Date: February 20, 2006
Vol. X, No. 4

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TABLE OF CONTENTS

COMMENTARY: The Future of Trade Shows  

It makes you wonder about the future:

1. Some vendors and buyers are making deals in China, not at trade shows or even in the buyers' offices.

2. Some chains are demanding exclusivity on designs or even products. If a vendor has made such a deal, he may not show the product line at trade shows.

3. CLN received in invitation to participate in a virtual trade show. Buyers can surf to the "show" and watch/hear product demos, sales spiels by the vendors, etc. – and place orders.

4. Three small scrapbook vendors combined mailing lists, then sent first-class letters to each retailer on the list (in part to see if they're still in business). When the returns were culled from the master, the companies mailed sales pieces for their new products (before the retailers spent money in Las Vegas). The final results are still being tabulated, but one vendor said sales were at least as good as those at the 2005 CHA show – for a third the cost of exhibiting.

Business-Wise. Exhibitors and buyers evaluate the CHA show in their own, blunt words.

Category Reports. Two savvy design pros walk the CHA show and report on the trends.

Scene & Heard. Trends from the Atlanta Gift show and Christmasworld-Paperworld show in Frankfurt, Germany – the latest designs, colors, fabrics, and textures.

Memory, Paper & Stamps. Going-out-of-business sales and short-sighted vendors make the tough business of scrapbook retailing even tougher. A report from the trenches by a scrapbook retailer.

New Trade Show Exhibitors. Last chance to check out the new exhibitors at the recent TNNA and CHA shows.

Note: To read the columns, click on the titles in the left-hand column. If it appears to be an "old" column, click on your "Refresh" or "Reload" button on your browser.

Should our trade shows continue be sectionalized by product category? To vote, click on Industry Polls in the right-hand column or click HERE.

CHA show buyers and vendors arrived in Las Vegas expecting a good show, and according to CLN's unscientific poll, their expectations were surpassed. 16.3% rated the show Outstanding, while 49.0% said it was Very Good; that's 65.3%. In CLN's pre-show poll, 52.3% expected the show to be Outstanding or Very Good.

Only 4.1% rated the show Not Very Good and 2.0% said it was Poor for a total of 6.1%. In the pre-show poll, 9.7% predicted it would be Not Very Good or Poor.

More than a fourth, 28.6%, rated the show as OK; 38.7% had expected it to be that way.

Final Stats. More than 20,350 registered attendees, a 10.35% increase over last year ... 319,519 total net square footage of space – the largest show in CHA history ... 9,402 buyers (up 30.6% from last year) ... 1,035 exhibitors in 3,200 booths ... More than 10,500 education tickets sold, a 20% increase over last year. "The response continues to be very encouraging," said CHA's CEO Steve Berger, "so we plan to initiate even more tailored programs so that the CHA trade shows continue to improve, grow, and succeed."

Trends. Scrapbooking expanding more into a more general paper crafts ... Beads for jewelry and just about every other category such as quilting, crochet, scrapbooking, etc. ... Kids Crafts – more than we've ever seen at a CHA show ... Yarn may not have sold a kazillion skeins recently, as some retailers expected, but it sold a lot. Watch for "felting," to grow ... A resurgence in a wide variety of categories, pom poms, needlework, wearable art, etc.

The World Is Flat. Attendees came from more than 55 countries and there were exhibitors from Australia, Brazil, Canada, China, Great Britain, Hong Kong, Japan, India, Malaysia, Mexico, Nepal, Panama, Philippines, Puerto Rico, Taiwan, Thailand, and Turkey – and the products themselves came from far more countries.

Complaints. Most will be, in effect, moot: some exhibitors disliked the two-hall setup, and the lack of extra show books. The Winter show moves to Anaheim in 2007, which only has one very large hall, and the CHA staff promises there will be more show books next year. File this under "You can't win": Years ago, both ACCI and HIA sectionalized the shows because buyers complaints. The organizations merged and the sectionalized shows continued. Now some vendors, usually from non-scrapbook categories, say they don't want the show sectionalized.

Kudos. Most exhibitors were pleased with the show, not only because of buyers' response to their products but because of the buyers' upbeat, optimistic attitude. "They had a renewed belief that things are getting better," said Shawn Grecian of the Grecian Sales Group. (Note: To read reactions to the show from a long list of buyers and exhibitors, click on Business-Wise in the left-hand column.)

Media. Among the magazines that attended the CHA show: Readers Digest, Country Living, Woman's Day, Parents, Family Fun, and Homeschooling Parent.

Magazine Awards. Scrapbook Retailer's awards: Customer Service: Quickutz ... Shipping: Notions Marketing ... Education for Retailers & Consumers: EK Success ... Event Support: Bazzill ... Communication with Retailers: EK Success ... Product Innovation: BasicGrey ... Business Building Partnerships: Making Memories ... Advertising Campaign: EK Success ... Manufacturing Company: EK Success ... Manufacturer’s Rep Firm: Fred Hill ... Distributor: Notions Marketing ... Consumer Scrapbook Publication: Creating Keepsakes ... Individual Contribution to the Scrapbook Industry: Sandi Genovese ... Individual: Aleene Jackson. ... To see the winners of Craftrends' Award of Excellence, visit www.craftrends.com/news.cfm.

Friends. Our best wishes to Keith Gardner and Howard Hoffman, both of whom became ill at the show. Both are now on the mend and should be fine.

Seminars. Recordings of some of the show seminars are available on audio CD's and MP3 CD Roms. Visit www.playbacknow.com/search/index.cfm?orgname=cha.

Next: The CHA Summer Show will be held in Chicago, July 21 – 23, 2006. For more information visit www.chashow.com.

Hobby Lobby reported its 2005 gross sales were in excess of $1.4 billion. The chain now has 362 stores in 28 states after opening 27 new stores in 2005. The company plans to open 25 new stores in 2006 in Florida, Ohio, Alabama, North Carolina and Colorado and for the first time, in Utah and Arizona. Approximately 15,000 people are employed in the retail, wholesale, and manufacturing divisions. The total square feet of retail space is now more than 16 million.

John Menzer, the company's Vice Chair and head of its domestic Wal-Mart stores division, said the company will open 335-370 new stores in the U.S. this year, after opening 341 last year. The company is well on its way to achieving that goal, having opened 69 new stores in January, a company record for a single month. Menzer, the former CEO of the now-defunct corporate Ben Franklin, did not specify how many would be discount stores, Neighborhood Markets, Sam's Clubs, or supercenters (with groceries), although supercenters seem to be the primary focus.

"We are really focused on opening new stores right now," Menzer said during a webcast from a financial conference. "We see so many opportunities to open new stores that that's where our capital is going first."

All told, Menzer said the company would open more than 1,500 stores in the coming years. Menzer also said 1,800 of its supercenters would be remodeled over the next 18 months. Plans call for faux wood floors, wider aisles, and digital television display walls. Analysts believe that's an effort to attract wealthier consumers.

The company also launched a new ad campaign focused making customers think of Wal-Mart as a shopping destination with unexpected possibilities beyond basic necessities.

CHA INNOVATIONS AWARDS

CLN reported the winners in the previous issue, but not the products:

Art Materials & Framing: Moore Push-Pin for the Invis A Link art connectors for scrapbooking, themed groups of picture frames, wood panels, and canvas. www.push-pin.com

General Crafts: 3 Ring Circles for wood carvings that are ready to be painted. www.3ringcircles.com

Fabric/Quilting/Needlecraft: Colonial Needle for the Mary Arden Needles line imported from England that features needles for all types of crafts including beading, cardmaking, quiltmaking, and embroidery. www.colonialneedle.com

Scrapbooking & Paper Crafts: Heritage Handcrafts for the new Pink Pig Heat Gun shaped like a pig. It is an ultra quiet, lightweight, sturdy and fun way to glue craft projects. www.heritagehandcrafts.com

New Exhibitor: Paper Cellar for special card kits and sparkly accessory line for scrapbook pages and greeting cards. www.papercellar.com

Best of Show: Judy’s Stone House Designs for their New Wood Surfaces for Crafting; the line includes undecorated wood purses, containers, mini-albums, journals, etc. www.judysstonehousedesigns.com

Winners of the Golden Press Kit awards: First place to Albums and Answers, second place to Hot Off the Press, and third place to Anna Griffin.

Recent issues of CLN seemed to have had an unprecedented array of negative news stores. So to balance the scales, so to speak, here are some positive trends:

1. The Martha Stewart-EK Success collaboration gives Martha a vested interest in the sales of scrapbook and craft products. That will mean more exposure for the industry in her various media outlets, which should attract more consumers to our stores.

2. The CHA show seemed to indicate the beginning of a resurgence of interest in various categories besides scrapbooking and yarn. It's much healthier for the industry to have a variety of appealing categories rather than be so dependent on one or two.

3. The unification efforts of CHA and the Society of Creative Designers. SCD is filled with immensely talented free-lance designers who had difficulty making contact with manufacturers who needed them. By joining forces it will be much easier for vendors to find the talent they need because they can meet the designers and see their work at CHA shows.

4. Successful specialty retailers in yarn and scrapbooking are expanding to include other related categories and therefore are appealing to a broader range of consumers. During the counted cross stitch heyday, many of the retailers refused to do this and are now out of business.

5. The economy: unemployment recently hit a six year low. Many of the new jobs don't pay as well as lost manufacturing jobs, but this is still better than no jobs at all ... Consumers seem to have absorbed last year's rise in oil prices in part due to a relatively mild winter.

6. The new Decorative Painting Advisory Council may not solve anything, but at least it's a sign that the category leaders realize it's time to take action.

7. Survival of the fittest. Some scrapbook stores have closed and the closeout sales will temporarily hurt the survivors, but if they can weather that storm and ultimately have a larger slice of the local pie, they will be stronger. Four strong stores in an area is better for the long-term health of the category than 10 mediocre stores.

8. The new CHA study showing the industry has surpassed $30 billion in annual sales is already generating favorable publicity (e.g. a recent glowing article in the Las Vegas Desert Morning News). The study will help everyone negotiate with bankers or prospective buyers.

9. There ARE new stores opening. There were 16 new Ben Franklin franchise stores opened last year – variety and crafts – with the main merchandise category in most of the stores being fabric, yarn, memory, and beads. "We continue to see strong interest from people who want to own their own business and from existing retailers who want to add the BF program to their existing business," said David Larson, Dir. of Sales/Marketing for Franklin Franchising Inc. (For more info, call David at 800-992-9307, ext 402, or Franchise Director John Ptacek at ext 284.)

10. How often have consumers said, "Gee, I wish I had a camera." As cell phones-cameras become more ubiquitous, they will have a camera and won't miss a shot. That means more photos to scrap. Today the quality of the photos taken with these cameras is pretty lousy, but that will change.

11. We're not in the toy industry. Sales fell 4% in 2005, the third year in a row sales declined. (Specific sales figures for Arts/Crafts category were not released.) And as Toy Fair (the industry's version of the CHA show) opened in New York, the city was hit with 26.9 inches of snow in Central Park and 50 mph winds, the worst blizzard in NYC history. Opening day attendance was way below pre-registration levels since many buyers couldn't get into the city.

Researchers at the U. of Arkansas found a 16% reduction in out-of-stocks at Wal-Mart stores using electronic product codes (EPCs) powered by radio frequency identification (RFID) technology, compared to control stores.

Linda Dillman, Wal-Mart's Chief Information Officer, said the company has also been able to restock RFID-tagged items three times as fast as non-tagged items that used standard bar-code technology. And Simon Langford, Wal-Mart's chief RFID strategist, said the company is rolling out RFID-enabled forklifts to help it gain further efficiencies from the technology, reported DCVelocity.com. Wal-Mart is also testing a way to share data from RFID tags through automated electronic data interchange transmissions (EDI), TechWeb News reported.

Meanwhile the price of RFID tags is coming down. Avery Dennison is selling Gen 2 inlays for 7.9 cents per unit for orders of one million or more. UPM Rafsec, an RFID tag and inlay manufacturer, is selling its Gen 1 and Gen 2 inlays for less than a dime each with a minimum delivery of 50,000 pieces.

(Comment: Within a few years, RFID tags will be as ubiquitous as UPC codes.)

1. I don't plug particular companies or products without very good reason, and here's an excellent one: Bill and Jennifer O'Meara own Twelve by 12 and were exhibiting at CHA for the first time. They filled their trailer with their booth, literature, samples – everything – and drove to the Flamingo hotel, eagerly anticipating setting up their booth the next day.

That night the trailer was stolen from the Flamingo parking lot. It was later found after the show in Henderson, NV – empty and burned. So if anyone deserves a plug, it's Bill and Jennifer. Since you didn't see their impressive new scrapbook papers at the show, visit http://jenniferomeara1809.sitewelder.com. And if you've checked their site before, check again; they've added some great new tags and stickers.

2. Sometimes knitting and crochet receive more publicity than necessary. From the 2/13/06 issue of Newsweek: "Barry Byron Mills is a bank robber who will spend the rest of his life in prison. An alleged leader of the notorious Aryan Brotherhood prison gang, Mills stabbed a fellow inmate to death with a handmade knife 27 years ago, adding two life sentences to his time. Now 57, he likes to project a softer side. He spends his spare time crocheting...."

3. A recent TwoPeas message board included an excited consumer who had just bought two rubber stamps at her local Big Lots for $1.98 each. The scrapper was so excited because she had bought the same stamps for $12 each in December. No mention of the manufacturer's name, but whoever it is, this is a great way to drive independent retailers out of business.

RATINGS. Last week Moody's Investors Service lowered all ratings on Jo-Ann's, including its senior subordinated notes, to B3 from B2, CBS MarketWatch reported. The agency also revised its outlook on the company to "negative," due to the adverse impact of weak merchandising programs and a slowdown in several categories. Key credit metrics have fallen well below levels that are typical for the company's previous ratings, Moody's said, adding that ratings could decline further in the next 12-18 months if operating performance, free cash flow, and credit metrics remain weak.

STOCK. Wall Street has taken a recent interest in Jo-Ann's and Hancock. According to recent 13G filings with the Securities & Exchange Commission, on Feb. 6, Dimensional Fund Advisors bought 1,461,047 shares (5.2% of outstanding shares) of Jo-Ann's, and two days later bought 1,231,300 shares (6.43%) of Hancock. Other recent acquisitions: First Pacific Advisors bought 2,608,069 shares (11.0%) and David J. Green & Co. bought 1,280,941 shares (5.47%) of Jo-Ann's stock, while the T. Rowe Price Small-Cap Value Fund bought 1,585,500 shares (8.2%) and Rutabaga Capital Management bought 1,598,500 shares (8.35%) of Hancock stock. All told, approximately 22% of each company's outstanding shares were purchased.

A.C. MOORE. Oppenheimer analyst Bernard Sosnick raised his rating of the company from Neutral to Buy, thinking the retirement this year of CEO Jack Parker might lead to a sale of the company, the Associated Press reported. Company officials declined comment. The stock jumped $2.17 the day of the announcement ... Earlier, Wedbush Morgan upgraded A.C. Moore to buy from hold, citing more confidence that management will improve the company's business.

RETIREMENT. Best wishes to Alan and Phyllis Goldman, who are closing their Goldman's Yarn Store in Greenburgh, NY and retiring. The store started in the Bronx, then moved to Greenburgh more than 30 years ago. A Goldman's customer for 20+ years, Arlene LeBow told the (Westchester) Journal News, "This is really a heartbreaker. You don't find this anymore. It's an era gone by."

FABRIC. Newsday recently profiled Canner's Fabrics on Long Island, which was started in 1923 by Joseph Canner. Eight decades later, the store is in its third generation of family management. Joe died in 1973 but his son, Bernard, now 87 and still working a few hours every day, told Newsday: "I merchandise by the seat of my pants. I do it by feel, and 90% of the time I'm right, and the other 10% I sell at a loss. A business like I'm in, you don't learn. You have to grow into it, with it, so it becomes part of you. You stay on top of the innovation. But sometimes you do things and you don't know why." The key to success? Change with the times. "Less women are sewing now, and you have to keep up with those changes," Canner said. For example, the store added yarns – now a strong seller – and upholstery materials. "We diversified. So if one item didn't sell, the other one did. We always kept something on hand that would add to the growth."

RESEARCH. The first Sewing in America Consumer Research Study, sponsored by Sew News and Creative Machine Embroidery magazines and Int. Textiles Expo will be unveiled at the Expo Mar. 28-30 in Las Vegas. For more info, visit www.textileshows.com or email Show Director Pat Kobishyn at textileshow@earthlink.net.

MOVIES. Previously CLN reported on the new movie, End of the Spear, produced by Mark Green whose family owns Hobby Lobby. In mid-January Variety.com reported it was the #8 movie at the box office, outselling "blockbusters" such as King Kong ... There is a new movie about scrapbooking, Scrapped, that will be released this fall. To watch the hilarious trailers, visit www.scrappedmovie.com/promos.html.The site received almost 25,000 hits in its first four days, the producer told CLN.

TRIVIA. Wendy Wasserstein, the Pulitzer Prize-winning playwright (The Heidi Chronicles) who recently passed away, had a connection to our industry. Her father and brother were the "W" in W.F.R. Ribbon, at one time one of the industry's major ribbon companies.

MAGAZINES. There was an interesting discussion on a TwoPeas message board about non-scrapbook ads in scrapbook magazines. Enthusiasts don't like it. (Comment: But more ads means the publisher can keep the subscription price low.) On the other hand, enthusiasts will often actually study the ads related to their hobby far more closely and respond more often than a non-enthusiast.

RUMOR. Time Warner sold a book division to a French company, but Leisure Arts is NOT part of the deal.

TEEN FASHION, I. The March issue of Teen People, on newsstands now, includes an article on how girls can save money on prom night. The photo shows a model holding a Franchi handbag that retails for $345. The next photo shows a model with a comparable purse, but it's from BagWorks' Additions line and costs only $16. Visit www.additionsweb.com.

TEEN FASHION, II. The current issue of Family Circle has two projects for teens using fabric paint – decorating a t-shirt and tennis shoes.

INTERNET. The Society of Decorative Painters' magazine, The Decorative Painter, is now online for members.

LOOKING TO BUY. Veteran craft company is looking for acquisition opportunities within the craft industry. Best candidates will have annual sales between $3 million and $10 million. For more info in complete confidence, call Mike Hartnett at 309-925-5593 or email mike@clnonline.com.

IMPORTS. The White House is again pressuring China to allow the yuan to float more freely against other currencies. That would ultimately make goods imported from China more expensive and U.S.-made products more competitive ... If you're be going overseas this year, check www.cdc.gov/travel before you go. It's a site for the U.S. Center for Disease Control and it's loaded with advice for precautions to take before any overseas travel.

LAWSUIT. A blind UC Berkeley student filed a class-action lawsuit against Target claiming the retailer commits civil-rights violations because its website is inaccessible to the blind. This could have serious implications for everyone who has a website. Blind people can access websites by using keyboards in conjunction with screen-reading software which vocalizes visual information on a computer screen. In a previous issue CLN reported that Lion Brand Yarn has already upgraded its website to allow the sight-impaired to access the site.

TRENDS. While many consumers focus on the new, a growing number of young people (late teens - 20's) are looking to embellish and modify recycled clothing, often using our industry's products. Visit www.swaporamarama.org.

QUOTATION. "The hot new look in gift, home, and seasonal merchandise this season is glitz and glam – a return to the traditional, but with an updated, sleeker twist. Lots of silver and crystal are being mixed with the year’s hottest non-colors, black and white." – Meredith Schwartz, Gifts & Decorative Accessories

SCRAPBOOKING. For a thoughtful perspective on new scrapbook products and the true motivation for preserving memories, read the latest entry in the blog of Drex Davis of Scrapbook.com at www.scrapbook.com/blogs/13413/view/5759.html.

PEOPLE. Loew-Cornell promoted Martha Mason to VP/Marketing and Richard Gasson to VP/Sales ... Steve Lewis of Winter Woods was named Citizen of the Year in Jefferson, WI ... Weldbond Adhesive announced a partnership with designer Heidi Borchers to develop craft-related products under the Weldbond brand ... Kandi Corp named industry veteran George Taylor, formerly of Prym Consumer USA, as National Sales Manager.

NEEDLEWORK. A New York art gallery, DCKT, recently had a showing of needlepoint-on-paper works by Maria E. Pineres. Visit www.dcktcontemporary.com. Then click on Artists, then Pineres.

YARN. The North Hancock Recovery Center in Necaise, MS needed blankets and household goods for the 250-300 families, victims of Katrina. Lion Brand Yarn issued a call to its 365,000 subscribers of its email newsletter and so far the facility has received about 250 boxes of blankets and other supplies, including 41 boxes of knitted or crocheted blankets. Blankets and warm clothing are also still in short supply; to make donations call Gay Ladner at 228-234-8899.

QUOTATION. "There is just something therapeutic about knitting that clears your mind. It's peaceful, almost spiritual. It's the new yoga." – Laura Metzer, a former Microsoft executive and art gallery owner who took up knitting last year at 42. (St. Petersburg Times)

BEADS. Jackie Guerra, host of DIY's Jewelry Making, actress, author, beader, and comedienne, will appear at the Bead & Art Glass Fest in Anaheim Nov. 10-12. She has launched her own jewelry line and will sign her new book, Under Construction, and teach jewelry-making classes. For exhibit info contact Chris Reinke at creinke@offinger.com. Promotional and even sponsorship opportunities are also available.

ART. Derwent introduced Inktense, an ink-like pencil that produces color – used dry to produce color or washed out with water for a translucent effect. Once dry, the color is permanent and can be worked over with other media. In 23 colors and a non-soluble Outliner for initial sketches and outlines that won't. Distributed by ColArt Americas. Visit www.pencils.co.uk.

TNNA. TODAY is the deadline for exhibitors at the The National NeedleArts Assn. show in Indianapolis June 10-12 to send in their contracts and be in the first round of booth assignments which are made by seniority points. All contracts received after that date are assigned in receipt date order. Fax 740-452-2552, email tnna.info@offinger.com, or visit www.tnna.org.

NAMTA. Online registration for the National Art Materials Trade Assn. show Apr. 20-22 in Boston is now available at www.namta.org.

PAINTING. There are a limited number of booths left for the Society of Decorative Painters Conference/Expo June 8-10 in Nashville. Call Yvonne at 316-269-9300, ext. 109, or email yvonne@decorativepainters.org.

SHOWS. Ed Expo and the School Equipment Show will be "co-located" together to form the School Products Expo in Orlando Mar. 2-5. More than 400 companies will exhibit. Call 800-395-5550 or visit www.nssea.org for more info.

To see the latest listings from The Creative Network, the only personnel recruitment firm specializing in our industry, click on Jobs in the left-hand column or click HERE.

A. C. Moore (ACMR). Last*: 17.83 ... Change**: +2.96
Hancock Fabrics (HKF). Last*: 4.22 ... Change**: -0.31
Jo-Ann Stores (JAS). Last*: 13.95 ... Change**: +0.56
Michaels (MIK). Last*: 31.95 ... Change**: -1.00
Wal-Mart (WMT). Last*: 46.10 ... Change**: +0.61
CLN Retail Index. Last*: 162.46 ... Change**: +2.5%
Dow Jones Index. Last*: 11,115.32 ... Change**: +3.0%

Exhibit at enough trade shows and the law of averages will catch up to you; something bad will happen. This issue contains the sad stories of the New York blizzard affecting Toy Fair and first-time CHA exhibitors Bill and Jennifer O'Meara of Twelve by 12 having their trailer stolen. Usually the disaster is a lost booth, but there have been some notable exceptions. Here are a few from our industry's history:

1. A sewer backed up during a needlework show, gushing raw sewage into an aisle on the show floor. The exhibitors there didn't get much traffic; the buyers forgot to pack their hip boots.

2. A ceiling air conditioner malfunctioned during an ACCI show and it "rained" on a booth. (When it rains on your booth in a convention center, it's time to go home.)

3. During a floral show in Las Vegas, there was a horrific windstorm outside the convention center. Whenever the bay doors were opened to allow freight to enter or exit the center, it caused a wind tunnel that blew down a particular booth. Five times.

4. One HIA exhibitor was hospitalized briefly because of bed bugs in her hotel room.

This did not happen in our industry, but during a needlework show in the relatively new convention center in Charlotte, a center employee told this tale to CLN: During its opening weekend, there were shows on each of the center's two floors. The show on the top floor was one of the home party companies. One day there was some sort of pep rally with thousands of women jumping up and down. That caused the ceiling tiles on the first floor to come cascading down on the exhibitors and attendees. 

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xxx

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