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The Times of Trenton, NJ
Copyright © The Times of Trenton 2004
April 11, 2004
Sunday Business Edition
`Gentle' hobby spawns `cutthroat' industry
By Laurie Whalen, Staff Writer
After nearly 18 months supplying scrapbook embellishment kits, the owners of
Ewing-based Scrappin' Do-Dads decided to ``crop'' their losses and ``cut
out'' of the industry.
The company, in the end, had difficulty selling its products without
slashing prices and undercutting its own profit.
This frustrated the owners even though the $2.5 billion scrapbook industry
is growing by leaps and bounds.
Scrappin' Do-Dads co-owner Dan Valentine, who ran the business with his
wife, Robin, said liquidation of the scrapbook supply business should be
completed this summer.
And he claims the scrapbook industry is a tough one to break into with many
independents struggling to hold onto a piece of the market.
Though scrapbooking is very much a gentle hobby practiced by schoolchildren
and women at home parties, retailers and product suppliers say the industry
has become cutthroat and highly competitive as the popularity of
scrapbooking has grown over the last seven years.
There are so many newcomers on the scene that the typical 30-day credit
terms usually given to pay for inventory no longer apply. Many wholesale
suppliers ask for cash on delivery because businesses are so new they don't
have an established credit history, or any kind of guarantee for that matter
that they'll survive, insiders said.
Despite the carnage, many believe the marketplace is still big enough for
many small businesses to get a piece of the action. A wide variety of
business sizes and types have cashed in on the continuously growing trend.
And hobbyists and wholesalers now have various publications to turn to. For
instance, Scrapbook Retailer Magazine in Ogden, Utah, has been publishing
for the last three years.
Retail sales in the scrapbooking industry climbed from $400 million in 1997
to $2.5 billion in 2003, according to the Hobby Industry Association.
Don Meyer, a spokesman for the association, which represents 5,000 members,
said there are no signs that the popularity of the paper-craft hobby is
losing its growth momentum.
``We've definitely not seen the peak in this industry,'' Meyer said.
Nevertheless, just because an independent shop is in operation doesn't mean
the business is profitable, according to one scrapbook business consultant.
``I've been hard-pressed to find any (independent) store owner who is
taking home a salary,'' said Michael Venzor, co-owner of Manhattan-based Fun
Facts Publishing, which specializes in business consulting for the
scrapbooking industry.
``Store sales are doing very well,'' he said, ``but owners have to put
everything back into the store.''
Other insiders say profit is very slim.
Jean Bergeson, former owner of Scrappy's scrapbook store in Dallas, Texas,
and now a consultant for manufacturers and retailers, said there's been a
shift in the marketplace that forced her to shutter two retail
locations recently.
``It just wasn't financially beneficial to stay open,'' Bergeson said,
adding that as many as 10 fellow retailers went out of business within the
last year in the Dallas area.
The marketplace for scrapbooking in Dallas is being dominated by bigger
players who've used the city as a testing ground for stores competing
against independents, she said.
Venzor and others think small independents can survive amid the chains, in
part because smaller stores offer personalized service.
Yet even that characteristic is being sought after by the big corporate
retailers.
Last year, Michaels Stores Inc., an 815-store nationwide retailer based in
Irving, Texas, invested an undisclosed amount of money into two smaller,
scrapbook-only
stores in Dallas. The company has plans to open more with one to open in the
Baltimore area this year.
The stores, dubbed Recollections, will strive to be as personable and as
customer friendly as small independent shops, said Tom Clary, a Michaels
spokesman.
``Customers can sit right there in the store and participate in the craft,''
he said.
In New Jersey, there are as many as 15 independent scrapbook stores and as
many as 2,500 independent retailers nationwide, according to the Hobby
Industry
Association.
Venzor and other small business consultants say big-box retailers are
going to take a huge chunk of the scrapbooking industry based on their size,
``but the overall market has barely been scratched.''
Venzor said minority markets, such as Hispanics, Asians, blacks and gay
communities have yet to be tapped.
``And stores that are willing to reach out to what I call 'scrapbook
diversity' will also be able to get a leg up on the bigger companies,'' he
said.
-- -- --
Robin Valentine launched Scrappin' Do-Dads in November 2002, in part because
of her own enthusiasm for the communal hobby, said her husband, Dan
Valentine,
who handles the financial side of the business.
The business offered packages of buttons, beads, ribbons, eyelets, charms,
spangles and other items that can be used to embellish a scrapbook page.
However, over the last year, the business struggled to succeed. Direct
buyers and independent retailers did not buy enough of their product even
though, Valentine
estimates, thousands of kits were sold.
The couple invested less than $10,000 to get the business off the ground and
capitalized on an existing manufacturing facility on Whitehead Road.
Kits began selling at $13, then the Valentines slashed that to $10 - the
price currently advertised on Scrappin' Do-Dads Web site.
Dan Valentine said he's now selling the kits on eBay, the online auction Web
site, where $5 seems to be the average going price.
``I don't think we'll end up losing so much money,'' in the end, Valentine
said.
He takes comfort knowing that Scrappin' Do-Dads was probably not the only
failed scrapbooking business in the state, let alone the country.
As businesses such as the Valentines' wind down operations, Netsie's
Scrapbook of Hamilton, an independent scrapbook retailer, continues
expanding.
Lynnette Young, 32, moved her operations to 528 Route 33 from a Bordentown
City location less than a year ago.
At her new operation, Young has more space to devote to retail and
manufacturing. Young, a former business management consultant, has added a
paper-cutting sideline. A high-tech, laser paper-cutter was installed last
fall.
``It's not smart to invest in one concept,'' she said. Netsie's also offers
a nationally accredited ``Scrapbook Design University'' class.
Young is confident about her competitive footing in the increasingly crowded
marketplace.
``I can buy mom-and-pop products: unique products that have not been flooded
on the market,'' Young said.
Larger, corporate competitors, such as Blackwood, N.J.-based AC Moore and
Wal- Mart, have to buy larger quantities of mass-produced stuff from
warehouses, she said.
Whereas, ``I can call an owner of a company selling unique products and put
an order in and get the order in a week,'' Young said. ``Big chains don't
have that
flexibility, and that's what my No. 1 appeal is to my customers.''
``Word of mouth is very, very strong and our location is good,'' she said.
Most of Netsie's customers, 99 percent, are women of all ethnicities,
married and single, and range in age from teenagers to grandmothers.
Many others have been unable to duplicate Young's success.
She has heard numerous anecdotes of unopened stores and unsuccessful
entrants. Sometimes it's not the competition that leads to ruin. It's a
sheer lack of proper
business planning.
``People don't realize it takes at least $75,000 to outfit a store and
that's before you have to put up money to buy the merchandise,'' Young said.
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