Was it just me, or did every independent stationer in America see this one coming?
Those of you who have been quietly asking me “What’s the deal with Swoozies?” the past week have been getting lukewarm responses and a little tap dancing, given a tidbit of confidential news I’ve been keeping under my hat. Now that the cat’s out of the bag, well…. It’s true. The Blue Tulip acquisition turned out to be the nail in the Swoozies coffin, pulling the already shaky chain under water.
Of course, anyone who’s heard about the beyond-predatory discounting that’s been rolling through their stores the past month knew something was up, and it wasn’t good.
The number of vendors who have confided in me about the sheer volume of their lost revenue is beyond belief; we’re into major league numbers, with very little hope of seeing daylight (or payment). As reported in the Atlanta Journal-Constitution, Swoozie’s “has less than $10 million in assets and between $10 million and $50 million in debt,” according to the court filing. Assuming my sources are correct, the actual number is waaaay closer to the high end of the scale than the low end.
Vendors aren’t the only ones being burned losing out; customers have been left high and dry, with little or no option for refunds on personalized orders placed in the past several weeks (depending on the location). Basically, if you have any type of financial connection to the chain, you’re toast.
Which won’t bode well for small and medium sized vendors that have been carrying Swoozie’s debt on their books, in hopes they’d eventually be paid. The odds of significant cash trickling down that far is slim at best, and will likely be the death of a few decent lines…and a gut check for larger companies about to lose their shirts.
I can’t help but think about a certain high profile paper vendor who shall remain nameless that overhauled their entire field rep system to accommodate chains like Swoozies a few years ago. The brainiac behind that decision is no longer with the company, but those who came after are no doubt popping Advil and Pepcid AD like jellybeans right now, given the state of affairs with multi-channel accounts. This hits ‘em hard, where it counts.
Reaping what one sows…? Hmm. Food for thought.
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Cinda,
Your writing always warms my small vendor heart (sarcasm). I believe you missed a point to your brick and mortar followers in this story. Those who exist in a town that currently houses a Swoozies should take this opportunity to grab customers. Swoozies stopped selling custom products a few weeks ago and I have seen several of my stores benefit from this. There are customers out there looking for the products that they once purchased at Swoozies. I have had them calling me direct to locate product. Local stores, take advantage of this opportunity.
Editor’s note: Happy to warm your small vendor heart (no sarcasm, simple fact).
As expected, independents are getting calls today, now that the news is out about Swoozie’s going under. They’re cautiously optimistic, but fully aware that inheriting orders doesn’t include inheriting the money already paid by customers. The orders are great if—and only if—Swoozie’s either refunds the customer in full so they can now pay the independent -or- forwards all funds to the independent stationer directly.
Of course, those funds need to be verified before anything moves forward, since a check from Swoozie’s isn’t worth the paper it’s printed on. Heaven knows, we don’t want to see independents taking a financial hit because Swoozie’s can’t back up a refund (or twelve).
As a manufacturing vendor selling to thousands of independent retailers, we had refused to sell to Swoozies for years. Then, this Nov they came calling with a large po for our popular polka dot ornaments… and we took the bait. After that, they tried to get us to pre-ship personalized items but wouldn’t send payment so we wouldn’t fill the orders feeling that we’d never see our money. How right we were! Just wish we’d been a little smarter sooner. Yea we got burned, but it was on a high margin item so damage wasn’t all that bad… unlike some of our competitors.
What a shame. No wonder I am not receiving a call back from an order I placed online Feb 18.
Hi,
Might I recommend a little introductory paragraph on what Swoozies is/was, for those readers who haven’t heard of it? (I went and looked it up, but it would enhance the article if I didn’t have to).
Keep up the good work!
Editor’s note: Thanks for the thumbs up, Julie–sorry not to include an explanation of what Swoozie’s is, but given the number of times I’ve blogged about them, and their high visibility throughout most of the country, it didn’t occur to me to backtrack. My apologies to those of you who recently joined the blog and were unaware of the Swoozie’s story history.
You are correct,long time small retailers saw this one coming quite some time ago,and it doesn’t bode well for the rest of us. I personally know of several small stationers that have gone under recently or are about to do so. I even went so far last year as to email Swoosies about restructuring the way they operated their small store area designed for writing custom invitations,which was so badly laid out it looked like an afterthought. This whole fiasco will most certainly have a ripple effect on all of us
So sad how so many of the vendors who supplied Swoozies with products will be closing their doors due to the debt owed to them by Swoozies greed. I think we will be seeing gift and stationery suppliers closing their doors, with these huge losses in the hundreds of thousands of dollars. Is there anyway to obtain a list which shows all debt owed? I would be curious to see one year from now how many of these companies close their doors.
Swoozies big mistake was going to the NE. Why do companies feel that expansion is the only direction? Is it greed? Is it a power trip? The sad thing is, that this “greed” or “power trip” will be affecting so many people, as we now there will be a huge domino effect.
Not to “toot my own horn” but I posted that the move to the Northeast was a big mistake and also posted this” “I guess time will tell, my feeling is next year at this time we will be saying goodbye to Swoozie’s.” This was from Feb. 7th, 2009.
We DID get OUR MONEY…!!!! Why…??? We took them to court…YAY…!!! Otherwise, we would have been a victim too. I did EVERYTHING I could to get them to pay. I was nice, I begged, I was sarcastic, I was mean, I even told them, “Shame on YOU”…!! Of course, nothing helped. SO….after many months of trying to get paid, we just filed a complaint with our local court in Nov. and they paid….At the last minute…LOL..So happy we did this.
I even ask the buyer…..”HOW can you keep placing orders with innocent vendors KNOWING that they won’t get paid and still sleep at night”..???…..It’s such a shame that they chose to keep taking products from unsuspecting vendors. And I KNEW we were not the only ones they would not pay. Vendors exchange info at market and I heard so many bad comments about them not paying. On behalf of Blue Tulip, we also sold to them for several years and they ALWAYS paid us ON TIME…Even the month before they went out of buisness. So it seems that Blue Tulip did at least have good ethical and caring business practices, unlike Swoozie’s. I feel bad for so many of the smaller companies who, I’m sure, this caused a great hardship.
Sadly, the first domino appears to have fallen.
Cross My Heart (invitations) has notified retailers that they’ve closed due to the financial damage done by Swoozie’s. Not surprising since they’re number 12 on the list of the 50 companies owed the most money, clocking in just shy of $161,000.
As much as I like the people at CMH, I still have to ask: You let Swoozie’s go $161,000 deep on invoices? Seriously?
It’s hard to feel sympathy for vendors who turned a blind eye to such whopping high numbers at the same time so many independents are being called on the carpet for $150 invoices running a week overdue. Very hard.
It is a shame that manufacturers don’t listen to there customers. In the personalize business, you need an owner in the store to run that department. Would you rather sit with a 20 year old part time employee or somebody who does this for a living. Also, to the manufacturers listen to people who have been in business. One day you will have to pay rent in the stores like you do in the showrooms, if you keep sell direct to our customers. When we first got in to the business we worked as a team now we work against each other. Lets go back to helping the brick and mortar stores, stay in business. Stop selling direct and work with your stores.
Bill, you’re not the only one talking about vendors paying rent to retailers for shelf space. That’s an idea I hear pop up quite frequently these days, based heavily on how the grocery industry functions.
Personally, I’ve always wondered why stationery stores have to pay for the sample albums custom print vendors produce. It’s one thing if the customer can purchase the item itself, but when the “item” is a collection of samples, well….. That really *isn’t* all that different from what happens in rep showrooms and booths, now is it?
Also not everybody has heard from Cross My Heart we tried to call all week and all we get is we‘re taking inventory. It is time retailers get together and stand up to the vendors. With out us they would not have any business. We need a strong retail group.
What a disaster – we’ve hung in there for over 5 years as a small retailer and I’m worried about what this is going to do to some of our favorite vendors that appear on the creditors list of Swoozies. Here is a link to an article about their bankruptcy that i found interesting. it also has a lit of the creditors and how much they are owed. http://www.burbageweddell.com/2010/03/02/swoozies-bankruptcy-information/
Editor’s note: Our policy is to remove outbound links from comment posts, but this one merits sharing.
I am in…thanks to one of my reps that had me pull up this website. I spoke with my rep for CMH yesterday morning and she has lost thousands in commission that she worked so hard for and now will never see. We had written up a few thousand dollar order in my store about 4-6 weeks ago and I had put it on hold until we could get together again and go through everything (since they had not updated a catalog or their website in forever). CMH called several times to try to get a CC to put on file and get out the order. Thank goodness I went with my gut on this one and stood firm on wanting to see each item again before letting the order ship!
I have to say that I am so very happy that Swoozie’s is out of Paoli, PA. Hopefully their exit will make room for another spot similar to the Blue Tulip caliber. Last year I arrived at what I thought would be the highlight of my day — a Blue Tulip store in Paoli, PA only to find what I consider a watered down version of once was. I walked in the store and was shocked and unimpressed by the lack of invitation selections, and cheezy looking gifts that lacked uniqueness. I don’t miss them one bit. Despite my feelings, please know that I am sorry that so many were hurt in this deal.