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The Art Material Trade Today

Friday, Feb 26, 2010

Posted By Larry Adlerstein

These are “interesting” times. Pearl Paint, the former dominant player in the distribution of art supplies is on the rocks. They are closing 11 of their 16 stores. From this man’s perspective, here’s the story.

A few years ago a parcel ripped open in a UPS conveyor belt and out spilled hundred dollar bills. So Robert Pearlmuter , a man in his late 70’s went to jail for a couple of years. He’s been depressed ever since (4-6 years of depression). His crime: tax evasion.

I have had almost no contact with the Pearlmuters or their partner Shalish Shaw, but what I know about them I don’t like. Aside from this stealing money that they don’t need, they have a history of arrogance and they do not treat their employees nicely.

Pearl will attempt to reorganize and prosper with the remaining stores. At this point I don’t believe they will survive.

Their management skills have proved inadequate and if my recent experience in Los Angeles is an indicator of the future, I see no hope of improvement.

Here’s the Los Angeles Story:

I was at a trade show in Anaheim, California a few weeks ago. Everyone was talking about Pearl’s announced 50% off everything sale in 6 stores (it later went to 12 of the 16 stores).

Steve and I consulted (Steve Kenney is my General Manager of 17 years) and we decided to look at the cities that were losing Pearl Art Supplies. Los Angeles was a 40 minute drive, so I drove north and Steve flew back east to general manage.

My first stop was Pearl. I asked to see the manager. Lamine and his assistant Doug joined me for coffee and I was very careful to be clear in my intent. I wanted to notify them both that if Pearl Los Angeles closed they could apply for a job with Artist & Craftsman. At that date Pearl Los Angeles was selling everything at 50% off and regardless of Pearl closing or not I was committed to open in Los Angeles.

So, a week ago I returned to Los Angeles to sign a lease. The 50% off sale had gone to 75% then 90%. The morning I arrived there was an 8 ½ x 11 inch sign in the Pearl window announcing that the 90% sale was over and Pearl intended to reopen with fresh inventory in a few weeks.

Lamine, a 12 year veteran with Pearl joined us for lunch. He said he had just minutes ago quit Pearl. A group of bosses from headquarters had come to Los Angeles and they were very critical of Lamine’s performance. Lamine countered that he had no inventory left to sell. I can attest to Lamine’s version. Anyway, at lunch Lamine asked for a job and he’s my new manager at Artist & Craftsman Los Angeles.

Vendors are telling me that Pearl is sending purchase orders for 5 stores (including Los Angeles) with the promise of prepayment before shipment but with no commitment to pay past overdue debt.

We are also actively pursuing two markets. We believe a store on Route 1 North of Boston would be good so as to replace out of business Charette of Woburn and Tech office in Portsmouth.

Also on the short list is Chicago. Without Pearl that sophisticated art market has one independent and corporate like suppliers Utrecht & Dick Blick. Chicago needs A&C and we need Chicago.

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Protecting a business in hard times

Thursday, Oct 30, 2008

Posted By Larry Adlerstein

Apparently someone stole a check of ours on its way to the Staedtler Company, a supplier of rulers and technical supplies. Big deal. Well, it’s turning into a big deal and could have been a business disaster, except we were lucky. Here is a story of how we’re changing our business to protect ourselves in hard times. You might consider how you can protect yourself.


The depression is affecting all banks, even the strong ones. One effect we discovered is the rising tide of fraud. Our one missing check has turned up in three separate frauds and a lot of people are getting hurt.


That missing Staedtler check for 8 thousand dollars was washed. Staedtler’s name came off and a thief deposited the check in a Chase bank. The bank suspected foul play and Chase and our bank T.D. Bank North caught the fraud, but that was only the first.


The thieves sold or gave our routing number to counterfeiters who manufactured checks with a new name, but with our routing number. They sent these checks to people as prizes for winning a make believe contest.


The plan was for the “winners” to deposit the check (our check) into their bank accounts and mail the thief a few hundred of their money to get the second half of their award. For some reason the new checks kept our Portland address and two “winners” found us. We closed the account and so far Artist and Craftsman have lost no money, but I imagine some “winners” are “losers”.


Last night my comptroller called me to announce bogus credit card charges were appearing on our closed account. This morning lots of restaurants and merchants are victims of chargeback’s. The third fraud was against these merchants.

Here is our response.


We will have three bank accounts. The first will be our checking account that will issue checks. After each check run we will deposit in that account enough money to cover the checks, but little more.


The second bank account will be our savings account where we will have our assets. Our line of credit will be attached but our savings account will have no outside contact. Routing from the savings to the checking account will be internal and secure.


A third bank account will be our receiving account where credit card and store deposits will be received. Money from this account will be transferred to the savings account periodically.


To lessen the danger of checks being intercepted in the mail, checks will no longer mail in check like envelopes. Electronic transfer of funds will be preferred and we have signed up for bank monitoring programs which allows us to spot fraud the same day, not at the end of the month as is the case today.


So I welcome you to the future.

Larry

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In The Recession Hole

Friday, Oct 24, 2008

Posted By Larry Adlerstein

Here are the realities as I see it.


The captains of industry are not stupid but they have been affected by the same short term interests that affect all American society. The manufacturers of SUV’s were not stupid; it was mere short term self interest. Profits were fat.


Those fat profits paid heavy union wages and benefits. They could let the Japanese seek short margins. The profits lasted for generations, but the bosses and the workers knew it would end some day. It’s ending now.


And we borrowed a lot to keep the image afloat.


There will be a shrinking of the economy as we retrench to what we can afford. This will be complicated by two factors: 1. paying off debt and 2. Insecurity in the credit market.


I think paying off debt will be easy. We’ll print lots of money but so will other so called advanced societies. It will be a race to the bottom as governments cheapen currency so as to pay back loans with cheap money.
Who is the money owed to? Well not you and I because we never saved and loaned (invested.) In the short haul I think it will be the Chinese and Arabs who get shafted. I think.


But no one in your generation will trust the greenback, perhaps not the Pound and Euro.
And that brings us to the more difficult issue- trust in the markets. That is what upsets me as I glance at the dow.
The markets control huge parts of the economy. I believe layoffs and mortgage defaults will be more affected by Wall Street than Main Street, I’m sorry to say.


So in a nutshell, The best cure is an orderly retreat on Wall Street down to realistic levels. If our economy was measured at the peak at 14 thousand, I expect the dow will continue to settle till 6 or 7 thousand.


Then things should stabilize and life will go on, poorer but O.K.

Forget about national debt. They can always print on toilet paper.



Larry

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My job, what is my job?

Monday, Sep 22, 2008

Posted By Larry Adlerstein

I do it every day, you’d think I know what I do. Let’s try to figure out what the owner of a middle-sized art supply does.

I often feel that I’m like a father to the 75-80 people who work with me. And like most parents I mess up. But if there is any reality to this self-image then Artist & Craftsman is a family life with all the strength and weakness so associated.

They drift in and out of our lives. Many who quit or are fired come back, sometimes older and wiser. Some of us just stay for decades.

I guess my job is to try to understand as many of them as I can. To help them grow and develop their best potential, even if my words hurt. To listen as best I can and to protect the security of this family-like group.

I guess that’s my job. I love my job and, my actual family – 4 children and many wives have given up trying to convince me to retire. I’m one of the luck ones. 

-Larry Adlerstein

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