Many in the sewing world will remember entrepreneur Elizabeth Caven, founder of UpCraft Club and an early pioneer in the world of projector sewing. Over the last few years, Elizabeth has become a venture capital investor. When the news of JOANN’s second bankruptcy broke, she published this article on her website and LinkedIn page and granted Craft Industry Alliance permission to print it here.
What happens when a company’s leadership is completely removed from the experience of the customer? Joann Fabrics just found out and it isn’t pretty. It’s bankruptcy.
And it’s not the first time that the company has gone through bankruptcy, it’s the second time in a year. Anyone who was listening to the company’s earnings calls over the last few quarters they spent as a public company could see the writing on the wall the first time. In the short span of about 2 years, the company went from IPO to obliterating its market cap (losing over 98%) and then being taken private to restructure its debt and try to salvage what was left.
The CEO departed almost a year before the first bankruptcy filing and the board did not identify a definitive leader to move the company forward (who thought co-interim-CEOs for 12 months in a troubled business would work out?).
The explanations on missed revenue and adjusted forecasts failed to inspire confidence at every turn.
Now, as a private company, the debacle has continued, leading once again to a Chapter 11 filing.
I’ve watched the company with intense interest for many years, first from the perspective of a customer…then as the founder of a craft-related startup…and most recently as someone who invented an award-winning product Joann now sells. I have wanted them to be successful but all signs have pointed to their unfortunate unraveling.
How did this happen?
Allow me to offer an opinion based on my unique experience and perspective, which illuminates the underlying problems lurking within this company.
In 2015 I tried, unsuccessfully, to connect with someone about a digital breakthrough in sewing. When my emails and calls went unanswered I drove to the company’s headquarters in Hudson, Ohio, and tried to get an in-person meeting. A security guard took pity on me and made calls internally to see if someone would talk with me but was told, “We don’t do anything digital so we don’t know who to have her talk to.” To which I said, “I know you haven’t gone digital, THAT’S WHY I’M HERE.” Did it work? No. I was escorted out of the building that day.
I worked hard to become entrenched in the industry, meeting with the executive teams of just about every sewing and crafting-related company you could think of. One thing they all had in common was that they were all vendors to Joann, which seemed to be truly the hub for the entire industry. So, I kept trying to find an “in” at the retailer.
A year after my expulsion from their headquarters, I was introduced to the “head of sewing” at Joann. Back to Ohio I went, filled with excitement and hope that the timing was better for the most powerful sewing-related retailer in the US to embrace the digital future. Those hopes were dashed within the first 10 seconds of our meeting when the department leader made it clear they had never even seen a sewing pattern out of the package and had no idea how one worked. I spent 30 minutes teaching, the leader of the sewing category, how the Joann customer uses the sewing products found in their stores…the very products this individual was in charge of buying to put on the shelves.
Are you seeing a problem here?
Sadly, that’s not the only time I had to educate people within Joann. The higher the level of the executive, the less they understood about what the customer did once purchasing the products the company carried. The board prioritized executives with Wall Street experience over crafting industry know-how or even curiosity about what the customers do with the company’s merchandise.
Am I saying that all executives of a company have to be hyper-users of that company’s products…no. But can you imagine a CEO like Jensen Huang of Nvidia only talking about the numbers and supply chain factors of the semiconductor business without being genuinely curious about what his products would empower customers to create?? When you build a business around selling an input material (like semiconductors…or craft supplies, in Joann’s case) It’s key to the success of the business to have an understanding of the point of view of the customer.
Before going private (again), the co-interim CEOs emphasized their “read and react” strategy. With sales falling, and falling, it’s clear that they couldn’t read what was happening or react quickly enough.
Where was the effort to anticipate customer’s needs? Innovate?
I’ve been left countless times to wonder if they even like their customers. Or their employees, for that matter. In past earnings calls the front-line associates have been called “store labor.” (Insert eye roll here)
Contrast this with other retailers, like Target, where customers are called “guests” in their earnings calls and they use words like “team” to describe employees both in the corporate office and the front line in stores. Brian Cornell, CEO of Target had this to say in a past call, “Whether a guest knows exactly what they’re looking for or needs a bit of inspiration, we want to make the trip joyful, easy, and welcoming.” Imagine how different the experience at Joann would be as a customer if from the top-down the company was oriented to make the shopping experience pleasant instead of the “bad garage sale-like environment” of a Joann store.
I took the photos above on a recent trip to Joann and was appalled at the condition of the aisles and the lack of merchandising. Is it any wonder the company is troubled when its default experience is so poor?
Now that Joann has declared bankruptcy (again), maybe a buyer will step up with a mix of customer-centric thinking coupled with savvy financial engineers to successfully right the ship. But unless the North Star of the company becomes the delight of the customer, aligning success to fulfilling the crafting wishes of the makers who seek inspiration and the tools to bring their visions to life, no amount of financial acumen or new money coming in to snatch up the flailing retailer will turn this company around.
What a tragedy for the tens of millions of creative and crafty people in the US.
Please note: I would be remiss if I didn’t mention one gem of a human I met on the executive team at Joann. He left the company several years ago and was a bright spot of ambition, passion, and care for the customer that was missed, as performance went downhill quickly after he departed. I’m sure there were, and are, many well-intentioned, good people at Joann and I’m truly sorry they’ve had to experience the gross mismanagement of this company.
I smell an opportunity for someone in the industry to sweep in and become the de facto leader in the space, although, in all likelihood, I predict the business will be sliced and diced. If that’s the case, I’d love to see the Ditto assets land somewhere like Amazon…or maybe Adobe or Canva. I can even see a play for Ditto at Meta because the IP (the patents I wrote) would pair in a really interesting way with their tech. Time will tell and I’m rooting for the one that can put the digital and crafty tools into the hands of the customer, enabling them to be astoundingly creative.
Elizabeth Caven
Contributor