Serving the needs of local congregations is a growth area for stores to pursue

Michelle Brown believes so strongly in church supplies that last fall she dedicated a section of her 1,800-square-foot location to this category to stimulate more interest in Word of God Christian Resources.

The outreach is working. During 2010, the store derived 48% of its revenue from church supplies. That nearly matched 2009’s figure of 51% despite a third consecutive annual decrease in giving to churches nationwide.

“I go to every church and say, ‘I will give you a 5% discount, pay shipping and deliver the material to you,’ ” Brown said. “A lot of churches don’t realize what a local Christian bookstore can do. We research the best prices and products. We need our churches or we wouldn’t be here.”

That is a view shared by CBA. In its annual report for 2010, the trade association noted that stores taking part in its survey that reported doing well were often working hard to connect with local congregations—and urged other retailers to follow suit.

The pro-active approach by Brown’s Word of God is especially significant in light of the store’s opening—in the fall of 2007, just as the economy started its long decline. Today the store has attracted more than two dozen churches as steady customers for all of their supplies, including the largest congregation in the Elizabethtown, Ky., area.

Brown’s proactive approach includes matching prices from online and other discounters. She offers churches a 10% discount for every $100 they spend and 5% discounts on Sunday school and vacation Bible school (VBS) materials.

“If I’m only making 20% margin on something, it’s better than making nothing at all,” Brown said. “Smaller churches are faithful customers. Nobody’s on staff (full time), nobody does the Internet. They just say, ‘This is what I want and tell me what I need.’ ”

Word of God’s owner isn’t the only Christian retailer bullish on church supplies. Mardel Christian & Education saw a 21% increase in category sales between 2008 and 2010, said Dylan Hillhouse, senior buyer for the Oklahoma City-based chain. 

He said these products are fairly predictable, even those classified as seasonal, which is why the chain is looking at building closer relationships with churches. 

“We have typically done annual catalogs and focus on email marketing,” Hillhouse said. “We are exploring other areas, such as more direct and focused seasonal catalogs, and more focused email campaigns.”

Even where results the past two years are more modest, retailers like the potential of church-related business. 

Pee Dee Christian Book & Supply in Florence, S.C., divides its supplies from choir robes and clergy apparel, which have been declining. The 12,000-square-foot store also breaks out choral music and church furniture sales.

“Church furniture holds its own, while church supplies have increased 3%-4%,” said CEO Andrew Criswell Sr. “Framed against an overall declining market, we’ll take 3%-4% growth.”

That said, he noted that starting in 2008 the sales of choir robes plunged, reflecting the onset of lower church giving that has negatively affected his store. Congregations that used to replace robes every 14 or 15 years are more likely to wait 18 years or longer, Criswell said.

Despite this drop, the Pee Dee executive suggests retailers consider stocking robes, particularly those with locations near quality manufacturers east of the Mississippi River. Not only do they promote awareness of this inventory, pulpits and furniture can serve as display bases for other accoutrements, he said.

“As a five-year moving average, church furniture is up 10% a year,” Criswell said. “At the high end are pulpits and communion tables. On the low end, the two most popular are classroom lecterns and tithing boxes (for offerings). 

“Artistic Manufacturing makes a cross, candlestick and matching vase. All these beautiful things out on a table (in the store) plant seeds in people’s minds. People have to see them time and time again.”

Seeing imminent changes in the ways churches acquire inventory, five years ago Baker Book House in Grand Rapids, Mich., organized a three-member church relations team. One calls on churches two days per month; the others field emails and phone calls to nurture those relationships.

“Our Bible sales have definitely increased because of this,” said Manager Sue Smith. “A bigger push is our Amazon Challenge. It’s an initiative to get people off of Amazon and into the store. We try to focus on larger churches and those who aren’t shopping here regularly.”

Spotlighted in a 2009 Christian Retailing report,  the initiative offers churches who agree to shop at Baker for 12 months the same price as Amazon, plus 2% and free shipping. It resulted in 27 churches signing up between 2009 and 2010, and a 60% increase last year in church purchases.

Although not strictly related to church supplies—most redirected purchases were of books, music and sheet music—Baker’s effort demonstrates how retailers may find rich rewards by approaching churches.

“I feel like this has made us more prominent in the churches,” Smith said. “We’re coming alongside the churches in general and helping them with their ministries. They feel good about buying local and keeping us going. We’re gaining a lot of interpersonal relationships and it’s made us more aware of what churches are doing.”

 BLEAK ASSESSMENTS

Offsetting these optimistic outlooks are some bleak assessments, related to the downturn in church giving that has led to staff downsizings and budget reductions. 

The Cokesbury chain, which has traditionally seen strong, church-related sales, has seen a double-digit decline the past two years, said Ed Kowalski, senior vice president of marketing and sales for United Methodist Publishing House. Persistently high unemployment rates have affected purchases of the choir robes, altar ware, bulletins and banners it supplies to various mainline churches.

“They have realigned their priorities,” Kowalski said. “Help is going to other areas and people in the congregation who have lost jobs. There’s been a significant adjustment in what sells.”

That has forced inventory realignments and more reliance on samples and catalogs to facilitate custom-designed robe orders. Cokesbury has also attempted to build better relationships with churches through its call centers and sales reps in 14 major markets, he said.

Though its 60 stores historically have relied on longtime ties to the United Methodist Church, a national decline in all denominations now means the chain has to work as hard on church sales as any independent retailer, Kowalski said.

“You have to go and win that relationship every day,” Kowalski said. “Denominational loyalty is not that influential anymore. It’s easy to go find an aggregator (Web) site, pop in a product name and find a price without talking to anyone.”

Christian Supply in Spartanburg, S.C., has seen a pullback in church purchases since 2008, which is notable since it distributes products nationally to more than 22,000 accounts. While owner Chuck Wallington wouldn’t reveal percentages, he attributed the decrease largely to lower church giving.

“Some of that is style of worship,” he said. “We don’t sell near as many choir robes as we used to because there aren’t as many choirs. A lot of churches have gone to praise teams. But I suspect the strongest reason is the economy. Churches are feeling the pinch.”

Supplies like disposable communion cups, bread and offering envelopes remain steady. However, few churches are buying new offering plates, stylish communion ware or $2,500 altar crosses, Wallington said.

In addition, in recent months he has heard regularly from ministers of music at churches that have cut budgets, reduced staff salaries or instituted buying freezes.

Despite those realities, Wallington recommends retailers pursue this business. He strives to build relationships outside his area via mail order and Internet offers, and in Spartanburg has a staff member who calls on churches twice a year.

Christian Supply hosts a quarterly luncheon for pastors and another for youth pastors in its conference room. It sponsors an annual clergy appreciation breakfast, too. 

The store also hosts an annual VBS expo that draws up to 175 people. However, its largest conference is a four-day event for music ministers, where in 30 years attendance has grown to 1,200. To build better relationships with music ministers, Christian Supply maintains a #1 Club. For $50 a year, members receive certain perks, including the store’s highest discounts. 

In addition, some of the 35 stores in Christian Supply’s Covenant Group have reported strong increases, thanks to revenue from churches. Wallington believes those who make overtures will not only see new business, but also be better positioned for an eventual turnaround in the economy.

“I feel there’s a lot of fruit hanging on the vine for a store to pick up,” Wallington said. “We sell an awful lot of church supplies from here in Spartanburg, and the biggest reason is people can’t find it in their local area. If a local dealer decides they’re going to … go after it, it’s real hard for me to compete with them when they’re in their hometown.”

Munce Group President Kirk Blank agreed that potential exists. In its annual survey of group members for 2009, those who experienced sales increases had two things in common: consistent communication with customers and reengaging with local churches.

“The growth in general has been small because not many product categories in this economy are thriving,” Blank said. “However, it does appear that the interest level among independents has increased in their desire to stock more supplies, as well as engage the churches more.”

Among Munce’s corporate promotions are twice-annual mailings to about 75,000 churches. The flyers are branded with local affiliates’ names and reminders that these stores are ready to serve them with curriculum, VBS materials and other resources. Electronic versions of the flyers are also available.

However, keeping this business growing takes commitment and hard work, Blank warned. He also lamented the fact that competition for the category often comes directly from suppliers. 

That isn’t a one-sided situation, though. Blank said that after many vendors sensed a lack of retailer support in the late 1990s, they started dealing direct with churches. Such sales were disruptive and caused considerable anxiety for retailers, but through the years they have been able to reclaim much of that business, he said. “There is now a much greater level of support from the vendors to pass this business on to local stores when the stores show they are going after that business,” Blank said. 

 DISTRIBUTION CHANNELS

Other industry participants see promise in church supplies, including the three major Christian distributors. Spring Arbor, STL Distribution North America and Anchor Distributors all have reported growth in the last 12 to 24 months. 

Last year, Spring Arbor changed its stocking strategy, moving an assortment of church products to regional centers to speed up deliveries, said Chris Smith, director of sales. 

“We also added a significant number of items, particularly Bible covers, accessories and tabs,” Smith said, adding that Artistic churchware, offering plates and communion supplies are also strong sellers. 

“Our main focus has been letting customers know what we carry and where it is. We emphasize a speed-to-market message, where they can have products in a one- or two-day shipping (time).”

Smith believes church supplies are crucial to retailers’ success, saying an important role of impacting their communities is maintaining contact with congregations. In addition to sales, it is another avenue of developing store traffic, he said.

“Retailers shouldn’t be terribly afraid of price,” added Mary McCarthy, Spring Arbor’s director of product management. “Where we have things at all price levels, with church supplies there are essentials to consider. These are high-priced items that move extremely well.”

While STL Distribution suffered a notable decline in its VBS business last year because of a change in discounts from its suppliers, the rest of its church business increased more than 20%.

Rick Regenfuss, vice president of merchandising, said that STL emphasizes having the best selection of church resources. Bulletins related to Easter, graduation and other special observances were “flying off the shelves” last year, and sales of communion ware remained strong. Of 49 STL subsections in this category, 41 increased.

“A lot of this production is recession-proof,” Regenfuss said. “Churches have had to cut back, but I don’t think they’re going to have communion less because of a recession.”

Nor do online outlets seem to be a major problem. Although he said today anyone with an entrepreneurial bent opens a virtual store rather than a brick-and-mortar location, the STL executive wasn’t sure how many of those operations are pursuing church business.

While supplies represent promising growth, retailers have to get face to face with decision-makers, whether that is the pastor, secretary or other staff members, Regenfuss said.

“Talk to manufacturers, people who are doing a good job (with church supplies) and churches (about) what their needs are,” he suggested. “If an owner-operator walks into a church, he or she can get a good idea about what they use. There’s a good chance of getting in the door and getting their business.”

Successful retailers are reaching out to churches with all the products the Christian marketplace has to offer, said Karen Keisler, sales and marketing manager for Anchor Distributors.

Although not revealing figures, she said a few years ago the company moved to fill a need for more supplies expressed by customers and vendors and has seen growth ever since.  “I would say that most vendors realize how much a distributor can help them reach more stores and churches,” Keisler said.

Nor should retailers allow reports of decreased church giving and attendance deter them from going after this market, said David Wilke, marketing manager at Gospel Light. He commented that contrary to many reports, Sunday school attendance is on the rise nationwide, according to a study by Barna Research.

That is one reason Gospel Light is expanding its resource books for Sunday school and homeschool lessons in 2011 and introducing an elementary Sunday school line this fall, along with a new large group-small group course. 

“We are encouraged, too, by the quality of people involved in children’s ministry on a more professional level,” Wilke said. “Because of this, our customers are more selective about the quality of materials they buy for teaching. Customers are demanding better and better products.”

In addition, Gospel Light will offer four VBS courses this year and place an emphasis on getting churches back to the core reason they do these schools—to lead children to Christ. 

Although traditionally these programs are planned for summertime, Wilke said they see more churches using them for special events, five-week programs, Saturday camps and weeklong camps.

“Stores could possibly keep a few kits around and encourage churches to use one of them for their camp programs,” Wilke said. “Carrying VBS, Sunday school material and church resources makes their store more relevant to the church. 

“There’s no question that inventory dollars are stretched to the snapping point, but retailers need to give customers a reason to visit often, and these product lines are a great enhancement,” he added.

Another Christian publisher contemplating expansion is Warner Press. The Church of God (Anderson, Ind.) company produces various supplies—such as offering envelopes, record books and classroom resources—and publishes several million church bulletins annually. 

The latter is divided into two categories. Special events cover things like communion, baptism and holidays, while its Every Sunday Bulletins subscription line covers weekly needs. The latter is an attractive option for retailers, since those who sign up churches receive continuing referral fees without having to handle inventory or make a capital investment.

Mike Meadows, director of trade marketing at Warner Press, said the company has been studying possible high-tech options for various products, although it has yet to finalize any plans.

 “We’re trying to determine where the church is headed,” Meadows said. “A lot of churches are still embracing paper and ink, and there is a place for that. But we’re asking, ‘What are some other ways this might be delivered in electronic format?’ ”

Although church supplies are holding their own, Meadows said it could take a while to see growth because of budget restrictions facing many congregations. Still, Warner encourages retailers to appreciate that churches offer a real opportunity.

“I think a store that has a solid church-customer base may see a stabilizing effect when other areas go up and down more readily,” Meadows said. 

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