The trends, the issues, and productive business strategies.

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The State of Scrapbooking 

Interview with Crafter's Home President Norm Carlson

by Mike Hartnett (May, 2004)

CARLSON. One of our concerns has been the number of inventory turns (annual sales divided by average inventory at retail) that independent retailers are reporting to us. While five to seven turns are ideal, we would like to see at least four.

Part of the problem is with "old" merchandise taking up space that could be used by fast turning items. Everyone has winners and losers, and this is compounded by the volatility in our industry. Customers are demanding the new merchandise that they see advertised in the media. So, it becomes paramount to get rid of items that are not selling. Sometimes it is as simple as moving the item to eye level, making a creative display of multiple uses for the item, or using the item in a class.

But there are also those items that just won’t sell even though you’ve marked them down below cost. Those are the items that could be donated to schools or non-profit organizations and written off at retail.

The whole point is to free up the shelf space for something that will sell. Most independent retailers are hesitant to mark down prices before it is too late. If one waits too long to mark down or discontinue a product, the chances of selling that product are decreased exponentially. Too much old inventory and not enough new inventory will close a store faster than anything.

CARLSON: All of our stores certainly appreciate the buying power that they enjoy, but the benefits go far beyond just discounts. Belonging to a group of like minded business people where ideas can be freely and openly discussed, splitting orders, ongoing training and consulting, special gatherings with both Crafters Home stores and Crafters Home Vendor Partners are just a few of the added benefits.

CARLSON: I suppose that home retailers are a valid concern to most independents, because of the low overhead enjoyed by those working out of their homes. But, it really comes down to competition for a piece of that entertainment dollar. In reality, the home retailers are no more competition than the local Target, Office Depot, Wal-Mart, or neighborhood gift store that carries a few paper craft items. The winners will be those business owners who provide the best "Shoppertainment" (a Kizer and Bender definition) for their customers.

CARLSON: If it weren’t for the scrapbooking phenomenon, the craft industry would be much smaller than it is now. The veteran art and craft companies who are just jumping on the bandwagon were probably concerned that scrapbooking would turn out to be short lived, like macrame. I think that the effect they will have may not be seen on the retail end, but will have a profound effect on small manufacturers who do not have the resources for national advertising. With more and more manufacturers getting involved in the industry the most likely point of competition may be price, which will hurt all manufacturers.

CLN: Are scrapbook retailers expanding their inventory to include more paper crafts, stamping, and other categories? Should they?

CARLSON: Some scrapbook retailers are becoming paper craft retailers. In order to be successful in retail, you have to provide merchandise that end users will buy. If a merchant is carrying strictly scrapbooking, and their customer base is maturing so that they have emptied their shoe boxes of old photos, what will bring that customer into the store on a consistent basis?

In other words, we have shown a generation of young women (primarily) what fun it is to be creative. What does her favorite scrapbook store have for her to do next? Retailers have to listen to their customers. Have they learned other paper crafts? Are they moving on to jewelry making? What are the interests of their particular customer base?

CARLSON: I can remember when we added scrapbooking to our rubber stamp store about 10 years ago. The choices were easy because there were just a few companies out there, several of whom are no longer in business, just as there are many independents who are no longer around, but that’s another topic of discussion.

It goes back to knowing the interests of your customer base, the trends in the industry, the abilities of the retailer to educate his/her customer base, and future articles and advertisements in the media. Retailers need to look at the new products from a business perspective instead of a consumer’s perspective (after all, most of these store owners are consumers first). They need to understand that as they spread their inventory base among more and more vendors, their actual cost of the product goes up. There is more time spent controlling inventory, more time spent ordering product and more cost associated with shipping to name a few of the issues. There is a fine line between having the "best" new products in your store and having "all" of the new products in your store.

CARLSON: As we all know, the trends seem to start in the west and then move east. Some areas are months behind other areas, and interests are different in different areas depending on their demographics. Some areas are saturated with retail outlets that carry paper craft supplies, and other areas still have room for growth. Some areas, such as the upper Midwest, are big crafting areas while others are not.

CARLSON: We are in a maturing industry where we will continue to see companies come and go, whether they are on the manufacturing side or the retailing side. This is a free market, and survival will depend on those who are market leaders, not followers. The companies who can leap ahead of their competition will not only survive but will also prosper. The same thing happens in every new and successful industry. Only the biggest and the strongest will survive (the law of attrition.) Both those currently involved, and those wishing to get involved in this industry need to figure out a way to be bigger and/or stronger than their competition.

CARLSON: I believe we will continue to see more mergers and acquisitions on the manufacturing side. On the retail side, there will continue to be many new stores open and many stores close.

To stay in business, an independent retailer will have to do a better job of providing that total shopping experience for their customers, have broader name recognition, and not only have the finances to withstand increased competition, but also ability to seek and obtain information and resources necessary to survive. They will have to do a better job of bringing new customers into their stores as well as catering to their existing customers.

In two years, there will be fewer manufacturers and fewer independent retailers. However, the survivors will have larger selections of merchandise and will be more profitable. Those who choose to continue to do business as they have in the past will not be with us in the future.

Note: For more information on Crafter's Home, call Norm at 800-486-3534 or 623-780-1333; fax 623-780-1302; or visit www.craftershome.biz. To read previous Memory, Paper, & Stamps columns, click on the title in the right-hand column.

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