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Opinions Wanted Price Check on Michaels

Discussion in 'Picture Framing Business Issues' started by PaulSF, Dec 3, 2008.

  1. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    Good info, thanks dtwoxford. Welcome to the forum.
  2. FrameMakers

    FrameMakers PFG, Picture Framing God

    Kristie, I don't think anyone is implying that the price they quote with out a coupon is the same as with the coupon. It is just the price before in many cases it jacked so the coupon brings it down to a more normal level.

    My wife was at Michael's yesterday and said that they had a flier for 8x10 framed with mats for $49. It also said that they guaranteed Christmas deliveries for orders placed before the 10th of Dec. I know that in the past, their cut off was much earlier then this. I don't know how much that has to do with volume vs distribution.
  3. Ylva

    Ylva SPFG, Supreme Picture Framing God

    Yes, our Michael's almost has the same sign, Christmas deliveries on orders placed by Dec 10th. Didn't see the special for 8x10 though.
  4. Maryann

    Maryann SGF, Supreme Grumble Framer

    In our area, it's being printed on their receipt. EVERYONE gets one.
  5. Ylva

    Ylva SPFG, Supreme Picture Framing God

    Yes, you're right. Checked my receipt and there is a separate receipt that mentions it.
  6. Indyago

    Indyago CGF, Certified Grumble Framer

    Can you tell me more about Masterpiece Glass? On first glance, I see a very elementary webpage showing a light level adjusting glass? How does the cost compare to TruVue Museum Glass? We sell Tru Vue Museum glass but, we have never been approached by anyone with a product like Masterpiece. Is it a Michael's proprietary product? Has it been as rigorously tested as Museum Glass?

  7. Maryann

    Maryann SGF, Supreme Grumble Framer

    If you do a search you will find lots on this. It is Museum glass made exclusively for Michael's by Tru Vue
  8. HB

    HB SGF, Supreme Grumble Framer

    Price Range

    $135 - $420


    I wouldn't want to brag about getting the $135 unless I was selling an awful lot & have a very efficient business! If you are - congrats!
  9. Indyago

    Indyago CGF, Certified Grumble Framer

    I knew Tru Vue did work for them in Museum Glass. I just hadn't seen the optically changing characteristics of the Masterpiece Glass. Thanks for the info.

  10. Jerry Ervin

    Jerry Ervin PFG, Picture Framing God

    I had that same thought.

  11. PaulSF

    PaulSF PFG, Picture Framing God

    Well, if your cost structure and the income levels of your trade area allow you to charge that kind of money and make a healthy profit, that's fine. My cost structure doesn't. And remember, Michaels can get away with these prices for three reasons:

    1) They do an enormous volume of framing work
    2) They get quantity purchase discounts we can't even imagine
    3) Their stores sell all kinds of other merchandise, so that they don't have to rely on framing as their sole source of revenue and profit.
  12. Jerry Ervin

    Jerry Ervin PFG, Picture Framing God

    4) The moulding was a cheap poly imitation.
  13. PaulSF

    PaulSF PFG, Picture Framing God

    I don't think it was poly. The cut sides of the moulding weren't black.
  14. HB

    HB SGF, Supreme Grumble Framer

    I think its comparable to or better than at least 1/2 that replied here EVEN IF WE DIDN"T INCLUDE THE MLDNG!

    If I am not mistaken, I recall Jay Goltz saying (& he oughta know)that we can easily offset the savings of a volume discount the "big guys" get by running more efficiently. He said that the big qty disc aren't near what we imagine them to be! From that discussion I was under the impression that maybe they get 10-20% less than the best we can get on box pricing. Maybe someone knows better and can strike that down!!! Surely, getting even 30% off box pricing on the mldng will not bring a $420 quote down to $135!!
  15. PaulSF

    PaulSF PFG, Picture Framing God

    I figure M's cost of materials on the project at about $65, at most.
  16. Paul N

    Paul N In Corner

    Maybe not but pricing based on truckloads of moulding, glass and mats will.

    If I, a small shop with $250,000 - $300,000 in volume can get a certain moulding at .70 /ft by the box, I am certain Michael's can get it at half my cost.
  17. FrameMakers

    FrameMakers PFG, Picture Framing God

    The thing to remember about the big boxes is that they work on very narrow margins. If they make 5% profit they are thrilled.
    I recall from reading there annual report they they are striving for $5 million dollars of sales per store.

    For a frame shop, labor is one of the big expenses. I have found that the ratio of 1 full timer for every $100,000 to be a pretty good base. So that would mean that M would need 50 employees per store or even if you just looked at the frame dept they would need 7-8. I doubt that they have half of these numbers. Why? the $750,000 from their frame dept includes readymades etc not just custom framing. I doubt that they do more then 1/3 of the dept sales in custom work. So if that is the case then they are only doing what a typical well run indy store is doing.

    Now who here wants to run a $250,000 shop with a 5% profit?
  18. Emibub

    Emibub PFG, Picture Framing God

    The last Michael's I worked at Dave was working towards 1 million per year in custom sales. Maybe that has changed over the years but the ready made department had it's own numbers. I had 10-15 employees depending on the time of year. I bet they don't pull those numbers in any longer, but it was the goal at the time.
  19. PaulSF

    PaulSF PFG, Picture Framing God

    I think the M's near me may have 2 people working the framing department at any given time. But don't they centralize activities like frame cutting & joining, and mat-cutting?
  20. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    We always discuss Michael's cost of materials, which is certainly going to be lower than an independent's would. But we never consider how many layers of management and administrative overhead they have to pay. We also never consider that their counter staff is not going to be motivated to sell as effectively, or to design with the skill needed to make people want to spend more. And when you buy moulding by the boat load, you need to warehouse it and manage it.

    Most retail framers who buy length moulding are already working on gross profit margins of 75% - 80%. Even if you could buy your moulding at 50% less than you are currently paying, your profit margin still has only moderate room to improve.

    The point is that purchasing power, and any other perceived advantage that the AOSFs have are grossly overexagerated. As an industry we've failed to respond adequately, and except for a few, we've shyed away from competing directly, even though we are capable of it. In doing so, we've lost, possibly forever, an entire generation of first time customers most whome will never set foot in real frameshop.

    Shame on the AOSFs for cheating the public, and for gaining an unfair competitive advantage though the continual use of sham sales. But shame on us, for allowing it, and for not having the guts to fightback.
  21. FrameMakers

    FrameMakers PFG, Picture Framing God

    Kathy, that must have been one hopping store. The stores around here are not nearly that busy, as a matter of fact when I have been in the stores and looked at the framing area only once have I seen an employee in the frame area. The rest of the time I could nose around as much as I wanted. I never have seen any work waiting to be picked up or even waiting on frames to arrive.

    Maybe this is just the shops in the Midwest that are poor performers.

    When I was in a Michael's last week I bet there weren't 15 employees in the entire store and less customers. I see them having a hard time surviving this economic storm.
  22. cvm

    cvm PFG, Picture Framing God

    Well, I promise I wasn't bragging, but I was the one who came in at $178.00 with a 20% COGS. Enough profit to buy a couple big ol' bags of pork cracklin's I reckon. Craziest thing, though - the same day I posted here about that, I had an employee sell a $1026.00 frame/liner/brushstroke combo on a 26 x 29 $48 poster, and a $2145.00 frame/mat/fillet combo on two 11 x 14 open edition prints. Now, of course that doesn't happen every day, but I'll take in whatever we can drum up.

    Probably because my naive, backwoods mind believes that our niche (custom framing) is rediculously small, so we try to be all things to all people.
  23. jim_p

    jim_p SGF, Supreme Grumble Framer

    Other people have already mentioned factors that could permit Michaels to engage in "aggressive" pricing: diversified sales (they sell a LOT more than custom framing), volume purchasing, and a business structure that can tolerate much thinner margins.

    This got me to thinking: when we talk about Big Boxes these days, most of the folks we talk about (Michaels, A.C. Moore, Joann's) are businesses that have custom framing as part of a larger retail business. This has me wondering: now that Corners is gone, are there any remaining Big Boxes for whom framing is the mainstay of their business?
  24. PaulSF

    PaulSF PFG, Picture Framing God

    Jim P: Aaron Brothers. They sell art supplies too, but it seems to be much more balance with framing sales than a Michaels.

    CVM: Do you mind sharing with us the moulding that you used for your quote?
  25. Beveled

    Beveled SGF, Supreme Grumble Framer

    Our retail, $354 with the Larson frame.

    We don't have a Michaels nearby, but we have another Chain type BB. People assume that they'll be cheaper, but we have always been lower. Every time. If you can somehow get it across to them to actually compare, they'll often come out better with Maw and Paw.
  26. Jay H

    Jay H PFG, Picture Framing God

    You're always cheaper but are about double the price in this example. Exactly what big chain you up against? Tiffany's?
  27. Beveled

    Beveled SGF, Supreme Grumble Framer

    After the 60% off, Michael's price was $180 plus tax, indicating a full retail of $450. With "Masterpiece Glass," the discounted price was around $250.

    If I understood this correctly, Michael's full retail was $450. My full retail was $354.

    I wont mention the name of the local chain, since this is small town USA and one of those framers may be here too.
  28. HB

    HB SGF, Supreme Grumble Framer

    Am I missing something here? How are you always lower, when your selling price appears to be $354 and their sale price is $180. Isn't your $354 more than their $180. And doesn't "always" also mean when they have a sale.

    {Unless you also are an AOS (Always on sale) type of business}
  29. Jim Miller

    Jim Miller SPFG, Supreme Picture Framing God

    There are myths about mass marketers, some of which have been mentioned in this thread...

    1. "Their framing departments are failing." Not true generally, but some stores are doing better than others. A few years ago their average was around $700,000 per store. I'm guessing it is less now, but framing reportedly is still among their most profitable segments.

    2. "They make tons of profit." Nope. Someone mentioned that they would be happy with 5% net, and that seems reasonable. Sure, it's still a lot of profit dollars, but their cost structure is higher, too. Consider that all of their orders are handled by multiple people in multiple locations, and nearly every order involves shipping materials, probably twice as much as a smindie's materials. Mass marketers need to maintain big sales numbers in order to cover their base costs. In a downturn, they suffer more and sooner than smindies do, and they can not respond to market changes as easily.

    3. "They get materials for half of what small independents pay." Probably not. Their volume might get them into a range of 20% to 30% less cost than smindies, but there is a point of diminishing returns. For example, contracting production overseas might make their cost-per-foot very low, but the costs of administration, packaging, transportation, handling, and off-site subassembly production add up in a hurry.

    4. "Their framing quality is bad." Compared to the best of smindies, maybe so. Compared to the majority of smindies, it's probably equal or better. We hear about their framing disasters from disgruntled consumers who run to us on occasion, but those are the exceptions. Occasional disasters aside, their quality is controlled in order to provide saleable, profitable framing that appeals to consumers. Yes, it does.

    5. "They sell junk materials." Generally, their materials are as good as those provided by most smindies. I don't know of any poly mouldings sold by M, JA, or HL. However, some poly mouldings are now better than some wood mouldings. If they have any polys on their samples walls, you can bet they are among the better ones.

    6. "Their prices are unbeatable." Nope. Most smindies can beat most mass marketers' discounted prices most of the time. Their frame designers are trained to propose elaborate designs with lots of extras; some actually have quotas for extras. Creative designing is important. For example, if we are quoting a major-brand moulding to the mass marketer's look-alike, we lose. But if we propose similar-looking, lower cost materials and simplified designs that still satisfy customers, we win.

    7. "We need to compete head-to-head". Maybe that works in some markets, but not in most of them. The mass marketers' advantage is in professional marketing of deep discounts based on inflated retail prices. Smindies that advertise traditional, "real" framing discounts of 10% to 25% on special occasions only invite consumers to compare them to 40% to 60% discounts from the mass marketers. Smindies that inflate their prices and offer similar deep discounts only contribute to the further erosion of consumer respect for the industry. And discounting usually doesn't work anymore, because smindies can't afford to match their full-color inserts in the Sunday newspapers.

    I believe the best strategy for a smindie is to sell what the mass marketers do not.
  30. PaulSF

    PaulSF PFG, Picture Framing God

    Jim, I think your comment is spot on. Regarding point 6, at the point where I arrived, the sales clerk and the customer were considering double mats. I can't say whether he showed her a triple mat design off the bat. While I was there, he made no mention of fillets (does M's even offer fillets?). And while he did discuss the merits of Masterpiece Glass vs. Conservation Clear, and quoted her a price on both, he wasn't at all pushy.
  31. FrameMakers

    FrameMakers PFG, Picture Framing God

    One other thing to think about, with all the framers that are closing or laying people off the employees at the BB might be former indy framers.
  32. Beveled

    Beveled SGF, Supreme Grumble Framer

    Comparing full retail to full retail. Theirs $450, mine $354. If my full retail, $354 was 60% off, my price would be $141.60.

    And always lower than my local unmentionable BB competitor, not Michaels.
  33. HB

    HB SGF, Supreme Grumble Framer

    Does the customer really care what the "full retail" or "regular" price is?
  34. PaulSF

    PaulSF PFG, Picture Framing God

    But Beveled, Michaels is always at least 50% off, except for maybe one odd week a year. So as Paul Cascio has pointed out, their effective retail is the discounted price. And unless you are willing to discount your regular retail, you are much higher.
  35. JRB

    JRB PFG, Picture Framing God

    Nine pages devoted to Michaels Fine Custom Framing. Consider that Michaels and Aaron Brothers could, if they wanted to, just give it away free. Unlike us, where every sale is critical to our survival, at Michaels it is just one part of their many offerings.

    They could offer a free complete custom framing job with every purchase of dried flowers that has a value of ten dollars or more. They could continue doing this until all us little independents no longer exist. Fortunately, for us, they are not doing such things. What they are doing is offering large discounts instead.

    My point is, we should be more concerned with what we are doing to survive, rather than what the Big Box operations are doing for their survival. They are slow as well, we are not alone in this.

    You gotta ask yourself, what are some of the things that you can do that the chain stores can't? Can the chain stores walk around the neighborhood introducing themselves for one hour every night after work? That is just one thing we can do that they can't. Think of more things.

  36. Jay H

    Jay H PFG, Picture Framing God

    But Paul in this thread, our retail and theirs was very similar. Their 1/2 was about 1/2 as most indicated they would sell it for. Is that not 1/2 the going rate?

    John's right. We should completely and totally disregard anything and everything the biggest competitor is doing.
  37. JRB

    JRB PFG, Picture Framing God

    Yup, that's the answer. Wring your hands and spend all your time worrying about the competition. You can not meet their cost of goods, you can not advertise the way they do. You can not hire a continuous stream of minimum wage part time people to staff your store..

    What can you do? Oh worry, worry, worry, pretty soon business will just pick up for you and you'll be off and running again.

    I'm not saying do not be aware of what your competition does, but in these economic times, that carp should be on the back burner. You should be giving most of your energy to building your own business, and trying to get back what you can.

    What can you do that your competition can't do?

  38. Jay H

    Jay H PFG, Picture Framing God

    I know we are both using a little creative license but you have miscalculated my position in general.

    I think you suggested that if you to many more months like you did in the past, you would run out of money. If I never sold another frame I could pay all my business expenses for the next year and maybe more.

    I'm very charged about the current retail climate. If it gets better from here, then I'm getting ready to take a heck of a ride.

    Still I think something as simple as knowing what your competitors are selling and for what price is as basic to business as a sippy cup is to a baby drinking. That is really what is being discussed here.
  39. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    John, while I agree there are things that we can do that the chains can't, that kind of thinking is what's gotten our industry into so much trouble. Ignore 'em!

    We can all go around glad-handing the neighbors, but when we let that first time customer get away, they ain't likely to come back.

    Instead, we need to make sure that every ad we run makes it a point to mention the distinction, or to mention the value we offer, or to point out that the competition runs the same phoney sales every week. Otherwise, our message will pale in comparision.

    I challenge you to tell me one thing ithat you can say in your advertising to a prospective customer, that's more compelling than, "I'm Going to Save You 60% This Week"?

    There aren''t any. And that's why you can't just ignore your biggest competitor, especiually when you know it's not true. Yet sadly, that's exactly what most of our industry has done--ignore them.

    No other industry ignores it's biggest competiitor and still achieves success. Not one.Apple Computer knows this. Hundai know this. Ace and Tru-Value know this. But we don't. That's why every small framing business needs to make it their responibility to make sure they do everyhting possible in their advertising to see to it that the public is made aware of the reality.
  40. surferbill

    surferbill SGF, Supreme Grumble Framer

    I don't think they care. I don't think I could even tell you the difference.
    I think most customers only care about hearing it's 50% off.

    In our newspaper this morning, M's had a 60% off sale.
    My girlfriend asked me why I don't have a 60% off sale, even though I have gripped to her many times about M's marking framing up, and then giving a discount.
  41. Beveled

    Beveled SGF, Supreme Grumble Framer

    Yea. I get it.
    I was comparing to MY BB store competitor. They dont discount like Michaels apparently does.

    But hey, for the record, I'm out of this thread. I'm going to go lick my wounds.
  42. Kirstie

    Kirstie PFG, Picture Framing God

    Paul, I am not challenging you in asking this question, but what reality?

    The always on sale bbs are just that, always on sale. Their 60% off coupons reflect what is actually their true everyday price. I am in a somewhat unique situation with the DIY because I can actually offer something different, low cost, and immediate. I read that some framers here say they can compete head to head with the bbs item for item, and I am, frankly, amazed, because unless they have mass buying power, storage, low wages, and own their buildings outright, I do not understand the basis of their pricing structure.

    In my view, one has to give the customer a decent price for a large selection of well made product, offered by talented and friendly framers whose care for their customers and business shines in such a way as to self-select a certain group of customers. The rest, probably the majority, will go for price, price, price.

    I try to grab a little of both by offering a product mix that serves a wide variety of the public, but I won't fool myself by thinking that any amount of personal customer service, quality, selection, and ambiance will woo the customer who only cares about price. I also fully recognize that I cannot place Sunday newspaper inserts to advertise my unique products and services. I can open these ads every week and make myself miserable, or I can ignore them and get on with running my business to the best of my ability.

    Sometimes ignoring them just makes sense.
  43. Paul Cascio

    Paul Cascio SGF, Supreme Grumble Framer

    Fair question Kirstie, but I believe you answered when you noted that, "Their 60% off coupons reflect what is actually their true everyday price."

    The problem I have with Michaels, Jo-Ann, BA, and the rest of the AOSFs is that what they are claiming is a special opportunity, by nature of putting an expiration date on it, is not. The customer is lead to believe that this is a special price that expires on Saturday at 9 pm, and that the next day prices will double to their regular, reference price. But of course, they don't--the cycle just starts all over again, like the itsy bitsy spider.

    According to Unfair and Deceptive Trade Practice laws, a group of consumer protection laws, which also happen to protect competition, the litmus test for a Sale, is what happens to the price of a sale item once the sale ends. That's what make these offers phoney. Also, if it's on-sale often enough, those prices become your defacto regular price.

    Michaels' prices are not an issue in that sense. It's how they portray them to the public, and to the detriment of small competitors, that I object too. Certainly we should all be aware of our competitor's prices, but I've never believed that each and every frame here couldn't advertise a policy of "matching or beating" every AOSF's pricing.

    Which brings me to the point I made about us failing as an industry. You were NOT one of the business owners I was referring to. In fact, your business is a model for how to market and grow a framing business.

    The one thing in particular that you do, is that you make a concerted effort to attract first time customers and budget conscious consumers. This is something that most of our industry has either ignored, or made only a token effort to achieve. I think it's the #1 key to not only building a customer base, but to replenishing that base.
  44. Jim Miller

    Jim Miller SPFG, Supreme Picture Framing God

    That is a key question and not just a rhetorical one. Doing what "your competition can't" has proved to be a winning strategy for my business.

    So what exactly can we do better or differently? Let us count the ways....

    1. Quick production
    2. Larger selection of materials
    3. Better services -- design expertise, visualization
    4. Subcontract conservation treatment
    5. Packing/shipping of finished framing
    6. Lifetime warranty
    7. Protective framing
    8. Object framing, non-invasive
    9. Frames that open/reclose
    10. Delivery & installations
    11. ?
  45. Franny

    Franny CGF, Certified Grumble Framer

    Joannes and Michaels were highest in my test

    About a year and a half ago, I did a price point study of many of the framers in my area. I took a poster 16x20 and requested the same metal molding and two mats from each framer. I got prices ranging from $82.00 up to $170+. The HIGHEST two prices came from the big boxes. I have been TRYING to educate my customers ever since that the 50% off is a scam and they need to shop local. I back that up by doing the exact same thing. I even buy from my local supplier whatever I can. I know he's going to United and others, but I love his service to me and I want to support him. My supplier said something to me a while back that inspired me and I think about it whenever I have an urge to lowball a price...he said "I started out 25 years ago from scratch. The first day I took in $15.00. 15 years later I was able to pay off my building and be out of debt. The way I did that was that I didn't worry about my customers pocketbook...I worried about my own." I strive for giving a FAIR price. I would never gouge anyone...it just is not in my makeup. :smiley:
  46. Harry FKA Harry

    Harry FKA Harry CGF II, Certified Grumble Framer Level 2

    Well in the interest of playing along...

    For the specs you gave Paul I would charge $367. I could however, frame something that size with a the dbl mat & CC for $160 using an instock moulding.
  47. PaulSF

    PaulSF PFG, Picture Framing God

    I went back to Michaels last night, this time with a print of Flaming June from the shop. First the guy asked if I just wanted to show the image, or the image plus the title stuff at the bottom. I said just the image, which measured 27x27.5 from edge of paper to edge of paper, and that's how he measured it. Then he went to the POS and scanned in a thin black moulding that he never showed me, and told me it would cost about $180. So I asked about mats, etc., because "it is a Christmas present for my sister, who likes things to be a little over-the-top."

    So he grabs a couple of mats and shows me a double mat design. The top mat is a hideously patterned Bainbridge, and the bottom mat, you'll like this, is a red suede. Yes, a suede mat on the bottom. Then he shows me a different option using a single mat, also hideously patterned. I chose that one, and we moved to frames.

    I told him I wanted a gold frame, and gently steered him to the Michaels lookalike for LJ500CG, a gold scoop with beads on the sight edge and floral pattern around the outside edge.

    He then asks about mat width, and we look at a couple, and I choose 3-inches. He starts to price it all out, and I can see he's troubled by the fact that 27 plus 3 plus 3 comes to 33, which is of course wider than your 32x40 mat and glass short side. But he never raises the issue with me and offers an alternative, like coming in a little more on the image. Then he announces the prices:

    With Masterpiece Glass: $390
    With Conservation Glass: $282

    And that's after the 50% off, so the undiscounted retail would be $780 and $564, respectively. My prices would be $600 and $450, respectively. I'm tempted to create an image of the poster framed up with that frame, using Integrated Framer, and post it on my door with this printed under it:

    "Michael's Price: $564 Our Price: $450"

    Some generalized observations:

    1) The guy never wore gloves while handling my poster. He had nice prison tats on his thumb.

    2) The guy has no concept of how the projects he designs are going to look when completed.

    3) The guy has no sense of color or texture.

    4) Michaels' customers seem to be OK with all that.
  48. Rick Granick

    Rick Granick SPFG, Supreme Picture Framing God

    Nice report, Paul. I like your descriptions. You could be the David Sedaris of the Grumble.
    :thumbsup: Rick
  49. MabSadie2

    MabSadie2 PFG, Picture Framing God

    But can he sing just like Billie Holiday?
  50. HB

    HB SGF, Supreme Grumble Framer

    Will That help? Ho will you respond when they say - "Oh but I can get it at 60% off that with my coupon!"

    Again, I think you are trying to compete on price, and eventually they will think of you about as misleading as them with your sign.

    Don't let price be such a big concern - the many that do, go down. Every business in my area that has closed up has tried to be price-competitive with Michaels.

    You should have a sign that adveretises your better service, quicker turnaround, extra services, better quality, selection & workmanship.
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