Why are so many Local Independent Scrapbook Stores going out of business? When we opened our store 5 years ago. The scrapbooking industry was at an all-time high, independent retail stores were quickly multiplying and making great progress. When we opened our store we studied the demographics of the Medina County area as well as the surrounding counties. We produced a solid business plan and believed that the demographics were a perfect match for this type of retail business. We thought we’d have plenty of local as well as traveling customers to support our business. Times were good and we thought we could survive after the first 2 years, but then the bottom fell out, the industry changed and our scrapbookers began to dwindle. Where did they go? Here’s the sad but real truth: We’re living an industry nightmare.
Scrapbook stores are closing across the nation. And unlike the store closings of the past, many of the stores closing today were well established with excellent reputations for customer service and product selection. These closures of established stores mean trouble for the industry as a whole. Stores are closing faster than stores are opening. Ultimately, this will lead to a manufacturing crunch (if it hasn’t already), and the closure of various manufacturing companies as well. Today, the scrapbook industry has moved full swing from the early to mid-90’s, when there were virtually no scrapbook choices – to having way too many choices. And too many choices is creating a huge problem. Consumers do want choices. However, offering such a wealth of choices is a double-edged sword. More choices cause more demand for more choices. Eventually the expectations for product is so high that the customer refuses to buy what is available. They become extremely picky – and this lowers sales. It used to be that consumers were relatively content scrapbooking with just some cardstock and stickers. They did the best they could with what they could find. They were more tolerant of low product selection – and didn’t complain nearly as much.
Enter the modern scrapbook world. Product is released each week. Stores struggle with moving slow sellers, while people clamor for new or different themed papers to satisfy their thirst. But, once they’ve used "that" breakfast paper with the bacon & eggs, they want a "different" paper with pancakes and sausage. When we get paper in with pancakes and sausage, the customer exclaims "Oh, but these are sausage links, I want sausage patties!" Customers can afford to be "picky" because there is so much selection. And, what they can’t find locally they hit the Internet for gratification. It’s hard to go back; but with the store closures and manufacturers sure to follow, the industry is bound to contract. It’s pretty much an inevitable conclusion.
The question often pondered is, "Why?" Why are all of the scrapbook stores closing? Many people offer various reasons. No business sense, poor customer service, poor product selection. Too much product, not enough product. The answer is a bit more simple, and we can sum it up in two words, NOT PROFITABLE. There are all kinds of reasons stores may become un-profitable, and no store is immune. We could go further into Gross Profit Margin details and such, but we will save you from those business management details. Retailers are blasted on a daily basis from the end user coming in and saying "What do you have that's new?" Consequently, when retailers talk to the manufacturer, their first question is "What do you have that's new?" The retailer feels pressured to answer to the end user, and the manufacturer feels compelled to respond to the retailer. Keeping in mind that the vast majority of this industry is made up of independent retailers and independent manufacturers, it's a tough situation.
As you well know, product development is expensive and if you don't call it right, you're going to be sitting there with a huge amount of money invested in a product that didn't sell. And unless it's a real "hot" product, it has a life span that extends from CHA Winter tradeshow arrivals in May to the CHA Summer tradeshow in July, and then everyone is on to the next new thing. It's an absolute killer for both manufacturers and retailers. In fact most consumers would be shocked to hear that if a store cannot turn it’s inventory every 3 months (that means sell it all!) then you start taking a loss on what is considered old product. Trends change quickly; scrapbooking is one of the fastest changing industries ever seen. These days the chain stores are all into private labels, so they're taking products, normally produced and sold by the smaller manufacturers, and having them made offshore. Since each chain has its own ready-made market, they can afford to buy the huge quantities required by the offshore manufacturers, knowing they have guaranteed placement. We also have Target and Wal-Mart making major moves into the scrapbooking arena too. We’re sure you’ve already spotted and told your friends about some great scrapbooking finds in the $1 Spot.
We've been saying for the last couple of years if we, the mid-level independent operators, don't do something to save ourselves, the industry is going to end up with three or four major manufacturers and three or four major retailers. There will always be a constant supply of start ups, though. Businesses that begin in the garage, build up to a mid-level retailer, only to discover they can't survive at that level. They don't have the unlimited funds to support constant new product for the footage they expanded to, nor support the employees they have hired as they grew. We wish we had the answers. It hurts us to see our store and others close. We’re not the types to give up easily. These are all talented people who have put their hearts and souls, not to mention their kids' college money, into their businesses, only to walk away from them after 5 or 10 years, a lot poorer for the experience. For independent retailers, it's the chain stores (Archiver's, ReCollections), as well as the other large retailers who are adding more space to scrapbook supplies (Target, Jo-Ann's, Wal-Mart, etc.) and pulling the consumers into their stores to absorb a large piece of the pie that is needed to survive. I wish I had counted the times I heard someone say “I’ll have to go to XYZ and use my 40% off coupon on that item”. When Jo-Ann’s, Michaels & Hobby Lobby can afford to discount their merchandise 40% due to the “big box” discounts that they receive when making large purchases from manufacturers. They also purchase cheaper quality merchandise in most cases.
We do not receive any discounts on our wholesale prices and when we are forced to discount items we do not make any profit to pay the bills. With the over abundance of products out there, many retailers are having a tough time keeping up. With the fairly limited budget that many scrapbook retailers have, as well as fairly limited space, they can't possibly stock everything that's available, so they need to decide in what products to invest. Inevitably, customers will come in and ask for products that they saw in the latest scrapbook magazines, products that the retailer does not carry. In many cases, the customer simply seeks another venue to obtain the product. If we take a look around this area, we have seen several stores come and go over the past 5 to 10 years and stores across this region will continue to close, guaranteed.
Many factors come into play, such as:
- Competition and lack of consumer loyalty. Many storeowners go into business thinking “but my store will be different/better”. Doesn't matter. If customers have the choice, many will shop around and not buy all their supplies at one certain store (no matter how great the customer service is, unfortunately). Competition comes in the form of other local independent stores, craft chain stores, discount department stores, and online retailers. The existence of Archiver’s and Michaels-owned ReCollections, who have said they plan on opening 200-300 or more locations in the future, has many independent retailers worried. And they should be. Again, consumers will probably continue to shop at their favorite store when the chain comes into town, but unless they are diehard loyal customers, they’ll probably shop the chain too. This again divides the scrapbooking pie.
- Too much product. As I said earlier, there's so much product now available, many smaller retailers simply can't purchase it all. And because the trends change so quickly, the products they do purchase sometimes end up sitting on the shelf when the trend is over. Both of these industry factors provide the basis for an UNPROFITABLE store. Sadly, we would be very wary of advising anyone to open an independent scrapbook store unless they had buckets-full of money, and even then, only if you wish to loose it and go further into debt. The bottom line is, if this were a profitable business (in the least), we would not be closing our doors today. With much sadness, we thank you all and we will miss you – Keep Leaving Your Legacy!