Holiday Catalog Observations 2014 – Part 3

by Bill LaPierre on November 23, 2014

Sales:

The cold weather appears to have done the trick, and gotten consumers back into the buying frame of mind. From what I am hearing from clients and mailers, orders and sales began to pick up starting around November 10.  No one is reporting that sales are doing great, but they are back to close to plan.

What does that mean to you? If this year goes like several other recent November/ December timeframes, orders will take off the week of Thanksgiving, and will then do about 20% above plan the first week of December. This will have nothing to do with Black Friday, Cyber Monday or snow in Buffalo. It will simply be due to a truth of cataloging – Christmas comes but once a year, and the average consumer is still going to make Christmas happen. Based on past experience, when response is depressed in September and October, barring any unforeseen catastrophic events that would hurt response from November 15 to December 15 (like a blizzard, or stock market crash), response will bounce back late in November / early December, and catalogers will not have the inventory to respond. But I bet Amazon will.

Volume:

Most of you will be reading this posting on Monday November 24, which I predict will be the peak day for consumer catalogs in your mail box for the year. When you get home tonight, see for yourself.

I Love This, But Only This

My wife receives the Acacia catalog all the time, but is not a title from which she would ever buy (not her style). However, I spotted this collection of Yoga Cookie cutters in the November catalog.

Acacia-Cookie-Cutters

These are great! I love to bake cookies, and I’m always looking for new cookie cutters. I’ll never do yoga (sorry to all of Datamann’s clients that have yoga catalogs!) but I love these. Unfortunately, if I bought them, Acacia would probably send me their 64 page catalog for the next 4 years, probably 12 times/year, before they determined that I was only interested in the cookie cutters, not the rest of the apparel in the book (sample spread below).

acacia-spread

This is where a merchandise analysis of the first product a customer purchased can reveal which customers are likely to never make a second purchase. It can help you to not only stop mailing to those customers, but to identify that type of product, and avoid putting them in the catalog to begin with.

A True Web Diver Catalog

Most of you know that I believe catalogs should do more to use their catalog to drive customers to the website. Mail fewer pages, make more contacts, and get more customers. It works for some, not for all.

ThinkGeek-Cover

I received this 12 page, slim-Jim catalog from ThinkGeek. None of the products in the catalog have prices. There is no phone number. You have to go to their website to learn the price and place an order. And there are hundreds of more products on-line.  In my opinion, this is the perfect web driver catalog. Think about this the next time someone on your staff says “But our customers are different – they have to see it in the catalog”.

This Can’t Be a Good for “the Brand”?

If you are a loyal reader of this blog, you know my wife and I live in a little town in rural New Hampshire, a full hour away from the nearest mall. We do however have a small mass merchandise store in the town next door called “Ocean State Job Lot”. It is the kind of store that is lit with single rows of florescent lights about 30 feet apart, and features remainder merchandise and close-outs products from larger retailers. I noticed that their weekly newspaper flyer this week featured a full page ad for old Coldwater Creek merchandise.  Ouch! – do you think this is what Dennis Pence envisioned in 2005 when Coldwater Creek famously announced that they no longer viewed themselves as a catalog company, but were an online company with stores?

Coldwater-Creek-OSJL-Ad

Having their product sold at stores like Ocean State Job Lot is going to make it really hard for the team I heard of that is trying to resurrect the old Coldwater Creek title. Good luck trying to convince your target customer that you’ve got an upscale catalog brand.

Ce Ne Sont Pas Bonnes (This is not Good)

As I was writing this posting, I checked the weather on Weather.com, and was presented with the ad below, for the North Face store in Montreal. I assume it was served to me because my wife and I drove to Montreal this summer, and I searched for hotels/ restaurants in Quebec online. But that was in August – four months ago. Plus, I almost always search in English, not French.

North-Face-Store-Ad

This is important because many of you are paying big bucks this holiday season to have your display ads and retargeting ads plastered all over the web. The companies doing your targeting are reporting to you that all is going well and that they are hitting your target customer. But how relevant, how recent, and how close to you (geographically) are those targets? I don’t think this is an example of targeting gone bad – I think it is an example of some online ad suppliers stretching the allowable definition of who is their client’s target customer.  This store is 250 miles from my home – but someone (or some algorithm) defined me as being a target for the store, and served me the ad, in the wrong language. Watch your own results – and try your best to verify where and to whom they are being served.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 802-295-6600 x235

blapierre@datamann.com

What is to Become of Single Title Catalogs? – Part 1

by Bill LaPierre on November 16, 2014

With the news that catalog conglomerate Potpourri recently purchased the travel product catalog Magellan’s, bringing Potpourri’s total number of titles to 15, I started thinking about the future of other single title catalog companies.

There’s nothing wrong with being bought by a conglomerate like Potpourri. They are an extremely well-oiled and efficient catalog machine. If they follow their standard procedures for this new acquisition, any remaining assets of the company will be trucked to the Potpourri headquarters in Massachusetts, and production of the catalog will be streamlined in with the other 14 titles. They’ll throw a few pages of sex toys in the back of the book (maybe for Magellan’s they’ll find a travel assortment), and the book will be homogenized into the rest of the assortment. Great for Potpourri and their investors, but is this what’s best for the catalog industry?

The catalog industry, especially here in New England where Datamann is located, was built on the strength of a multitude of single title catalogs scattered around the nation, not unlike the plethora of small town retail stores that lined every Main Street. It’s so easy to be nostalgic for what cataloging was like 20 years ago, but it does no good.

I used to think that conglomerates were the death of the catalog industry, especially those that were venture capital-backed and which knew nothing about catalogs/mail order. On the other hand, it really doesn’t matter whether those mail order know-nothing VCs are backing a single title, or multiple titles – if they don’t know what they are doing, it’s a train wreck waiting to happen.

Even though almost all the major conglomerates – Potpourri, Cornerstone, Orchard Brands – have some form of venture capital behind them, the core management who run the day-to-day show are catalog professionals, both in experience and in terms of being catalogers at heart. They know how to get it done, and for the most part, don’t go off track.

When I worked at Brookstone, we were owned for a short time by Bain Capital (yes, the same Bain Capital of Mitt Romney fame).  Back in the mid-1990s, Bain was a magnet for proposals from companies that wanted to start catalogs. As such, Bain would send my boss at the time (Randi Lawrence) and me some of these proposals to review.   They all carried a general theme – “We don’t expect to be another LL Bean. We simply expect to be at $400 million in sales in five years with 20% EBITA.” That’s a great goal, except for the fact that no one has ever accomplished it.   I still see that hubris in some of the VC companies that acquire catalogs and expect to magically turn them around with their (self –perceived) superior management and marketing skills.

But I’ve gone off track. I wanted to write today about the future of the single title catalog. The problems facing them are no different than those facing any single-location retail store, or even most small companies in general.

I’m not concerned with the small catalog that never should have gotten started in the first place because it was not filling a needed niche, but was simply a copycat, or a pet hobby of the owner. Because in fact, since many of those companies kept their operations small (keep it small, keep it all) many of them are doing very well, even though they are less than $10 million in sales. Instead, I’m talking about the single title company, doing between $25 million to $100 million in sales. They are the ones that seem to be struggling the most.

Here are the obvious issues:

  • They almost always have a physical store – but just one, which is enough to be a distraction from the core business of the catalog, because it is usually much larger than an “ordinary” store in that product category. This is because when it opened, usually next to the company’s headquarters, rent was cheap and the store just seem like such a good idea. But they have never been able to replicate the retail model.
  • They cannot buy in significant volume to get competitive gross margins, and if they do commit to a container load of products that don’t sell, they lack the ability to dispose of the overstocks as efficiently as bigger multi titles.
  •  They cannot leverage their most important asset – their customer list – across multiple offers.
  • Conversely, they must leverage a greater amount of overhead over a smaller base than their bigger multi-titled counterparts.
  • They usually feel compelled to have all the new bright shiny objects (hey, being omnichannel works, right?), so they invest their precious few discretionary dollars into funding a social media “initiative” or a “green” initiative, which gives them a warm feeling, but does nothings for sales. As a result, they are usually chronically short-staffed and undercapitalized.

The biggest problem I see for the single title is that they can only do “so much” because they lack a vast repertoire of tricks on how to do things differently. They lack the infusion of differing and new ideas that come with a growing company hiring new people. They become very parochial in their view of their catalog, their customers, and far too confident in their own management skills.

Thus, more and more, single title catalogs that lack both a growth strategy and survival strategy, are either succumbing completely by going out of business, or they are being acquired by the conglomerates. I mentioned earlier that I always thought the multi-title conglomerate were bad for the industry, but I’ve changed my thinking. One good thing about a multi-title conglomerate taking over a single title – they tend to get rid of a lot of management waste and internal culture that was flawed. That’s where we’ll pick up Part 2.

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by Bill LaPierre

VP – Business Intelligence and Analytics

Datamann – 800-451-4263 x235

blapierre@datamann.com

 

Holiday Catalog Observations 2014 – Part 2

November 9, 2014

Sales: Well, my dire prediction a month ago that ISIS or Ebola would cause the bottom to fall out of sales this holiday season has not happened. Plus, with the price of gas dropping below $3 in most places, you would normally expect strong sales. But I’m still hearing that most of you are experiencing […]

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This is How You Change Your Business

November 2, 2014

I know it gets annoying to hear consultants like me tell you to change your company to grow, without any specific advice on how to do it. I wish it was as simple as in the movie Young Frankenstein, where Gene Wilder picks up his grandfather’s book on how he created Frankstein labeled HOW I […]

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Staying True to Product

October 26, 2014

Several weeks ago, I wrote that many of the older catalogs headquartered in New England that were still in existence, have survived as long as they have because they have stayed true to their merchandise direction, while always keeping an eye on making sure they were staying “current” without trying to be “contemporary”. A reader […]

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The WOW Factor

October 19, 2014

When I critique a client’s catalog design, I don’t discuss with them color palettes, branding or eye flow. I talk about what drives response. We can all be subjective about what we do and don’t like creatively in a catalog, but it is tough to argue about what drives response. If the cataloger is eager […]

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You Are Communicating That You Can’t Compete

October 12, 2014

This has nothing to do with NEMOA the organization, but in the early 2000s, there was a four year stretch when just about every keynote speaker at a NEMOA conference was either fired shortly thereafter, or the company filed for bankruptcy. Yes, it was purely coincidental, but several of us joked at the time that […]

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Fall Catalog Observations 2014 – Part 1

October 5, 2014

As we start the first full week of October, those of you that rely heavily on the fourth quarter are starting to get anxious about where this fall/holiday season is headed. Let’s take a look at some of the early signs. Sales for most of you were soft in August and September. The range I’m […]

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Africa, Hillstrom and LaPierre

September 28, 2014

Who is looking out for your interests? Who can you really trust? I want to invite all the readers of this blog to a special event. Datamann is again sponsoring an all-day seminar for the Vermont / New Hampshire Marketing Group on The Evolving Future of Catalog and Ecommerce Companies on February 19, 2015 at […]

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No One Cares About …

September 21, 2014

“No one cares about your business as much as you do.” In last week’s blog, I recapped several pivotal comments that Pat Connolly from Williams Sonoma made in a NEMOA speech 20 years ago. Pat did not disappoint with his presentation this past week at NEMOA – he offered several simple business truths, which are […]

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