Spark Craft Studios: The Interview

This unique store offers food for thought for every retailer, large or small.

by Mike Hartnett (September 19, 2005)

Below is an interview with CEO Jan Stephenson who, with COO Amy Appleyard, are the founders and owners of Spark Craft Studios, a unique retail store in Somerville, MA near Boston. The store, the owners, and their approach to retailing are far different than the traditional craft store.

Among the differences: the store is in an urban re-habbed area rather than a suburban strip center or a small town ... The business emphasizes and capitalizes on the consumer's need for community ... the layout is far different than a traditional store ... Jan and Amy met while MBA students in Boston ... the list goes on.

But before you read the article, look at the store: www.sparkcrafts.com. Read about Jan and Amy: www.sparkcrafts.com/about/founders.asp. Read their story: www.sparkcrafts.com/about/ourstory.asp. Finally, read about their unique "Studio" concept: www.sparkcrafts.com/studio. And don't miss the Friday "Wine & Craft" nights, and even date nights.

Finish your surfing? Ok, NOW read the interview:

CLN: Who is your customer (age, income, etc.)?

STEPHENSON: Our goal is to appeal to cosmopolitan, professional women in their 20's and 30's who have disposable income for leisure-time activities, an interest in social interaction, and an eye for fashion and style. Approximately 85% of our customers meet these criteria, but our concept is also attracting older women and teens who associate with our emerging brand image ("cool crafts").

CLN: Why did you two, when in school, pick crafts? Had either of you done many crafts before starting the business? Do you have a mentor?

STEPHENSON: Amy and I are not avid hobbyists who decided to start a crafts business, but we enjoy the creative process. I like to scrapbook and do paper crafts – I love photography and was making collage albums before the scrapbooking industry exploded. Amy enjoys beaded jewelry making and her mother taught her to sew when she was a teenager. She's now using those skills again to make dresses for her three-year-old daughter. We are both exploring knitting.

We launched Spark Craft Studios to make creativity accessible and attractive to women who are busy professionals and who might not consider themselves "crafty" or "creative." Our aim is three-fold: 1) to make crafting convenient by providing tools, supplies, and instruction under one roof; 2) to keep a focus on style, understanding that our customers want to make items that are relevant and beautiful; and 3) to be social -- women want new and interesting ways to connect with each other on their night out that doesn’t solely involve eating and drinking.

Since Amy and I aren't seasoned crafters or designers, we rely on our team of six Creativity Consultants (our retail/studio staff), instructors (we have about 30), and customers to help us identify trends in the consumer marketplace that can be translated into hands-on projects. We try to act quickly to bring our customers the best products and classes that reflect current fashion – for example, we knew that bangle bracelets would be hot for fall, so we put on a successful "Wine & Craft" event that entailed 25 women tasting wine and chatting while gluing & hand sewing ribbon, velvet, and other materials to plastic bangles. Everyone loved it.

As to mentors – we are in the throes of assembling an "A Team" of crafts and retail industry professionals. Amy and I have a strong vision for Spark Craft Studios which is innovative and exciting. We have good business and marketing sense and the credential of two MBA's. But we know the importance of a well-rounded Board of Directors with industry experience, expertise, and contacts who can help a small company grow into a large one.

CLN: Is it working? Are your investors happy? Are you two supporting yourselves (including health insurance)?

STEPHENSON: Spark Craft Studios is a growth-oriented company. Our pilot studio is teaching us what works in our business model, what needs changing, and what we need to do to scale/replicate our model effectively. We are reinvesting all cash back into building the brand (marketing), enhancing product selection (inventory), and research and development (class curriculum and kits). Spark pays us a modest stipend and gives us basic health insurance. We expect to pay ourselves a decent salary within a year. Our investors expect to see a healthy return on their investment within five years, after we have launched additional studios.

We are all encouraged by the results we’ve seen so far. Some of our metrics include: ongoing media attention which positions Spark as cool and different and drives paying customers to our doors; a growing mailing list of customers (3,000 to date, with a dozen new additions daily); an average ticket that is highly competitive with industry standards; decent sales revenues in proportion to the money invested thus far; a growing foundation of repeat customers; a growing number of new customers; strong word-of-mouth advertising; and, of course, getting closer to break even and profitability.

CLN: What has surprised you since you opened?

STEPHENSON: Private parties took off really fast (bridal showers, bachelorette parties, baby showers, etc.). Scrapbooking, which was the hottest growth category when we launched, has been our slowest area to ramp up. We expected a slower summer, but June and August were our best months so far. The retail component of what we do is bigger than we initially thought – people love to shop!

CLN: What constitutes a good day? In other words, when you get home and say do yourself, "Boy, this was a great day!" what kinds of things happened that made you feel that way?

STEPHENSON: Meeting or exceeding daily sales goals; a steady stream of customers (repeat and new) throughout the day; full or near-full classes (five or more students); a busy studio with members working on projects; good press; connections we see being made between members-customers (for example, one of our instructors recently got an appointment with a leading pediatric dermatologist for her allergic-prone child due to meeting that pediatrician here at one of our events); watching people light up during a class or when they’ve discovered us for the first time.

CLN: Why did you pick memory/paper, beads, and yarn? Why those, why not more or other categories?

We did tons of market research for our business plan. Yarn, memory/paper, and beads were considered "hot" in terms of growth and were appealing to a new generation of crafter. The products themselves can be beautiful and stylish – fine yarns, unique and colorful beads, and fun papers and embellishments.

We also made a strategic decision to choose crafts that were community-oriented – with knitting, crocheting, scrapbooking, and jewelry making, you can sit around a table and chat with others while you work. We’re moving into new areas as we see trends emerge; for example, we weren’t doing sewing originally.

CLN: You mention you'd like to eventually open more stores. Is that still down the road a ways? Are you thinking of franchising?

STEPHENSON: Our original business plan projects us opening another store within three years using cash from operations (and/or additional investor funds). We have had inquiries about franchising and we’re considering that possibility as well. We are very interested in meeting individuals who are intrigued by our concept and want to help it grow – both with capital investments in the company and expertise/connections to the industry.

CLN: Whom do you consider your major competitor?

STEPHENSON: We compete with the usual suspects – online craft retailers, independents, discount chains, informal networks for crafting. We also compete with other leisure time activities (bars, restaurants, the movies) and material possessions (clothing, make-up) for our target market’s discretionary funds.

CLN: I'm guessing here that your prices are not particularly competitive with Michaels or Wal-Mart. Is that a problem?

STEPHENSON: We have an upscale boutique feel which our customers enjoy, but we try to keep our price points reasonable. We find that customers who are new to crafts find the convenience of buying from us when they’re here for a class or party outweighs our slightly premium pricing. Once someone is a dedicated crafter, however, we expect they will also shop web sites and retailers offering more selection and better prices. Our competitive advantage then resides in developing innovative classes/events to get them here; offering superior customer service; enhancing the benefit of studio membership; sourcing distinctive products hard to find elsewhere; and rolling out unique products bearing the Spark Craft Studios brand name and image.

CLN: Does the bulk of your income come from the club concept, or the product sales? How important is the "community" concept.

STEPHENSON: About 50% of our revenues come from retail sales and the other half from fees associated with classes, special events, private parties, and membership. Retail sales are largely event-driven, although we see a fair amount of purely retail business as well. Our membership benefits include use of workspace and tools, discounts, and networking opportunities. We find the community aspect is more important to some people than others. In addition, the private parties offer an opportunity to socialize with friends which is another type of community.

CLN: I read the Business Week piece on your site, so I'm curious, do you get to have a life outside Spark Crafts?

STEPHENSON: We're very busy right now! Since we're still so new, Amy and I wear tons of hats, both on the micro and macro levels. We have six part-time staff (retail/studio helpers) and 30+ instructors who teach classes. We haven’t yet hired and trained regular staff to handle day-to-day operations of the store/studio. Now that we have many of our processes, policies, and procedures figured out, it’s easier to pass that knowledge along. The pilot has to work before it can be replicated, so we’re aiming for perfection on the small stage first.

CLN: The younger generation of crafters seems more interested in making a one-of-a-kind item than copying a model. Is this a valid, if broad, generalization?

STEPHENSON: Yes, I would say our customers are very interested in individuality and putting their own creative touches on the items they make. At our classes and private parties, nobody ever makes exactly the same thing. But clients like to have a structure, examples of what they could create, and to learn skills that will help them innovate. We often rip an item from the pages of a fashion magazine and then challenge our customers to make not exactly the same thing, but something in keeping with that design but that is also reflective of their personal sense of style.