A Time Out in Chicago

In this industry, we spend an awful lot of time together at gift and home decor trade shows, but rarely take the time to sit down as a group and discuss the myriad challenges we face. One of those rare occurrences took place in Chicago, during the July Gift & Home Market, when Merchandise Mart Properties Inc. presented a symposium featuring a panel of industry leaders, including Alexis Bighley, president of Gift Creations Concepts; Chris Collins, senior vice president of sales at Figi; Randy Eller, president of CBK; John Keiser, president of OneCoast Network's Ivan Bloom & Assoc.; Mike McGilvray, president of Anne McGilvray; and Gail Michel, accessory buyer for Bay Furniture stores. Pam Danziger of Unity Marketing moderated.

The good news was that the event took place; the less-than-good-news was that it lasted just a little more than an hour. Among the challenges the panel addressed were the lack of capital to develop new products, product development cycles that are too long, and the need to seek new channels of distribution, as well as educating sales forces and retailers.

Mike McGilvray kicked off the discussion by saying that the gift industry is no longer attractive to people with money to spend (i.e. investment bankers.) And without that money, there's no capital for product development. McGilvray noted that we've done a poor job of selling the industry, and the result is that we pay higher rates for borrowed capital. "Other industries can walk into a bank with a [business] plan written on a napkin, and get money," he said. "We have to offer our first born."

Alexis Bighley also faulted the gift industry for a lack of forward thinking. "We do things the way we did them 30 years ago," she said. "We haven't changed enough."

The result is that the gift industry has lost touch with today's consumer. Bighley sees the fashion and entertainment industries doing the kinds of things the gift industry should be doing. Fashion responds quickly to trends, filling stores with the latest apparel introductions on a regular basis. Meanwhile, the product design cycles in the gift industry — six to 12 months — are too long. Bighley thinks smaller, more frequent product launches are needed for today's markets. We also need to look at the entertainment industry to see who and what is influencing young people.

Getting product placed in the right venues is another challenge facing our fragmented industry, according to Chris Collins. Establishing partnerships with retailing venues other than gift stores (hardware stores and amusement parks, for example) is one direction worth following. Collins also called for more strategic alliances with retailers, marts, and sales forces.

But for CBK's Randy Eller, it's the independent gift and home decor retailer that's the past, present, and future strength of the industry. It's a matter of staying focused and disciplined, he said. Manufacturers must always ask themselves: Who is my customer? What do they want? How do they want product? And "product" isn't just merchandise, according to Eller. It includes the delivery package; low minimums, customer service, and other benefits.

Those sentiments were echoed by the lone retailer on the panel, Gail Michel, accessory buyer for 70-year-old, family-owned Bay Furniture, a "Chicagoland" chain of six stores. She complemented the reps she's worked with, who have been a vital part of her company's success. But she also wonders at times if the industry is keeping up with the real world. "You need to know about my business," she said, referring to reps and manufacturers who don't take the time to establish relationships with their retail accounts — once again pointing out that "product" includes more than just merchandise.

Education and training — for both retailers and sales reps — topped the list of needs for future action. "Sales forces have to be consultants [to retailers]," said OneCoast's John Keiser. And it's not just learning about product, he insisted. Salespeople need to know much more about the entire industry, to add value to their relationship with retailers.

While acknowledging that the idea was "pie in the sky," Bighley suggested forming a gift industry foundation that would create a "retailing university." Retailers need to be educated on a range of topics, from establishing more sophisticated open-to-buys to using the web efficiently.

Continuing to nurture the small independent retailer is going to be essential for the gift industry, according to Eller. Overseas vendors are reaching out directly to the big retailers, cutting wholesalers and reps out of the picture altogether. At the same time, the independent has got to stop worrying about price alone, he said. Consumers aren't shopping independents for price.

"We have a larger churn rate [of retailers] than other industries," Eller noted. "But there's still lots of opportunity."

In addition to more frequent launches, John Keiser also called for more efficient ways to launch new product, and voiced a sentiment held by a number of the panelists that there are too many trade shows. McGilvray, however, disagreed, noting that retailers needed to go to more shows, but not necessarily just gift shows. They should visit venues such as the hardware show or the MAGIC Marketplace. "We all need to go to other places," he said.

No doubt, a call for fewer trade shows at an event sponsored by a trade show organizer caused a few grimaces among the hosts. But Alexis Bighley's suggestion that there be more frequent product introductions probably also gladdened their hearts. Yet in each case, the meeting provoked some beneficial insights. And perhaps making such industry summits a regular occurrence will help light the way forward for everyone.