Catalogs have long been an American tradition, filling mailboxes to the brim every Christmas, with pictures of perfect living rooms, the latest gadgets and the most comfortable shoes. However, due to the growth of ecommerce, increased postage rates and rising paper costs, many multi-channel retailers have been forced to decreased circulation and page counts while adapting their catalogs to be more than just a sales vehicle in the direct channel. Retailers now use their catalog as a brand communication tool utilizing it to connect with the consumer.
The technological and economical advantages of ecommerce have contributed to the decline in catalog titles and circulation over the past few years. Catalogs were initially born in response to geographical challenges retailers faced in offering their products to consumers across the country. However, the internet’s strengths, in many cases, are more adapted to the present day consumer’s desire for convenience, speed, and ease of use.
A primary cause for the reduction in catalog titles, circulation and page count is increasing postage. The postage increase in 2007, represented and increase on average of 20% to 40%.[i] A provisional price increase for 2011 has been proposed and if implemented would increase postage an additional 5.6%.[ii] In response to the combination of postage price increases and growth of ecommerce some retailers have decided to further reduce their investment in catalogs. Neiman Marcus, in response to the cost of printing and mailing catalogs, now only sends catalogs to their best and most profitable customers. Like many catalogers they also produce a digital version of their printed catalog which is available online and on the iPad to maintain contact with all customers, just at a lower cost per touch.[iii]
Many retailers are also slimming down their catalog page counts. The American Catalog Mailers Association reports that from 2007 to 2009 catalog mail volumes as a whole declined by 35 percent.[iv] A prominent multi-channel retailer, Frederick’s of Hollywood, is phasing out their standard-sized catalogs to focus on niche “persona books”. In fiscal 2010, Frederick’s mailed about 15.3 million catalogs but in 2011 only plans to mail about 13 million catalogs. In total, Frederick’s is reducing its catalog operating expenses by $2.1 million.[v]
Despite the many challenges, catalogs still represent a very influential and effective sales vehicle. The mail order industry generated sales of $138.78 billion in 2010, a 2.3% increase in revenue over 2009 and the industry’s first positive revenue gains since 2006[vi]. A study by the Direct Marketing Association in 2010 shows that direct mail catalogs generate on average slightly over a 7% return on investment. The same study reported that, on average, commercial email provides a 42% ROI and internet marketing excluding email creates a return of just under 20% ROI.[vii]
While other forms of direct marketing may report a higher return on investment, catalogs not only drive sales but represent a vehicle that can engage customer in a way that ecommerce sites and other online communications cannot. Catalogs remain an effective part of the marketing mix, especially with consumer segments that prefer printed communications or products that are enhanced through a more visually engaging format. Changing consumer purchasing patterns have driven retailers to shift their catalog offering from direct response to a tool that drives sales to other channels and enhances the brand. Catalogs no longer encourage customer to use mail in order forms, and many have taken the focus away from phone representatives. Delia’s, a girl’s teen clothing company, and Chia’sso, a modern furniture supplier, have embraced the use of catalog as a driver to web and retail channels by adopting marketing tactics from other industries or modifying traditional methods. This change in tactics is evident with both offering tear off coupons designed to drive traffic to retail locations (see image).
Beyond driving sales to other channels, catalogs are also effective at creating and building brand awareness and converting new customers into loyal customers. Catalogs are more successful than email or online communications at driving customer loyalty and conjuring the intended lifestyle feel a company wants to convey with their marketing communications. They also have a significantly longer shelf life and serve as a subtle purchase reminder. Catalogs represent a focused brand communications vehicle enabling a retailer to control the brand experience, which is often a challenge for online retailers.
As the catalog marketplace continues to become more competitive retailers are testing and innovating their catalog, offers, formats, prospect lists and customer database to increase their share of wallet and create tangible points of brand differentiation. Multi-Channel retailers are capitalizing on the tangibility catalogs offer and their ability to appeal to customer senses. Bliss is capitalizing on this capability with their holiday 2010 catalog featuring a scratch and sniff which helps develop the brand identity, promotes a specific aromatic product and develops the catalog beyond a simple visual engagement tool. Crutchfield, an electronic retailer, employed a 3-dimensional cover to engage recipients, develop brand identity and promote 3D televisions with their holiday 2010 catalog. Many retailers are also shifting their catalogs to look and act more like a magazine. With editorial features typical of consumer magazines intermixed with products, Dick’s Sporting Goods is a great example of this with their new hybrid mag-alog Game On. Game On features products, intermixed with sports related editorial and photography more typical of a consumer magazine. Catalog’s role has evolved and now serves double duty as a direct sales vehicle and as a marketing tool that drives sales to a retail locations and ecommerce sites. Consequently, retailers have adapted and maintained catalogs as a relevant tool in today’s market to fit their needs. Catalogs remain a critical driver of revenue that cannot be replaced by the online channel. Integrating marketing communications will create cross channel sales that will give multi-channel retailers a healthy and balanced revenue stream. Catalogers must continue to innovate to break through the marketing clutter, engage customers and motivate them to make a purchase.
[i] Kaplan, David. “Catalogs thinner but still carry weight.” Houston Chronicle 27 Nov. 2010 <http://www.chron.com/disp/story.mpl/business/7313135.html>.
[ii] Rich, Tim. “USPS Rate Change For 2011 – Postage Price Increase On the Way.” suite101.com.17 Aug. 2010. <http://www.suite101.com/content usps-rate-change-for-2011—postage-price-increase-on-the-way-a275080>.
[iii] Daniels, Chris. “Retailers testing out e-catalog versions.” Direct Marketing News. 1 Jan 2011. http://www.dmnews.com/retailers-testing-out-e-catalog-versions/ article/193140
[iv] IBID
[v] Brohan, Mark. “Frederick’s begins pulling the plug on full-size catalogs.” Internet Retailer. 3 Jan. 2011. <http://www.internetretailer.com/2011/01/03
[vi] “Mail Order In the US.” IBISWorld. N.p., 7 Oct. 2010. Web. 10 Jan. 2011. http://www.ibisworld.com/industry/default.aspx?indid=1931
[vii] “The High Costs of Catalog Retailing.” BrandWeek. 31 Mar. 2010. http://www.brandweek.com/bw/content_display/news-and-features/direct/e3id9db7bed8e9402cbea0b41c9c56a91a1
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