Paper cuts

Even while growth continues in the conspicuously popular scrapbooking industry, independent retailers across the country are still struggling to make a profit, according to what's being billed as the “first-ever” scrapbook retail survey.

“There's still work to do,” says Bill Gardner, editorial director of Craftrends Magazine, which unveiled portions of the survey during October's Sixth Annual MemoryTrends Trade Show for scrapbooking and papercrafts. The event drew 5,400 buyers, exhibitors and other industry personnel to Las Vegas earlier this fall.

Overall, independent scrapbook stores are faring “a bit better than we expected,” Gardner said at the show. Average annual retail store sales totaled $264,500 and average annual inventory turns (annual sales divided by average inventory) were 4.34 among the 449 retailers completing the survey (which Craftrends began selling in its entirety last month).

Scrapbooking, which emerged about a decade ago, ranked third in a survey of 2005 household participation in all crafts, according to the Craft and Hobby Association (CHA). Likewise, although growth slowed somewhat last year, CHA research showed that sales still grew by 25 percent more than 2003.

Sales are booming at stores like Majestic Memories in Las Vegas. Trade show attendee Bill Michael, who owns the shop with his wife, Dodi, grossed about $300,000 this year, and expects to move into a new, much larger store in a year or so. Their secret? Stocking products the competition doesn't and “location, location, location,” says Michael, whose store is off the freeway in a strip mall.

Another convention attendee, France Guimbeau, was weeks away from opening a scrapbook store on Mauritius, an island off Africa's southeast coast with a population of just one million—an indication that the trend is going global.

Still, the picture isn't as bright as it might be with the pastime of handmade photo albums, says Gardner, echoing others at the convention and elsewhere who report that coast-to-coast, specialty shops are continuing to shut their doors.

For at least one store owner at the show, one of the largest in North America, getting paid is still just a daydream, even after two years of operation. Likewise, Plaid Enterprises, the worldwide craft manufacturer and distributor, is providing scrapbooking product to about 730 independent stores nationally this year, but losing about five of these clients a month, says Constance Cross, sales and service manager.

“People are saying, 'close my account, I'm no longer in business,'” Cross tells PLAYTHINGS. “Scrapbooking is plateauing, and everybody knows it,” she adds.

Although crafts are still growing “a little bit,” the $2.5 billion industry is starting to plateau, agrees Gardner. He also concurred with industry colleagues that much of the problem lies in small retailers' lack of business savvy: as with other new trends such as quilting, a great many scrapbook store owners are passionate hobbyists who went into the biz without retail training.

“They are very creative,” says Gardner, “…but if they don't know how to run a business, that doesn't matter.”

The biggest challenge, many agree, is customers' seemingly insatiable hunger for the next new thing—fed by umpteen scrapbooking magazines, how-to TV shows and the Internet—and the speed with which new product comes to market.

“It's a constant battle for stores to find ways to keep buying new things” and owners are frequently forced to resort to discounts to move inventory, notes Sandy Redburn, owner of Crafty Secrets, a Canadian-based vendor known for vintage stickers.

Manufacturers are becoming increasingly aware of this problem and aren't introducing new lines as aggressively as in the past, says Bevan Bassett, director of merchandise for Provo Craft, Spanish Fork, Utah, another leading manufacturer. “The sheer quantity of new product has tapered,” says Bassett.

But retailers are also facing a challenge from major general-craft chains such as Michaels and Hobby Lobby, which regularly discount their products between 40 and 50 percent. These chains continue to expand their scrapbooking inventory and services, such as hands-on classes, that, not long ago, were the sole domain of scrapbooking independents.

In 2003, Michaels opened ReCollections, an offshoot devoted exclusively to scrapbooking and papercrafts—11 such stores have opened in the Dallas, Phoenix and Baltimore areas since. Hobby Lobby, with 360 stores in 28 Southern and Midwestern states, doesn't plan to open any such offshoots, but scrapbooking continues to be one of the chain's fastest growing sectors, says spokesman John Schumacher. He wouldn't comment on whether he sees any conflict in Hobby Lobby competing against independent stores, which, as in any industry, are critical to the health of the sector.

Meanwhile, big box stores like Wal-Mart and close-out barns such as Big Lots!—which slash prices by as much as 80 percent—have hopped on the scrapbook bandwagon. Wal-Mart charges $4.49 for a tool that rounds scrapbook page corners, says Julie Coozennoy, owner of Memories & More in Forest Lake, Minn. Her wholesale cost is $4. Still, she believes that the added exposure such chains provide can only help scrapbooking grow, although others disagree.

Classes in everything from Internet marketing to employment law were offered at the show, where attendance was up by 7 percent over last year, according to the show organizer. Some 2,670 buyers and others convened. More education and support are likewise being provided by trade associations and manufacturers like Plaid, which provides sales techniques and instructional DVDs.

The same holds true for manufacturers, which are also among those urging greater outreach to beginning scrapbookers to create a constant stream of new customers. Major manufacturer SEI, Logan, Utah, produces basic scrapbooking kits with everything a newbie needs to make an album, says Lindsay Moore, national sales manager. “We want that new customer to have success right out of the gate.”

Retail experts also continue to advocate diversification. Indeed, many industry leaders assert that the industry is evolving, and those who change with the times will have the best chance of success.

The growth of digital scrapbooking is part of the evolution. Likewise, scrapbook fans are picking up other crafts, such as making greeting cards, party invitations and snapshot frames.

Not surprisingly, the evolution is helping generalist papercraft retailers. Their stores are increasingly attractive to scrapbookers, and some are expanding their inventory to keep these new shoppers happy.

Evolution “certainly helps the rest of the industry,” says Redburn of Crafty Secrets, soon coming out with her first line of scrapbook paper, “because scrapbooking was taking over and really hurting everybody else.”