© 2009 Craft & Hobby Association. All rights reserved. CHA Attitude & Usage Study 2008 Annual Report 12 Months Ending 12/31/2008

© 2009 Craft & Hobby Association. All rights reserved.

CHA Attitude & Usage Study 2008 Annual Report

12 Months Ending 12/31/2008

CHA Attitude & Usage Study 2008 Annual Report

12 Months Ending 12/31/2008

© 2009 Craft & Hobby Association. All rights reserved. 22

CHA A&U Study Background Detailed Findings

What’s the State of the Industry Today? What Are the Key Trends? How Do Light, Moderate and Heavy Crafters Differ? How Do Beginner, Intermediate and Expert Crafters Differ? Is Shopping Behavior Changing? How Can You Drive Craft Spending in a Tougher Economy?

Q&A

Agenda


CHA A&U Study Background


39 craft segments are monitoredin four broad categories cont.

Needle & Sewing Crafts

Cross-stitch/Embroidery

Knitting

Crocheting

Needlepoint/Plastic Canvas

Other Needlecrafts

Apparel/Fashion Sewing

Craft Sewing

Home Décor Sewing

Quilting

Other Sewing Crafts

Painting & Finishing Crafts

Art & Drawing

Decorative Painting

Fashion Fabric Painting & Decorating

Home Décor Painting/Accessories/Finishing

Stenciling

Other Painting & Finishing Crafts

Floral Crafts

Floral Arranging

Wedding/Bridal

Wreath-making/Floral Accessorizing

Other Floral Crafts


39 craft segments are monitoredin four broad categories.

General Crafts Paper Cutting Scrapbooking /Memory Crafts Rubber Stamping Card Making Other Paper Crafts Beading/Bead Crafts Cake Decorating Candle Making Ceramics

Doll Making Do-it-yourself Framing Glass Crafting Jewelry Making Leather Crafts Macramé Non Floral Wreaths Potpourri Making Woodworking Other General Crafts


What the Research was Designed to Provide

The A&U successfully provides CHA with:

An overview of crafting households:

Demographics

Behaviors

Attitudes

A means of determining and tracking household participation rates in the US by craft and hobby segment

Shows trends over time

Documentation of shopping patterns by retail channel

Guidelines for sizing the market

Relative size of individual categories and market as a whole


What the Research Was NOT Designed to Provide

The survey provides a wealth of data, but is not designed to:

Be a substitute for scanner data Spending behavior is self-reported and is accurate only within a broad

range

Dollar volumes have a wide margin of error, especially for individual craft segments

Changes reported over time can only be guidelines

Distinguish between growth components Growth vs. YAG is driven by 1) real growth, 2) inflation or 3) product

price increases


What the Research Was NOT Designed to Provide

(Continued)

Nor is the survey designed to:

Assign attitudes and shopping behavior by: Specific crafting segments (e.g., Quilting, Jewelry-Making, etc.)

Individual demographic targets Information is collected at the household level only

Most households participate in multiple types of crafts


Detailed Findings


What’s the Stateof the Industry Today?


U.S. Retail Sales (Million $)U.S. Retail Sales (Million $)- Among Total U.S. Households -- Among Total U.S. Households -

Market Size = $27,297 Million (Market Size = $27,297 Million (±±11%)11%)

$10,267 Million

$7,266 Million

$6,432 Million

-21% vs. $13,027 Million YAG




Projected Base: 111 Million Total US HouseholdsSpending behavior is self-reported by consumers, and is accurate only within certain ranges.

$3,333 Million-6% vs. $3,538

Million YAG

Data based on 12 months ending December 31, 2008

The craft and hobby industry has not been immune to the current economic crisis. A 14% decline in retail sales has

taken place overall.

Floral Crafts,

12%

General Crafts,

38%

Needle and Sewing Crafts,

27%

Painting and Finishing

Crafts, 24%


While most participation rates remain virtually unchanged since 2007, General Crafts had the most

notable drop-off.

Incidence of CraftingIncidence of Crafting- % of Total U.S. Households -- % of Total U.S. Households -

Participation rates are based on screening data. Screening is conducted among the Ipsos Insight Mail Panel to identify crafters.

On an annual basis, the screener is sent to 50,000 households (25,000 twice a year in May and Nov).

-0.8 pts -5 pts -1.2 pts -1.5 ptsPoint

Changevs. YAG:

Projected Base: 111 Million Total US Households

-1.2 pts

56%

34%30% 29%

16%

57%

39%

31% 31%

17%

Total General Crafts Needle and Sewing Crafts

Painting and Finishing Crafts

Floral Crafts

2008 2007


Annual HH spending declines were seen across all crafting categories, except Floral Crafts.

Average Annual Craft SpendingAverage Annual Craft Spending- By Crafting Category -- By Crafting Category -

Projected Base: 63 Million Total US Crafting Households

-14% -11% -6% -8% ±0%% Changevs. YAG:


$434

$268

$219$195 $183

$505

$300

$233$212

$183



Floral Crafts

2008 2007


Spending on the average project held steady from 2007, with exception of General Crafts, which dropped 11%.

Average Per Project SpendingAverage Per Project Spending- By Crafting Category -- By Crafting Category -


-1% -11% +4% +3% +2%% Changevs. YAG:


$30$26 $27

$35$33

$30 $30$26

$35$32



Floral Crafts

2008 2007


While crafters spent nearly as much time on crafting (per week) as they did the previous year, they completed fewer craft projects, especially in the

Needle and Sewing and Painting and Finishing categories.

14.410.2

8.05.5 5.6

16.6

10.1 8.86.1 5.7



Floral Crafts

2008 2007

Average Number of ProjectsAverage Number of Projects- By Crafting Category -- By Crafting Category -


-13% +1% -9% -10% -1%% Changevs. YAG:


Average Hours Spent Per

Week

2007 2008

5.4 5.0


Scrapbooking continues to generate the largest sales volume, but like many other segments, has declined year over year.

Dollar SalesDollar Sales($Million)($Million)

% Change in total % Change in total spending vs. YAGspending vs. YAG

11 Scrapbooking/Memory Crafts $2,505 -3%

22 Art & Drawing $1,795 -8%

33 Other Painting & Finishing* $1,613 -13%

44 Floral Arranging $1,509 +21%

55 Crocheting $1,207 +17%

Top 5 Crafts – Dollar SalesTop 5 Crafts – Dollar Sales

Data based on 12 months ending December 31, 2008 Projected Base: 63 Million Total US Crafting Households

* Painting & Finishing Crafts other than Art & Drawing, Decorative Painting, Fashion Fabric Painting & Decorating, Home Décor Painting/Accessories/Finishing, Stenciling


What are the Key Trends?


Some segments experienced notable growth, particularly the Needlepoint/Plastic Canvas segment.


Greatest % Segment Sales Growth vs. Year AgoGreatest % Segment Sales Growth vs. Year Ago- Among Total U.S. Households -- Among Total U.S. Households -

Dollar Sales (Mill)

$487

$1,509

$695

$258

$1,207

Segments > $100MM


Many segments showed declines vs. year ago


Greatest % Segment Sales Decline vs. Year AgoGreatest % Segment Sales Decline vs. Year Ago- Among Total U.S. Households -- Among Total U.S. Households -


$153

$367

$219

Dollar Sales (Mill)

$475

$825

$854

Segments > $100MM


Even in the current economy, new growth opportunities are emerging.

When crafting households were asked what NEW crafts they expect they will try in the upcoming year that they currently do not participate in, the segments generating the greatest interest were:

Decorative Painting (3.9%)

Scrapbooking/Memory Crafts (3.2%)

Home Décor Sewing (2.9%)

Needlepoint/Plastic Canvas (2.9%)

Home Décor Painting/Accessorizing/ Finishing (2.9%)


How Do Light, Moderate and Heavy Crafters Differ?


32%

4%

41%

33%

26%

62%

Size of Segment Share of Annual Expenditure

Heavy (21+ Projects)

Moderate (6-20 Projects)

Light (1-5 Projects)

Heavy Crafters, who account for 26% of all crafters, spend far more than their segment size would suggest.

Crafter Type LevelsCrafter Type Levels


CDI

236

81

14


Regardless of crafter type, Scrapbooking is the largest category. Crocheting is more popular among Moderate and Light Crafters, while Jewelry,

Wedding/Bridal and Beading are more common among Heavy Crafters.

Light Crafters

Scrapbooking/Memory

Crocheting

Art & Drawing

Woodworking

Home Décor Painting/Acc/Finishing

Cross-Stitch Embroidery

Home Décor Sewing

Floral Arranging

Quilting


Moderate Crafters

Scrapbooking/Memory

Art & Drawing

Crocheting

Floral Arranging

Quilting


Woodworking



Decorative Painting

Heavy Crafters

Scrapbooking/Memory

Art & Drawing

Floral Arranging

Card Making



Quilting

Jewelry Making

Wedding/Bridal

Beading/Bead Crafts

Crafts in black grew from previous year. Crafts in red declined from previous year.

Top Ten CraftsTop Ten Crafts- By Type of Crafter -- By Type of Crafter -

Total $1,220

mill

Total $16,976

mill

Total $9,100

mill


How Do Beginner, Intermediate and Expert Crafters Differ?


The majority of crafters consider themselves to be intermediate in terms of expertise. Expert crafters spend

disproportionately more than other groups

Crafting Ability (Self-Assessment)Crafting Ability (Self-Assessment)


CDI

150

98

6520%

13%

64%

63%

16%24%

Size of Segment Share of Annual Expenditure

Expert

Intermediate

Beginner


While the Top Ten Crafts vary from one level of expertise to the next, several crafts are found to be common across all - Art & Drawing, Crocheting and

Scrapbooking/Memory Crafts (although experts favor more challenging crafts and may need to be encouraged to return to Scrapbooking).

Beginner Crafters

Art & Drawing

Scrapbooking/Memory

Crocheting


Floral Arranging

Doll Making

Home Décor Sewing

Quilting

Needlepoint/Plastic Canvas

Fashion Fabric Paint/Decor

Intermediate Crafters

Scrapbooking/Memory

Art & Drawing

Quilting

Card Making

Floral Arranging



Crocheting

Beading/Bead Crafts

Woodworking

Expert Crafters

Floral Arranging


Art & Drawing

Wedding/Bridal

Decorative Painting

Jewelry Making

Crocheting

Woodworking

Knitting

Scrapbooking/Memory

Crafts in red declined from previous year. Crafts in black grew from previous year

Top Ten CraftsTop Ten Crafts- By Expertise Level -- By Expertise Level -

Total $3,499

mill

Total $6,646

mill

Total $17,151

mill


Is Shopping Behavior Changing?


The channels where crafters are making their purchases are evolving.

Internet sales continue to grow: Internet +19% (7% of total sales)

Three channels accounted for 60% of Craft sales in 2008, with Craft Chain Stores showing the greatest decline of this group Craft Chain Stores -15% (25% of total sales)

Discount Store -4% (22% of total sales)

Fabric and Craft Stores -1% (13% of total sales)

*Note: The questionnaire was revised in Jan 2008 to more clearly define channels and may account for some of the differences seen here.

Other craft retailers are experiencing more severe declines in sales. Store closures are contributing to the losses for Local Craft Stores. Softening of the Home Décor Painting segment seems to have impacted the Variety Hardware Stores: Craft Fair/Flea Markets -59% (1% of total sales)

Local Craft Stores -57% (3% of total sales)

Variety Hardware Stores -49% (5% of total sales)


How Can You Drive Craft Spending in a Tougher Economy?


As consumers continue to tighten their belts, it’s very important to remind them why they craft in the first place.

A factor analysis reveals eight primary reasons for crafting:

Sense of Accomplishment

Relaxation

Memory Keeping

Health

Economy/Value

Recommended by Friends or Family

Enables Spending Time with Others

Interaction with Children

OPPORTUNITY reinforce these quality-of-life messages in communication vehicles and in-store at point of sale


Emotional drivers are strong influencers of craft sales for all levels of expertise.

Irrespective of ability levels, crafters strongly agree on the following statements:

Completing a craft gives me a feeling of accomplishment

I like to work with my hands

However, Expert level crafters are especially likely to believe that:

I forget about my daily problems when I work on a craft or hobby

Doing crafts or hobbies makes me feel better

I am a creative person

I prefer to craft alone


Reinforce consumers emotional ties to crafting to increase spending.

Emphasize “family fun” and “creativity” The greatest drivers of craft spending are children crafting and

crafting is a creative outlet Consumers are cutting back on entertaining and are spending

more time at home Appeal to the family orientation and inherent desire people have to

be creative

Crafting is fun and an affordable alternative to a day/night on the town


Reinforce consumers emotional ties to crafting to increase spending.

Inspire crafters with the emotional as well as functional aspects of crafting. Emotional - Accomplishment; Relaxation; Spending time with

others or children

Functional - Saving money; Preserving memories; Health/well-being (especially relieves stress)


Prominently displaying a variety of Crafting books and magazines can help generate consumer interest/ideas and sales.

Consider displays both by the checkout and in aisles.

Source of Project IdeasSource of Project Ideas


52%

46%

38%

37%

25%

22%

21%

18%

18%

7%

6%

4%

1%

23%

Magazines

Family/Friends

Books

Catalogs

Store Displays

Craft Fairs/Craft Malls

TV

Internet

Project Sheets

StoreDemonstrations/Classes

School

Clubs

Video

Other

Especially Intermediate and Expert Crafters

Especially Intermediate and Expert Crafters

Especially Beginning and Expert Crafters


Gifting represents a huge opportunity that may be largely untapped.

Usage Of Completed Craft ProjectsUsage Of Completed Craft Projects


% of Crafting HH% of Crafting HH

54%

53%

30%

24%

10%

9%

Personal Use

Gifts

Home Decorating

Holiday Decorating

Items to Sell

Other

Especially Intermediate, Expert and Heavy Crafters


84% of households craft because of a holiday or special occasion

Occasions for Which Crafts are MadeOccasions for Which Crafts are Made


66%

53%

33%

22%

21%

19%

18%

18%

17%

15%

13%

1%

15%

Christmas/Chanukah

Birthdays

Baby shower/New baby

Valentine's Day

Halloween

Easter

Mother's/Father's Day

Weddings

Seasonal Decorating

Thanksgiving

Bridal Showers

Kwanzaa

Other


Crafting classes/parties can be an important way to encourage spending.

Those who attend class/parties spend more than twice as much as those who do not!

Classes should be offered for crafters of all levels – most crafters consider their skills to be “intermediate”. Few Beginners attend but this can be a way to encourage new participants.

Average spending per year

$624$300

Incidence of Attending

92%

8%

Average spending per year$327

Incidence of Attending

$566 $608

Do Not Attend

Host GuestAttendDo Not Attend

Classes Home Parties


92%

5% 3%


Recommendations for CHA Members


Remain sensitive to price due to the economic climate but don’t focus solely on price; remind shoppers about the joys of crafting

Unadvertised sales are also a key influence on purchasing decisions

Don’t limit consumers to brick & mortar hours – Online sales are continuing to increase

People are busy, stores are closing - making around-the-clock online shopping available can help sustain sales. Strive for online success with:

Fun websites with plenty of inspiration ideas

Fast and affordable shipping

Shopping lists, “Items you will need to complete this project” for one-click shopping

Reward your best customers

Heavy Crafters account for a largely disproportionate share of sales

Consider “Frequent Crafter” reward programs to support, and possibly grow, this segment

Grow craft segments by leveraging store layouts to best reflect the cross-participation that exists

Cross-Stitch Embroidery, while not a leading craft, has a high degree of cross participation among the five leading crafts, and is the number two craft among Experts.

Action Steps/Opportunities


Steps CHA Members Can Take Now

Use effective messaging that reflects the crafters needs

A factor analysis revealed eight primary reasons for crafting. To sustain sales it is important to reinforce these quality-of-life messages:

Economy/Value Recommended by Friends/Family Enables Spending Time with Others Interaction with Children

Sense of Accomplishment Relaxation Memory Keeping Health

Emphasize gifting and seasonal crafting 53% of all crafting HH’s report that they make handcrafted items for gift giving.

Generate new entries to the industry by promoting craft sets/packages as great gifts for friends and family


Remind consumers that crafting is fun!

A great way to spend time with kids/family/friends to share a common activity or interest and build relationships

Life is stressful – crafting provides a way to relax

Crafting is a great creative outlet

Steps CHA Members Can Take Now


Accessing the Reports

Reports are free online to CHA Members

All of the reports are available under the RESEARCH tab on www.craftandhobby.org

Company Member ID numbers and passwords are needed to gain access

If you need your Company Member ID number or have any questions about the research, contact Keri Cunningham, Marketing Manager at 201.835.1229 or at [email protected]


Q&A

Documents

© 2009 Craft & Hobby Association. All rights reserved. CHA Attitude & Usage Study 2008 Annual Report 12 Months Ending 12/31/2008