel would have to issue a 1099 to that hotel, then turn in the completed form to the IRS. Spend more than $600 in a year for office supplies at Staples? Issue a 1099 to Staples, then turn it in. One subscriber told CLN, “Once a month I take my employees to McDonald’s for lunch. If I spend more than $600 a year doing that, I have to get McDonald’s to fill out a 1099!?!?!?”

The opposite is true, too. A manufacturer would have to complete a 1099 for every retailer to whom he sold $600+ worth of products in a year.

But there may be hope on the horizon: A) Rep. Daniel Lungren (R, CA) introduced H.R. 5141, The Small Business Paperwork Mandate Elimination Act, in the House to repeal the new requirement; B) Sen. Mike Johanns (R, NE) introduced an amendment in the Senate to repeal the 1099 requirement; and C) Sen. Bill Nelson (D-FL) introduced a second amendment to mitigate the impact of the bill. The Senate is expected to consider the amendments soon after it returns from its summer recess.

Various trade groups such as the Toy Industry Assn. are mobilizing to eliminate the mandate. To learn more, visit http://www.stopform1099.org. To learn who is your local representative in the House and to email him/her, visit www.house.gov. To do the same for your Senators, click HERE.

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THE STATE OF INDEPENDENT SCRAPBOOK SHOPS

(Editor’s note: this was written by the CEO of a well known scrapbook company that sells primarily to independents.)
I do think that, while many have gone out of business, the hemorrhaging that isn’t economy-related has stopped. I travel a lot to visit stores and I often tell them, three years ago we had a net loss of 365 stores to whom we sold directly. Two years ago we had a net loss of just over 180 accounts. Last year we broke even. The hemorrhaging had appeared to stop.

This year we're seeing some additional losses, but I fear it's more related to the economy. Paper crafting has learned to diversify itself better to give people more reasons to buy the same products, and more ways to use them. Home decor and card-making have become a large part of our sales. Even with the losses, we still sell to more independent accounts than Michaels has locations. If I try to estimate the stores that buy through our distributors rather than through us, there's still a healthy paper crafting industry. Even with store losses, our company has managed to have growth every year to date. However, these days the real growth for us is overseas.

One of the things I've started to encourage many stores to do is consider diversifying into other crafts that can be easily cross-sold. Cross-selling can help those who can afford to diversify to make more on every person that comes through their door. In this regard the general crafts stores, whether chains or Ben Franklins, have a real advantage. A consumer who comes in to buy a photo frame may also leave with scrapbooking supplies, paints, and more. If all you have is scrapbooking, there is no option to cross-sell and increase the value of each customer. 

I never thought that the photo industry was the answer. Our customers like to use their hands. They are crafters first, and scrapbookers second. The photo is almost an afterthought compared to the creating. I think it's going to be harder and harder to make money on scrapbooking alone. There are of course exceptions. – Name Withheld

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THE MODERN CHALLENGE OF PRINTING PHOTOS

(Editor’s note: The following was written by Julie McGuffee, a partner in the Kievlan-McGuffee product development firm and the host of Scrapbook Memories, the PBS series produced by KS Inc. Productions and now in its 12th year.)

CLN asked a while ago why we weren't printing our photos. Here's my two cents worth: The advantages of a digital camera are also the disadvantages. Because we have the ability to take lots and lots photographs, we have become snap-happy and end up with way more photos than we can print. Deleting photos is very difficult, especially if they are wedding or baby photos, so we end up with too many to print ourselves, or even to upload to a service. Our children are growing up to be jpegs and unless we can discipline ourselves to print a few photos; this may be a lost generation – photographically speaking.

I am as guilty as anyone; I have more than 9,000 photos on my computer, and even though I have back-up copies on an external hard drive and store photos on CDs, they are never as secure as the negatives we used to have from 35mm film.

Even if the CDs are in perfect condition – no scratches – who knows what kind of storage systems we'll be using 10-20 years from now, so we may not have a way to read them.

For example, I no longer have a floppy disk or zip drive on my computer. Printing photos ourselves would be a good choice, but it is not cost effective due to the price of ink, so I limit what I print to large photos on specialty papers. Plus, it takes me forever because I have a hard time choosing the best photo, then I have to crop and enhance it, etc.  Not because a photo might need changing, but because I can.

Uploading to a service is relatively easy, but it can also be time consuming, especially if the service offers a way to crop, enhance, etc.  The price of prints hasn't changed too much at places like Walgreen's and Costco, but it is definitely more expensive because we are no longer limited to a roll of 24 or 36.

On a personal note, I've had a camera (the first was a Brownie reflex) since I was 11. When I bought my first 35mm camera at 16, it was a "half frame", which basically meant that I could take 72+ photos on one roll of a 36 exposure film. I thought it was the best thing until I had to pay for twice as many prints when the roll was developed!

Editor’s note: Julie has posted reports on the recent CHA shows on her website, Life in the Craft Lane (www.juliemcguffee.blogspot.com) and Trends Information (www.trendsinformation.blogspot.com).

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SCRAPBOOKING AND JEWELRY-MAKING GROW CLOSER

Whether it’s “scrapbook” vendors introducing a jewelry-making line or photo-jewelry components, or jewelry-makers using paper in their projects, the two seemingly separate categories continue to inch closer together. The latest example is award-winning jewelry designer and author Jill MacKay’s launch of a digital content store on Scrapblog.com. The new storefront, Jill MacKay, offers multimedia scrapbookers and paper-crafters the ability to use MacKay’s pieces in digital format. Consumers can use Scrapblog’s web-based software to design digital layouts for scrapbooks, calendars, and greeting cards using Jill MacKay content.

“It’s opened a whole new world for my jewelry components,” says MacKay. “When I see them as part of a beautifully prepared scrapbook, it’s very special to have them used in this manner. I feel very privileged to be a part of honoring family, friends, and memories in this new way.”

In addition to her jewelry elements, the Jill MacKay store features hundreds of vintage (pre-1920’s) images MacKay received from her father. These postcards and product labels were part of his antique paper collection for more than 50 years. To view the Jill MacKay store, click HERE.

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THE YARN CRAWL RETURNS TO NEW YORK

The second annual New York City Yarn Crawl will be Columbus Day weekend, Oct. 9-11. It’s an organized three-day event that encourages investigation of 15 of the city’s most popular yarn and craft emporia. Participating retailers will offer special events, discounts, and promotions, plus a free chance to win one of l5 raffle baskets filled with products from sponsoring yarn companies and manufacturers. There will also be a fiber-themed scavenger hunt. Participating restaurants and meeting places will provide opportunities for R&R along the way.

Retailers who participated last year reported strong sales. Pearl Chin, owner of Knitty City, on Manhattan’s upper west side is participating again and said, “We find that events like the Yarn Crawl help us meet new customers, as well as people new to the city.  It helps promote community and local business at the same time.”

“The NYC Yarn Crawl gave me a perfect excuse to explore some shops I had never been to,” adds Karin Strom, editor in chief of Yarn Market News. For more info, visit www.nycyarncrawl.com.

CHA WINTER SHOW NEWS

It appears that the CHA staff has done a good job negotiating hotel room rates for the winter show in Los Angeles. According to figures released by CHA, 53% of the hotel rooms will cost $149 or lower, approximately double the percentage of rooms at those prices at this year’s show in Anaheim.

This Friday, Aug. 20, is the deadline for exhibitors to use their priority points to be placed, space permitting, in the South Hall. Otherwise, vendors may be assigned to Kenitia Hall on the lower level.

For those who exhibited this year, they can expand their booths for almost no additional cost. Exhibitors who had 1-5 booths at the 2010 show can add an additional booth for $1. Those who had 6 or more booths can receive 2 additional booths for $2. The basic cost for a booth is $17.50/sq. ft. Thus far, 80% percent of returning exhibitors to date increased the total show exhibit space by more than 5,700 sq. ft. over the previous winter show.

One controversial new measure: Vendors who chose not to exhibit will lose all of their accumulated winter show priority points.

For info on conducting a workshop or sponsorship opportunities, click HERE. The deadline for sponsoring a workshop is Sept. 1. Exhibit questions? Call 800-822-0404. The deadline for submitting seminar and Demo-nar proposals is Sept. 6. Visit https://www.expologic.com/chaApply.

RANDOM NOTES, RANDOM THOUGHTS 

1. Kudos to Michaels and Provo for their “Get One, Give One” offering in its 8/8 newspaper insert. If a consumer buys a Cricut Expression or Yudu, Michaels will donate an identical machine to a school of the customer’s choice. Considering the sorry state of our schools finances, anything like this is welcome.

2. The old Life magazine has a website where a scrapper can create a timeline using Life’s great photos. This could be an interesting complement to the scrapbook of a child’s life – putting his/her life in a historical context so descendants can better understand what the world was like. Visit www.life.com/timelines.

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MISCELLANEOUS NEWS: RETAIL

MISCELLANEOUS NEWS: RETAIL

BOOKS. Michaels’ book distributor deal with Baker & Taylor is now official. Sometime in the (near?) future, will we see many of our industry’s books as e-books? B&T has a free e-book reader and access to millions of books. Go to http://www.blioreader.com.

SAM, I. Billionaire Sam Wyly is the former chair of the Michaels board of directors and a major stockholder when the company was sold to Bain Capital and The Blackstone Group. As reported in the last issue of CLN, Sam and his brother Charles are now being investigated by the Securities & Exchange Commission and the U.S. Department of Justice for violations of securities rules. Sam also wrote a memoir, 1,000 Dollars and an Idea: Entrepreneur to Billionaire. The book's website says it "describes how his character was shaped, making him the spiritual, optimistic, and determined man and entrepreneur he is today."

SAM, II. The Dallas Morning News recently published a report, citing several legal experts, on the prospects of the SEC winning the case against the Wyly brothers. To read the article, click HERE.

B-T-S. Eight in 10 consumers said they plan to spend more or the same amount on back-to-school shopping this year compared to last year, according to a new American Express survey. For the average family of four, that means a bill of $550. … The International Council of Shopping Centers forecast BTS sales would increase 5.4% to $38.4 billion; that would be the first increase in three years and the biggest percentage gain in five years, MarketWatch reported.

OMEN. Could our industry be next? Reuters reported that the apparel industry is facing major price increases because of ballooning raw material, labor, and freight costs. “Cargo prices are much higher and factory capacity is down, meaning retailers are finding they are having to pay a premium in order to get what they want,” Jeremy Rubman, strategist at retail consulting firm Kurt Salmon Associates told Reuters. 

PRICES. Wal-Mart raised average prices at its stores by about 6%, according to a J.P. Morgan study in Virginia, Reuters reported. Its grocery competitors still have higher prices, but the gap is closing, the study said.

STORES. Hobby Lobby will open its first store in California – in Visalia.

MARTHA. Martha Stewart Living made a deal with Jo-Ann. The retailer blasted an email offering: subscribe to Martha’s magazine for $39 off the newsstand price, and receive a free Martha tote bag. Jo-Ann is also raffling off 100 autographed copies of Martha’s Encyclopedia of Sewing & Fabric Crafts.

CRIME. Surveillance cameras filmed two young men walking into the Hobby Lobby in Dalton, TN, stuffing bags with approximately $1,500 worth of jewelry supplies, and walking out. Footage indicated they were the same two men who performed a similar robbery in the HL store in Cleveland, TN, prior to the Dalton robbery, La Voz (a Hispanic newspaper) reported.

CRIME. A 27 year-old Canton, OH man was arrested for shoplifting when he tried to walk out of a Wal-Mart with a 22-inch television. In his pants. He pled not guilty, Gatehouse News Service reported.

CRIME. Sheila Diann McDonel, 58, in Panama City, FL was arrested for trying to shoplift more than 1,000 pieces of jewelry and knick-knacks from the local Hobby Lobby, the New Herald reported. The very next day an HL employee noticed a car in the parking lot full of HL merchandise and called the police. The police checked and learned the car was registered McDonel, who was arrested and charged – again – with grand theft.

TECHNOLOGY. Because of the success of C&T Publishing’s first iPhone app, The Quick & Easy Quilt Block Tool, the company has issued two others: how-to illustrations from Judith Baker Montano's Embroidery & Crazy Quilt Tool, and instructional video clips from her Crazy Quilting DVD. The three apps show consumers how to create 180+ stitches and stitch combinations. Visit www.ctpub.com.

STOCKS. A.C. Moore: $1.90, down $0.56 ... Hancock: $1.60, down $0.20 ... Jo‑Ann:$37.42, down $4.47 ... Wal‑Mart: $50.40, down $0.72 ... Dow Jones: 10,303.15, down 1.6%. (Note: All changes in price are since 7/30 and are exclusive of dividends.)

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MISCELLANEOUS NEWS

SHOWS. Final stats on the recent CHA trade show in Rosemont: 4,790 attendees, a 16.7% increase, and a 38.5% increase in total buyers over the previous year’s show in Orlando. Buyers came from 50 states and international attendance, 11% of the total, came from 39 countries. There were 738 retail companies in attendance. Square footage increased by almost 9% to 74,698 sq. ft., while the number of exhibitors rose by 10%; 79 exhibitors, 31.6% of the 251 total exhibiting companies, were new to the summer show.

LOOKING TO SELL. Vendor who is a long time floral product supplier to a major chain wishes to get out of that part of the business. Looking for only a commission of what’s sold for a period of time. The buyer would receive the chain’s monthly orders, and the brand name, with no upfront investment and needn’t buy any inventory. For more info in complete confidence, call Mike Hartnett at 309-925-5593 or email mike@clnonline.com.

SHOWS. Registration is now open for the Vogueknitting LIVE! event Jan. 21-23 in New York. For info, visit www.vogueknittinglive.com.

SHOWS. The 2011 Knit & Crochet shows will be July 29-31 in Minneapolis and Sept. 23-25 in Greensboro, NC. Classes start the Wednesday prior to the weekend shows. Details are being developed and will be posted at www.crochet.org, www.tksa.com, and www.knitandcrochetshow.com.

IMPORTS. Despite the fluctuation of the Chinese currency, Chinese factories forced to pay higher wages, and a shortage of shipping containers, imports continue: import cargo volume at the nation’s major retail container ports is expected to show a total 14.5 million containers for 2010, a 15% increase according to the National Retail Federation. June was up 4% from May and 30% higher than June 2009, which was at approximately the depth of the recession. July was up 16% over July 2009, but double-digit increases seen in recent months should taper off this fall as retailers cautiously manage their inventories, the NRF reported. … During the announcement of Li & Fung’s quarterly report President Bruce Rockowitz said, “Prices have gone up for us and our customers…. We are going through a major change in manufacturing countries that is going to take a few years to sort itself out.”

UH-OH. Three state legislatures (MN, IL, and CN) have already passed laws regarding cadmium in children’s products, and six others are considering legislation. To learn more, click HERE.

E-COMMERCE. A new, free website offers advice for individuals and small businesses on how to build their e-commerce business. Visit www.foolishadventure.com.

PBS. As cooking crafts continue to grow, KS Inc. Products has filmed the 8th series of bake decorate celebrate. It uplinks to PBS stations Sept. 19

NEEDLEWORK.  TNNA's Needlearts Stitch Zone was a big hit at the Detroit Maker Faire (July 31-Aug 1). Volunteers taught 500+ new stitchers needlepoint, cross-stitch, knitting, and crochet. To see more, visit http://tnna.org/Outreach/tabid/100/Default.aspx and TNNA’s blog at http://tnnablog.com.

ROLODEX. Falk Industries moved its office to 477 Madison Ave., Ste. 707. New York, NY 10022.

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THE CREATIVE NETWORK: JOB OPENING