Just read this article from the WSJ today, interview of the current Michael’s CEO and a discussion of the post-Covid direction that the company will take. Looks like they are going to emphasize products for “Makers” and even provide an Etsy-like platform for crafters to sell their wares. I am wondering how this approach will affect stock. Here is the article:
Michael’s CEO Interview (WSJ)It won't let me read without subscribing.
Sorry, I forgot about the paywall. Here is a cut and paste of the article:
"When Ashley Buchanan was tapped as chief executive of Michaels Cos., he knew he was taking over a slumping company. Sales were limping along, hurt by messy stores, a sluggish supply chain and competition from both big-box and online retailers.
As he officially took the reins last April, though, the arts-and-crafts chain was facing an even larger challenge: Covid-19. Most of the company’s 1,200 U.S. and Canadian locations closed to in-store shoppers amid pandemic lockdowns. Sales plummeted 27.6% in the quarter ended last May 2.
Then stores reopened, and homebound shoppers crafted. Americans painted, made masks, knitted and looked for ways to entertain children without screens. Michaels’s sales soared 12% in the quarter ended last Aug. 1, and 16.3% in the quarter ended Oct. 31, which included an early holiday sales rush and 128% e-commerce sales growth.
M r. Buchanan, who previously spent over a decade in executive roles at Walmart Inc., aims to use the Covid-19 sales bump to remake Michaels. He hopes to attract more shoppers by moving away from the general crafts market and targeting “makers”—people who gravitate to do-it-yourself projects or make items to sell through their own small businesses.
To start, Mr. Buchanan has focused on retail basics like keeping shelves stocked and speeding and simplifying the supply chain, as well as adjusting to Covid-19 shopping patterns by ramping up online pickup-and-delivery options. The company is also testing an online marketplace that would let arts-and-craft enthusiasts share ideas, watch instructional videos and sell their wares. Michaels hopes it will launch later this year, says Mr. Buchanan.
The Wall Street Journal talked with Mr. Buchanan recently about the company’s outlook and his first year on the job. Here are edited excerpts of the discussion.
WSJ: Pre-coronavirus, when you got the job, what were you hoping to move the needle on at Michaels?
MR. BUCHANAN: I toured a lot of stores before I joined the company, and what I saw was stores out of stocks, kind of a cluttered presentation. The website, I would not say it was great. It was really more around promotions, coupons, quite like a flea market. But the store was crowded, despite what I thought was perhaps mismanagement. I’ll never forget one customer who said, “I love it here, you all just make it really hard to love it.”
WSJ: For any retailer, Walmart, Target and Amazon can still pick away at your business. Why did you think that Michaels might not come to that fate?
MR. BUCHANAN: If you go into any of the mass retailers, they really only have an aisle or two dedicated to that arts-and-craft section, and a lot of it’s kids. I just didn’t get the sense that mass was going to offer [serious crafters what they needed] in-store, and it wouldn’t make any sense for them to, anyway.
WSJ: We’re almost a year into pandemic life. How is behavior evolving, if at all?
MR. BUCHANAN: People want something real. They want to create something. They don’t want to just sit here on the screen all day. We’re providing inspiration, creativity, projects and classes through the computer and then bringing it to life either physically or digitally.
What customers told us is, give us more of that, as opposed to just coupons and discounts. That’s what we transitioned to, and I think that stays [through efforts like the forthcoming online marketplace]. I think people want connection and personalization and something real, but enabled through technology. We’re not reverting back to no technology.
What customers want is a place that they can make their products. They can sell their product, they can buy their componentry, they can have a community of people with like-minded interests where they can exchange ideas. A place where I can go get classes and content. There’s an opportunity to bring a platform of people together that have similar interests and then also monetize that interest on top of it, but be this creative inspiration outlet and hub that connects all of it between community classes and content and basic componentry to make it. That’s kind of the platform we’re creating that we’ll probably roll out the back half of this year.
WSJ: A big part of your current strategy is to focus on a shopper you call the maker, and developing more into a one-stop shop for arts and crafts. Wasn’t it always what Michaels hoped to be? How is this different?
MR. BUCHANAN: In the previous approach, it was more seasonal home-decor driven. We’ve transitioned to being arts-and-crafts driven. The company had even gotten into outdoor furniture at one point, Adirondack chairs and water features. In a previous world, we said we were there for arts-and-craft makers, but the merchandising and the approach would argue the opposite. It was clear to me the labor had been cut back so much that no one was helping customers.
WSJ: Before you got the job, were you a crafter yourself?
MR. BUCHANAN: I’m not a good crafter. Usually, what I do is I just mess it up, to be honest. But I’ve got three girls who are actually quite creative and they are painters, they do crafts. I’ve gotten into arts and crafts, but they usually tell me to leave them, “Just watch, Dad,” because I’ll mess up the painting or the drawing or the craft that they’re doing.
WSJ:How are you getting to know your customer?
MR. BUCHANAN: We’ve asked a lot of customers what they want and what they think. They want a friendly team member to help them locate their product. They want you to be in stock. They want you to have a clean shopping environment. They want the ease of checkout. They want you to meet them in multiple different ways, whether that’s curbside, whether that’s a locker inside. For all too long, we’ve had people not helping customers. There was so much product in the backroom that all they were trying to do was just get it to the floor.
We’re stocking in the morning and helping customers during the day, and I think ultimately, that’s what they want. A lot of our associates are crafters. We are enabling them to do what they wanted to do.
WSJ:Why are you asking some executives to go work in stores?
MR. BUCHANAN: We all had to work in the store, and unloaded trucks and set a modular
and change the prices. There’s a lot of ways to improve this process if you do it yourself. Things don’t necessarily work the same way that you have it designed at the home office on a spreadsheet.
Ms. Nassauer is a Wall Street Journal reporter in New York. She can be reached at sarah.nassauer@wsj.com.
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