The Wal-Mart Effect (Part II)

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Cotton Floss 3 Large.ashx

Anyone who opens a needlepoint store is wise to carry needlework threads.

A popular thread vendor is DMC.

DMC offers a variety of threads, including embroidery threads and needlepoint threads.

A popular type of DMC embroidery thread is DMC Cotton Embroidery floss, which is known as Article 117 (DMC is a French company: a meaning of the word article in French is “item”).  It is often abbreviated as Art. 117.

Art. 117 comes in 454 solid colors, and 18 variegated ones.  It is comprised of six (6) easily separated strands, and is commonly used by needlepoint stitchers.

DMC also sells needlepoint thread, of which Pearl Cotton is a perennial favorite.  Pearl Cotton is known as Art. 115, and comes in two sizes, 3 and 5.  It also comes in a wide variety of colors.

A long-standing issue for needlepoint retailers is how to determine a suitable price point for thread in the face of Big Box and online competition.

At one time, circa 2000, DMC in fact tried to forbid the sale of its floss over the Internet.

However, this is of course no longer the case:  DMC floss is widely available on the Internet, often a hugely discounted margins.

Not that long ago, Wal-Mart appeared to be retrenching on the sale of DMC floss, with some of its stores not offering it at all. However, that situation appears to be in flux.

Wal-Mart DMC DisplayIn Stuart, Florida, for example, a Wal-Mart superstore does offer DMC embroidery floss (but no DMC needlepoint thread).

It is priced at pennies above wholesale.

Wal-Mart is of course able to do so, since it has the option of offering loss leaders, as well as achieving significant price discounts owing to purchasing in bulk.

Wal-Mart is largely unconcerned with traditional LNS niceties, such as separating dye lots, or offering expert sales assistance. Its primary objective is sales volume.

Other chain stores in the area, such as Hobby Lobby and Michael’s, also sell embroidery floss — albeit at a slightly higher price point.  Hobby Lobby and Michael’s often also carry a wider variety of thread, and employ sophisticated Internet sales merchandising techniques, including the use of online coupons to drive sales.

A needlepoint retailer who offers DMC floss at Wal-Mart’s price point is guaranteed to lose money on the sale of each unit, after factoring in overhead and other costs.

Thus the dilemma that has long faced the LNS retailer is whether to run the fool’s errand of attempting to compete with Wal-Mart and other large retailers on the basis of price for thread, or hold to reasonable margins and risk losing sales.

A more sophisticated approach, such as the strategy outlined in this Harvard Business Review article, suggests alternatives.

For the small LNS startup, savvy market segmentation, the customizing of thread assortments to local demand as well as select store inventory, and, perhaps most importantly, exceptional personalized service, can be key differentiators vis-à-vis Big Box and discount online competition.

While DMC floss, sold on a stand-alone basis, may never keep the store lights on, having the right mix of yarn will attract customers and allow the LNS startup to viably compete by upselling to more profitable lines of merchandise.

 © Erin McGrath and Needlepointland.com, 2012 – 2016

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About Erin

Owner of Needlepoint Land, LLC. Professional in the field for more than 15 years, during which I have managed and/or worked with various high-end needlepoint shops. I enjoy teaching both beginners and advanced stitchers, and have created numerous stitch guides, with speciality thread selections, for in-store customers and private clients. I maintain contact with an extensive network of needlepoint vendors, custom artists, and, most importantly, reliable, high-quality finishers. I look forward to hearing your comments on my blog!

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