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Tag Archives | Jo-Ann Fabric

Jo-Ann’s Ignites Social Firestorm with Anti-Tariff Advocacy

Jo-Ann Stores launched a political advocacy program last week to oppose new tariffs on product imports from overseas. The result, predictable with anything remotely political these days, was an avalanche of vitriol.

Jo-Ann Made in America Tax

The advocacy program poorly framed the tariffs as a “Made in America tax” in an attempt to stress that the tariffs will make items handmade by American crafters more expensive. (The goal of the campaign is to get crafters to contact their Representatives and Senators via the site linked above.) This high concept slogan fell loudly flat with its intended audience, it seems. Some were just confused by the campaign, seeming to think Jo-Ann’s was claiming that the tariffs applied to American products. Other recipients of the campaign’s email and social posts expressed that they found the wording deceptive.

Many of the outraged commenters on Jo-Ann’s post on Facebook have vowed to boycott the company in the future for engaging in politics. The most popular alternative boycotters are promising to seek out by far is Hobby Lobby, a good indication that the outrage is more about about the specific position that Jo-Ann’s is taking (opposing a policy of President Trump) than that they are engaging in politics in general. Based on the previous experience of Hobby Lobby, Starbucks, and Target – all of whom are thriving after similar consumer boycott threats – Jo-Ann probably doesn’t have much to worry about.

Jo-Ann Stores isn’t the only major craft retailer who has spoken out against the tariffs. Back in March, when the tariffs were initially proposed, Michaels Companies joined Jo-Ann Stores (and 24 other retailers) in signing a public letter opposing the tariffs that was organized by the Retail Industry Leaders Association.

So why would Jo-Ann Stores (and Michaels in a smaller way) voluntarily venture into a political issue that they had to know would cause backlash? The fact, basically, that they were willing to wade into this mire at all is telling of just how serious they believe the China tariffs are for their business. (And this assessment can be extrapolated to virtually all other craft businesses as well.)

What has Joann’s sounding the alarm? As of last Friday (the 24th), a 25% tariff (import tax) now applies to all virtually all craft category products that are imported from China. Jo-Ann’s is highlighting the following items from the tariff list in its campaign:

  • Candle Holders (9405.50.40)
  • Cookie Cutters (8205.51.30)
  • Faux Fur (6001.10.20)
  • Feather Craft and Décor Articles (6701.00.30)
  • Fleece (6001.22.00)
  • Glass Beads (7018.10.50)
  • Glue (3506.10.50)
  • Knit Fabric (6005.37.00, 6004.10.00, 6006.44.00)
  • Magnifying Glasses (9013.80.20)
  • Metal Beads (8308.90.30, 8308.10.00)
  • Paper Cutting Machines (8441.10.00)
  • Paper Products (4823.90.67, 4823.90.86)
  • Twig/Vine Baskets (4602.19.18)
  • Velour and Similar Fabrics (6001.92.00)
  • Vine Wreaths and Décor (4602.19.60)
  • Washi and other Paper Tape (4811.41.21)
  • Woven Cotton Fabric (5208.52.30, 5208.32.30, 5208.52.40, 5208.32,40, 5208.12.60, 5208.22.60, 5806.20.00),
  • Woven Manmade Fabric (Poly, Nylon, etc) (5407.61.99, 5513.21.00)
  • Yarn (5606.00.00, 5511.10.00)

A close examination of the tariff list also shows more items like clay, paints, stamping foils, inks, drawing ink, film, paper, metals, buttons, glue, and sewing machines that are likely to either directly or indirectly raise prices on craft products.

Products that are manufactured in the United States won’t be safe from tariff price increases, either. With items such as chalk, mica, wax, dyes, coloring matter, pigments, printing ink, inks, natural rubber, synthetic rubber, paper, metal, and printing plates and many wood items also on the tariff list, many American craft product manufacturers will find themselves paying higher prices for the raw materials used to produce even their U.S.-made products.

Jill Soltau, CEO of Jo-Ann Stores, told Fox Business last week that two-thirds of the products the company sells are sourced from China, and that no alternatives are available outside China that can meet their quantity and quality specifications. She said Jo-Ann Stores expects that consumers will see a 25% price increase on most products as a result of the tariffs.

The new tariffs are of concern in several ways for the financial health of the crafts industry. Sudden significant price increases may lead some consumers to opt out of the industry altogether due to a decrease in the perceived value they are receiving. Other consumers may find their discretionary hobby spending involuntarily limited by budget constraints caused by tariff-related price increases on non-discretionary household spending. Consumers who remain active in the industry will find their dollar not going as far – the same dollars buying fewer SKU units. Since wholesale and production prices for most items are based on volume ordered by the company, fewer SKUs being turned over could lead to increased wholesale prices – thus leading to even more consumer price increases and a vicious circle of inflation.

One of the Trump administration’s stated motivations for putting the tariffs in place is due to Chinese companies’ violation of U.S. intellectual property. This has been a major problem for U.S. craft companies on platforms like Alibaba, where blatant copies of popular stamp manufacturers’ designs are sold to U.S. consumers with barely any recourse for the companies. Stampin’ Up! made an attempt to file a copyright infringement suit against Alibaba Hong Kong Ltd in U.S. District Court in Utah in April, but then withdrew the suit for unknown reasons six weeks later before Alibaba even filed a response.

Will the cure (tariffs) be worse than the disease (copyright infringement) for the crafts industry? Only time will tell.

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Update | Taxes, Growth, Exclusives, Earnings, Events, and More!

Taxes. Senator John Thune (R-South Dakota) has proposed a bill that would affect how companies like Etsy, Lyft and AirBnB have to report their sellers’ income to the IRS. The bill would lower the income threshold that requires reporting by these entities to the IRS from $20,000 to $1,000 per year. It’s estimated by one tax policy expert at American University that the policy change, if implemented, will result in billions of dollars of new taxes being collected from sellers in the sharing economy who previously didn’t report their income.

Predictions. Market research firm Technavio has just made a new report available on the Global K-12 Arts and Crafts Material Market that predicts that market will grow at a CAGR of over 2% from now until 2021. To purchase the full report, visit the Technavio website.

Exclusives. Sizzix has announced that its Big Shot Jewelry Studio machine and an exclusive collection of jewelry dies and embossing folders are now available in a limited number of Michaels Stores. Only 30 stores – less than 3% of Michaels stores – are scheduled to stock this collection. To see the list of stores, visit the Sizzix website.

Bella Blvd Designer Day

Events. Registration is now open for Bella Blvd’s “Designer Day” event that will take place in Milwaukee on October 12th. The event will feature classes by Illustrated Faith designer Shanna Noel, Megan Hoeppner, Cynthea Sandoval, Jamie Pate, and Bella Blvd founder Stephanie Smokovich.

Deep Thoughts. Vicki O’Dell has a thought-provoking blog article up about the concept of being a “serial crafter”. I’ve long believed that most crafters tend to migrate through multiple crafts over the course of their lives. It’s an interesting thought to contemplate both from the standpoint of what it means for craft marketing, and what it means for the careers of professional crafters.

Security. In modern marketing, social media accounts are a vitally important company asset. They are also a major target for hackers, and a successful hack can cause at best a PR crisis or at worst the complete loss of social marketing assets. To combat this threat, Pinterest has just announced it is rolling out several new security features to help keep its users’ accounts secure. Turning on the new two factor authentication will require providing a code sent to your phone before you can log in. A list of logged-in devices on their account will also be available for Pinterest users, allowing them to disconnect ones they do not recognize. In addition, Pinterest will begin notifying users via email if a device not previously used on the account logs in.

Expansion. Hobby Lobby’s new store in the Lake Park area of Palm Beach has had its opening delayed until after the first of the year by what the company calls issues with getting permits. Another new store in progress, in Turlock, CA, is expected to open in September. A hiring event for 30-50 positions for the new store will be scheduled once an opening date is set.

Earnings. Amazon announced its 2nd quarter earnings today. Investor anticipation of the number temporarily made Jeff Bezos the world’s richest man, as Amazon’s stock rose enough to put Bezos over Bill Gates before a drop put Gates back on top again. The company reported a 25% increase in net sales versus the same period in 2016. Net income, however, was down significantly compared to 2016: $197 million versus $857 million last year.

The recent Prime Day event on July 11th, which will be reported with 3rd quarter sales, was described in a July 12th announcement as the biggest day ever in Amazon history. While sales were lead by offerings of Amazon’s signature devices like Fire and Kindle tablets, many other companies took part as well. Cricut was one craft company who offered Prime Day items. Even Amazon Handmade sellers took part, with Marcia Ricchiuti of Kahili Creations in Pahoa, Hawaii saying of the day that “So far, this year’s Prime Day sales increased 350 percent from last year’s. Getting the opportunity to offer lightning deals as a Handmade at Amazon artisan has been a boom to my business.”

Salutations. Happy Birthday to Jayne Burns of West Chester, Ohio. Jayne works at the cutting counter at the Jo-Ann Fabrics in Mason, OH – and celebrated her 95th birthday with her coworkers on Wednesday.

Peeks. A lot of crafters joke their homes look like a craft store…but what would your house actually look like if you owned one of the country’s biggest craft chains? You can check out this real estate listing for the answer – it’s the iconic Dallas home of Michaels Stores owner Sam Wyly. For a mere $12.5 million, you too could live in 7579 square feet of historic 1924 home on the Dallas Country Club golf course.

Jobs. The following industry jobs are listed as open and available:

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Jo-Ann Fabric & Crafts Names New CEO

JoannLogoThumbnailJo-Ann Fabric & Crafts has announced that Jill Soltau will be taking over as CEO effective March 2nd. Jim Kerr, the company’s CFO, had been serving as interim CEO since the sudden departure of CEO Travis Smith last August for undisclosed reasons. Jo-Ann’s is owned by private equity company Leonard Green & Partners, L.P.

Soltau is the former CEO of Shopko, having also spent time at Sears, Kohl’s and Carson Pirie Scott during her 25 year career in retail. She had been with Shopko since 2007.

“We are excited to partner with Jill as we continue to build upon Jo-Ann’s leading position in the fabric and craft industry. Jill’s passion, strategic vision and proven success make her an excellent leader for the company going forward,” said Todd Purdy, Partner, Leonard Green & Partners, L.P.

“For over 70 years, Jo-Ann has been inspiring the creativity in others and I am thrilled to join the team to help drive the brand’s future success,” said Ms. Soltau. “Jo-Ann is an industry leader that has exciting opportunities to achieve even greater long-term potential. I look forward to working with the talented management team and dedicated associates to bolster Jo-Ann’s market position and create further enthusiasm for the Jo-Ann brand.”

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