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Wednesday, June 22, 2011

The 3 R's of Retail Success can help you Navigate a Tough Economy

While many Crafty Retailers are closing the doors to look for greener pastures, others are digging in their heels in anticipation of a brighter future.  This week's Crafty Retail Rock Star knows the importance of the 3 R's of Retail Success:  Relevance, Relationships, Reevaluation.
Kelli Burns, one of the forces behind The Hole Bead Shop in Bartlesville, Oklahoma, is a retail survivor.  She is also one of the kindest and most generous people in the industry.  I first met her about five years ago when she became a customer.  She quickly became a favorite of mine and now I am lucky to call her a friend.  I had a chance to speak with Kelli today about the state of the industry and she offered the following advice:

Stay Relevant!
Check out your competition.  Find a void and FILL IT.  No one in the area is offering resin or metal work?  Great!  Make it your mission to be the best in that area.  Learn everything you can about  the subject and pound it hard.  Make IT your niche.  Design classes around IT, submit designs to magazines featuring IT,  become the national expert in IT.  Kelli, together with Husband Michael and sister Tarlee, have made Lucite Flowers their "IT."  While the store is well stocked with industry basics such as seed beads, glass beads, and lamp work, it is the lucite bead collection that is the star of the show.   The team sells the loveliest lucite in the bead industry, custom dyeing many colors not offered by any other vendor.  Kelli believes that the bead stores that carry only "standard" inventory are doomed, and I tend to agree.  Today's consumer is much more savvy than she was when I owned my bead shop.  She can get on the computer, do a quick Google Shopping Search, and find out exactly where to find what she needs if she cannot find it from you.  Stay RELEVANT and keep that dollar in your store!

Reinvent Yourself!  Kelli's bead store had an interesting start.  She traded some tired Avon inventory for some tired bead inventory and suddenly she was a Crafty Retailer.  She has been in business for about six years and has Refined and Reinvented herself the entire time.  The Hole Bead started out as a traditional bead store, with classes and bead parties.  However, Lucite sales took off and the store morphed into more of a shipping station for all of the website orders, and classes and bead parties slowly disappeared.  In fact, the website currently accounts for about 75% of store sales, with the Brick and Mortar shop accounting for the remaining 25%.  Are there any retailers out there who still think that they can get by without an e-commerce companion site? 

Of course, Kelli has been dealing with the same stagnant economy as the rest of us and reports that she and her husband now travel to six bead shows per year to supplement their income.   The store provides a salary and is the main source of income for the couple, who are considering adding classes and bead parties back to the shop menu.  Nothing is static....there is a constant need to reevaluate and refine, and Kelli does it with great success.

Cultivate Relationships!  People do business with people they like, period.  We all know the importance of focusing on customer relationships, but many of us drop the ball when it comes to industry relationships.  Not Kelli!  She makes it her mission to send out generous product samples to key players in the industry every year. Magazine editors and large vendors are always on the look out for interesting components to use for customer projects and "how to" articles, so  Kelli wisely makes it easy for them to consider using Lucite! Smart gal, that Kelli. 

Kelli does not have the budget to advertise, so she has employed other methods of getting her brand noticed.  For example, she works diligently to design amazing work and works just as diligently to get it published.  She regularly submits her designs to national and international publications and often hits the coveted cover spot.   Once the magazine hits the stands, The Hole Bead Shop offers kits for sale so that consumers can easily make the project as designed.   Moreover, Kelli has become a Facebook master...her posts are always funny or informative....very "real" and never contrived.   Frankly, Kelli  keeps her name "out there" in a way that is quite charming.   

Although her work has been published more than 30 times, she possesses none of the artistic ego so prevalent with many other accomplished artists.   She is a constant source of amazement to me with her willingness to share techniques, resources, etc.    She has encouraged me to submit my own work, sending contact names and advice regarding the process.   When I was tearfully navigating oncology treatments with my four legged pal, Rosie, I returned home on many occasions to find a well timed note of encouragement from Kelli, who had recently "been there, done that" and knew just what to say.  

 Ever the promoter, Kelli has generously offered blog readers a 10% off coupon good for 24 hours only at The Hole Bead online store!  The coupon code is CRAFTY and can be used for either wholesale or retail orders, but wholesale account holders must have a brick and mortar storefront.  If you do not have a wholesale account yet, please contact Kelli to get approved prior to placing your order. 

There is a saying in marketing that "Giver's Gain" and it is certainly true of Kelli!  Her happy heart, generous spirit, and work ethic guarantee that she will continue to delight her customers for many years!

I am no stranger to Reinvention and have a little going on myself.   I am delighted to report that I am the newest member of Swarovski's Create-Your-Style Ambassador program.  It is a thrill to be working with so many talented individuals and was just the affirmation I needed as I make the transition from Mom to Empty Nester.  I am doing a great deal more teaching these days and will soon be launching a new Retail site which will feature my own line of hand dyed ribbon, merino wool top and silk yardage,  as well as a selection of Swarovski sew on embellishments and crystal yarn.  There is so much more to report, but things are still under wraps as we work out the final details.  Look for an update soon.  Such fun!


A while back we tried to get an online retail networking group off the ground.  The Ning network proved clunky and difficult and the project was abandoned.  Happily, the new Facebook "groups" function has served to breathe new life into the endeavor.  I have established a Facebook group for Crafty Retailers to share their joys, triumphs and tribulations, project ideas and promotional events in a spirit of comraderie and friendship.  After all, if the industry succeeds, we will all succeed!  Although the members names are visible, all posts are private.  If you are a crafty retailer --on line or brick and mortar--and want to participate, send me a Facebook message and a friend request, as only Facebook "friends" can be added to Facebook groups!

Wednesday, June 1, 2011

Is the Brick and Mortar Craft Store still a viable Business Model?

Kinda sorta.

I guess it depends on what you mean by "viable." 

Clearly, the market for crafty consumers is strong.  56% of US households crafted at least once during 2010. The jewelry/bead craft industry  boasts 2.3 billion in annual sales, while the needlework craft industry is even larger---generating 2.9 billion dollars in 2010.  

Despite what appears to be a solid customer base, many Crafty Business Owners have decided they are making too little money while expending too much effort, shutting the doors in  impressive numbers.  Blue Moon Beads recently filed for Bankruptcy.  Homer Hillis, of HHH Enterprises, is closing the last brick and mortar store of what was once an 8 store bead empire, preferring to concentrate on his online retail business.  

Homer, who once described his shop as "a hardware store for women"  is one of the most personable, driven, craft loving guys I know.  I first met him in Tucson at the To Bead True Blue show and have come to respect his business longevity and his marketing acumen.  Despite his passion and his experience, Homer believes that the Crafty Business Model has changed so dramatically in the past few years, "the juice just ain't worth the squeeze."    No doubt about it, the large chain stores and major Internet supplies have had a deleterious effect on the local craft store.

It is easy to make the discount internet craft retailer the "bad guy," but the challenges facing the Crafty Retailer are more complicated than that.  Consider the experience of Jackie Goff, a former Crafty Retail Rock Star.  Jackie recently closed the doors of her Toledo, Ohio yarn store, Uptown Fibers.   Jackie did not go into retail as a starry eyed crafter looking to turn her hobby into a business.  She is a savvy business woman who did an inordinate amount of research before signing her lease.  She had a supportive husband and a plan for success.  She crunched the numbers, developed a budget, knew how much yarn she needed to sell at exactly what margin in order to meet her expenses, and decided to GO FOR IT.  She developed innovative and exciting classes which often had waiting lists.  She advertised locally to increase her customer base.  She held in store events to generate interest and excitement.  She encouraged crafty community and sent out regular emails.  She lost thirty thousand dollars her first year.  Undaunted, Jackie upped her game.  She increased her marketing, and wrote a killer email to her customers explaining the economies of running a Yarn Store.

She lost thirty thousand dollars her second year.  She had an email list of 2000 and a customer snail mail list of 500, yet as the economy worsened, her core customer group stood at only 400.  Jackie's shop was located in an area near Detroit.  The local economy was dependent upon the automotive industry,  an industry that has been decimated in recent years.  One third of her customer base had suffered a job layoff or had a spouse who had been laid off or worried about being laid off.    Fear kills the impulse purchase and folks simply didn't have the disposable income to sustain her shop.  Sales fell far short of the $600 required each day in order to meet her expenses.  Inventory started to grow stale and Jackie was reluctant to invest more money in what was starting to appear to be a black hole.

While she was dealing with a depressed local market, Jackie also experienced the double edged sword of the internet.  Her store was stocked with thousands of dollars worth of books and patterns, but her cost conscious consumer knew that she could go to Ravelry and download something similar for free.  Classes that were once a major customer draw started to stagnate as You Tube exploded onto the Craft Scene.  Suddenly it was possible for a wannabee fiber aficionado to learn to knit or crochet FOR FREE at midnight while sitting in her jammies on the couch.  Paying for the privilege quickly became less attractive to her cash strapped customer.   Thrifty shoppers came to the store for inspiration and companionship, but many would order their yarn from the online discounters.

Jackie did everything that she could to minimize her expenses.  She was forced to let go of virtually all of her help, was not on the payroll, and was operating on a shoestring.  She realized that she would soon be in a position where she could no longer pay her bills while servicing her debt.  Finally, after losing another thirty thousand dollars during her third year, Jackie made the decision to close.  I asked Jackie to identify the final straw and was surprised when she told me that the decision was easy.  In fact, the decision had actually been made before she opened the store!  In typically thoughtful Jackie fashion, she and her husband had decided how much money they were willing to invest before they signed on the bottom line.  Smart people, those Goffs!  They took the emotion out of the decision and were proactive rather than reactive.  They defined what they would invest as start up capital, and determined how much they would be willing to invest/lose along the way.  They promised one another that once those funds had been expended, the jig would be up.

Three and one half  years into her journey, it is over.  The fixtures have been sold, the remaining stock will be sold or donated, and Jackie is ready to call it a day, despite the fact that she will be responsible for a $2500 lease payment through October.  She doesn't think that she could have done anything to have brought about a different outcome and I tend to agree.  Timing, and a wicked economy, were against her.   In the end, the adventure will have cost her between $150,000 and $175,000.  Uptown Fibers was  more than a small business statistic....Toledo has lost a gem. the Brick and Mortar Craft Store still a viable Business Model?

Yes---for those retailers who are in an area with a more forgiving economy and who have crafted a niche market---retail is not just doable, it can be profitable.  Join us next week when we meet a Crafty Retailer who shares her secrets for defying the odds as she slugs it out in a crowded market!

In the Studio
My blog posts have been infrequent of late....all the work has been studio focused!  My youngest is graduating from High School next week and the Empty Nest is looming large.   I am endeavoring to look at this next stage of life as a wonderful opportunity ... creatively.  For the first time since I had children I will be in a position to travel easily and I am looking forward to new teaching opportunities.  The past few weeks have been a bit of a fiber frenzy as I prepared a number of workshop proposals.  Here is a "bits and pieces" preview of my submissions to Swarovski....wish me luck!

Speaking of workshops, I was delighted to learn that I will be teaching at the Southeastern Animal Fiber Fair in Fletcher, North Carolina this Fall.  The event is always spectacular for fiber lovers and I cannot wait to do some shopping while I am there!  The festival is October 21-23 and I will be teaching four workshops.  Two of the classes involve "hands on" fibery fun, while the others are geared toward crafty marketing.

Maybe this empty nest thing won't be so bad after all!