Beginning in June, shoppers at 1100 Jo-Ann Fabrics & Crafts stores across the country suddenly discovered that the craft store chain had added something new -- a book department.

The recently formed Butterick Book Distribution Company, which stocks the book departments from its Manhattan headquarters, is the brainchild of Butterick executive v-p Art Joinnides and consultant Mike Shatzkin of The Idea Logical Co. Carrie Kilmer, Butterick's director, has overseen and coordinated the complex logistics of the ambitious start-up.

The Jo-Ann Fabrics stores, which sell more than half of the fabric purchased in the U.S., is the distributor's first customer. Though Jo-Ann's has sold specialty titles in the past, books have never been a major item for the chain. According to Kilmer, the deal with the fabric company, whose headquarters are in Hudson, Ohio, was more than two and a half years in the making. Roughly 40 publishers were represented in the initial shipment of more than 300,000 books worth $8.5 million. The title base covered 12 major categories and another 150 sub-categories, including quilting, sewing, home decorating, crafts, cooking and gardening. Jo-Ann's stores previously carried roughly 150 titles per store. The fabric chain now stocks 450 to 900 single titles for each store and plans to increase those numbers.

The company's June shipment included more than 900 titles; each Jo Ann's store received an average of 650 books. Macmillan, Sterling, Hearst and Time-Life were among the major publishers represented.

Shatzkin expects the company's book stock to reach 2000 titles in the next few months. Negotiations for future Butterick distribution arrangements are currently underway with Little, Brown and other major publishers.

Jane Aggars, executive v-p at Jo-Ann's, told PW that she likes the program precisely because "it is a partnership. It resonates with our customers because Butterick is helping us to bring more color and ambiance to our stores. They've quadrupled the titles we carry, while heightening the atmosphere of creativity we emphasize for our clientele. Now we have a partner in the book world broadening the meaning of that."

The new distribution division of Butterick & Company, Inc., which has been a leading retailer of home sewing patterns for the past 130 years and has sold to Jo-Ann's for many years. This is the first instance of a manufacturer-distributor from another industry using its leverage and account relationships to become a one-stop supplier to that industry's retailers for books -- a new twist in the dramatic growth in the '90s of special markets, a term that seems out of date now that nontraditional markets account for a majority of most publishers' sales.

The driving philosophy behind the new distributor is to put books -- lots of books -- into the fabric and women's hobby stores the parent company already serves. "It's a win-win-win situation," said Butterick's executive vice-president Joinnides. "The customer gets more titles, Jo-Ann's expands its retail business and Butterick moves to the top in a specialty arena it knows like the back of its hand."

The distribution company was conceived after Shatzkin and Joinnides were unable to find a distributor for the six or seven titles a year Butterick publishes on its own. After several failed attempts, the two men approached Jo-Ann's and began to negotiate a package.

"It grew from there," Kilmer told PW. "The negotiations with Jo-Ann's blossomed into a full-fledged new company." In the end, the setup included distribution not only of Butterick's books, but those by major publishers around the country.

The initial results have been startling. Joinnides reported that while sales of books at Jo-Ann's were roughly $5 million in 1998, they are already approaching $8.5 million for 1999. "And the year is not over. We're looking to see sales in the $15 million range next year," Joinnides said confidently.

Based on early sales reports from three stores used in a eight-week pilot test prior to the full roll-out, Butterick predicts dramatic, high double-digit sales increases for books in Jo-Ann Stores, without a substantial increase in shelf space.

"The test results from the stores in Las Vegas and Columbus, Ohio, showed a five-fold increase in book sales," said Kilmer. "The chief contributing factor is the diversity of titles we make available."

The new company has found more than a niche and is not stopping with Jo-Ann's. Though Shatzkin -- who has consulted for Butterick for the past several years -- told PW it is crucial to work out all of kinks at Jo-Ann's first, Butterick Book Distribution is already in discussion with other nontraditional booksellers such as Michael's, a craft retailer in Texas, and Hobby Lobby in Oklahoma.

The Selling Pattern

Working with a staff of five full-time employees and 12 part-timers who work for the parent company as well, Kilmer's role is to expand the industry by creating partnerships based on Butterick's existing infrastructure.

Butterick & Company already makes weekly shipments of patterns to each Jo-Ann's, its biggest customer. The stores report their sales every day. Butterick Book Distribution's ability to build on this infrastructure is, according to Shatzkin, "The single most revolutionary thing about everything going on here."

The inventory is managed by a sophisticated and automated VMI (Vendor Managed Inventory) replenishment module designed by Butterick and The Idea Logical Company. As the vendor, the company furnishes all of Jo-Ann's titles, with no book buyers involved.

"You can't imagine the potential," Shatzkin emphasized. "We piggyback on the existing electric communication between the companies. The VMI modifies and adjusts the titles needed for each store and region without human contact."

All titles are sent on a consignment basis. The VMI studies the sale figures at each store as well as the chain's overall sales. It creates a customized replenishment order based on demand. It also evaluates the price points for the individual stores and provides Jo-Ann's with an overall picture of the chain's growth in book sales.

"In the future, each store will have its own unique assortment," said Kilmer. "Over time, as we see the patterns emerge for each store, we'll be able to hone and intimately build on each one's needs."

Butterick and Idea Logical are constantly refining the system's neural software (see sidebar), which develops sophisticated profiles on each of the 1100 stores, their regions and the type of books in demand. This relieves Jo-Ann's of the very complicated problems of buying books from a wide array of publishers and keeping track of all the titles.

Stitch-in-Time Ordering

Since stocking decisions are automated, Butterick provides publishers with efficient, low-return sales in a high-velocity marketplace. Publishers most likely would have difficulty reaching this specialty market. Jo-Ann's retailers receive one copy of each title for their new book departments. If a store manager wants to order a special title, she can. If the title hasn't sold within a few months, it is dropped.

Jo-Ann's d s limit space for its new book departments, so Butterick is dedicated to stocking books with the highest turnover.

Besides recruiting more publishers for the company, one of Kilmer's jobs in the next few months is organizing readings and in-store events. Since both Jo-Ann's and Butterick have catalogues, newsletters and ongoing promotions, the publicity channels for such events are already in place. "We'll help the publisher set up events and we have the arsenal to do with style," said Kilmer.

Joinnides told PW that the start-up cost for the company was in the $1-million range. "It's hard to say exactly," he added, "because so much of our work operates within Butterick's infrastructure." (Butterick & Co. Inc. has hundreds of employees and offices in half-a-dozen countries throughout the world.) "But I can say this. We're talking unlimited potential here. We've found a way to leverage Butterick's capacity in other arenas. Jo-Ann's is a billion-dollar chain at retail. The fabric industry already utilizes the Electronic Data Interchange, so we can make it work for books, too."

Lights, Camera, Bookselling Action...

For the second year in a row, The Booksmith sold books and organized author signings for the San Francisco Silent Film Festival -- and for the second year, it was a hit.

The event took place at San Francisco's Castro Theater, one of the last of the country's 1920s movie palaces. Booksmith publicist and events coordinator Tom Gladysz ushered in authors Russell Merritt (Walt in Wonderland: The Silent Films of Walt Disney), Allan R. Ellenberger (Ramon Novarro) and the 99-year-old Frederica Sagor Maas, whose The Shocking Miss Pilgrim: A Writer in Early Hollywood (Univ. Press of Kentucky) was the hit of the festivities. Between the classic films shown on Saturday, July 14, authors signed books, chatted with more than 2000 fans and basked in the glory of the silent film industry retrospective.

In collaboration with Stephen Salmons and Melissa Chittick, the festival's founders, The Booksmith sold a range of titles on movie stars, film history and film preservation in the theater lobby, more than 250 copies in all.

Film historians Leonard Maltin Gavin Lambert, Eileen Whitfield, Sumiko Higashi and Matthew Kennedy contributed signed volumes.

The Booksmith also held an event at the store with Maas the night before, and sold 60 copies of her autobiography. Gladysz chose to interview Mass -- whose vision is impaired but is otherwise spunky and upbeat -- instead of doing a traditional reading. It was Maas's first and only bookstore event.

Maas told Gladysz that "Outliving everybody brings a triumphant feeling."

In the heyday of silent movies, Maas wrote classics such His Secretary for Norma Shearer. Her account of the period depicts a depraved and heartless Hollywood. She made a reputation of herself as a troublemaker, later making it hard to find work. Gladysz met Maas at this year's BEA. "It's what can happen and is supposed to happen at the BEA," he said. "Booksellers find books they fall in love with, ones they can hand-sell with passion."