December 27, 2007

Looking Ahead To 2008

If you had told me two years ago that 1,020 folks would spend the day after Christmas reading an article I self-published about the catalog industry, I wouldn't have believed you.

That's how fast the craft known as cataloging is changing.

2008 will be a year that demands change in the multichannel cataloging and retail industry.


A Conversation Is Happening All Around Us. Are We Listening?

When I wrote about Catalog Choice, an eco-friendly organization encouraging consumers to reduce catalog mailings, leadership from Catalog Choice left comments for our community to read. The DMA and ACMA did not participate in the discussion.

In 2008, multichannel catalog and retail organizations will be forced to monitor what is being said about them, and might even begin participating in the discussion.

In 2007, when I wrote about multichannel catalog and retail organizations, I noticed a half-dozen or so visits from the brands I wrote about, within six hours of publishing an article. Some of you are monitoring what is being said. In 2008, some of you will actively participate in promoting your brand in a positive light. For catalogers, this will become an essential part of the marketing mix as eco-based organizations pressure us to change.


We Will Upgrade Our Information Infrastructure In 2008

Multichannel catalog and retail organizations spent most of the past decade installing an e-commerce infrastructure. In 2008, we will embark upon an overhaul of our information systems. No more mainframe-based reporting systems, or weekly updates of customer information. We will start the process of integrating clickstream, e-mail, call-center and retail information into one real-time customer database.

It will also become painfully obvious that we can no longer manage our brands on the basis of key codes. This realization will cause pain.

We'll also figure out that we truly know little about the long-term impact of our marketing decisions. We'll realize that we've been led astray by our hyper-dependence on matchback algorithms, and will begin to put the analytic infrastructure in place to understand the combined impact of traditional marketing, catalog marketing, e-mail, search and online marketing.

We will be baffled and confused by what we learn, because what we learn won't tie out with what we've been taught about "multichannel marketing".


We Will Realize That People > Systems/Software

In 2008, we will realize that systems and software give us the capability to do great things, but people are what really matter. Many will invest in systems and software to obtain a competitive advantage. Some will outsource customer intelligence to co-ops, list processing vendors, or inexpensive oversea analytics organizations. The best brands will pay a premium to have the brightest individuals work for them, either on-staff or via flexible contract arrangements.


We Will Realize We've Given Too Many Folks A Seat At The Executive Table

In 2008, catalogers will realize that we've given up control of our own destiny. A power struggle will begin to form in 2008. Catalogers may (should) form unusual alliances with competing catalog brands to "have a say" in our future.

Catalogers will realize that a host of silent partners are actually pointing our brands toward a future that we find increasingly difficult to understand and control.
  • The USPS.
  • Co-Ops And List Processors, Even More So If They Run Analytics Or Host Your Database.
  • The Paper Industry.
  • Your Printer.
  • Your Search Marketing Vendor.
  • Your E-Mail Marketing Delivery Vendor.
  • Google, A Brand That Ultimately Determines Your Online Reputation As Well As Your Online Sales Trajectory.
  • Vendors Who Supply Best Selling Merchandise Lines.
  • Big Box Retailers Who Mimic Your Innovative Products Within A Few Months At Lower Prices With Better Quality.
  • Third Party Eco-Friendly Organizations.
  • Bankers Who No Longer Offer Easy Access To Cash For What Used To Be Called The Middle Class.

We Will Re-Learn How To Market In Difficult Economic Times

In 2008, we will have to truly compete for the attention of the consumer. No longer will consumers be running from retailer to retailer, flush with home equity proceeds. Economic downturns provide fantastic opportunities for innovative brands willing to embrace change.


We Will Be Torn Between De-Centralization And Centralization

In 2008, decisions will need to be made quickly. Very quickly. We'll find we cannot make rapid decisions with centralized control, yet we cannot control our businesses with rampant, de-centralized activity. We'll battle this problem for several years.


We Will Put The Concept Of "Multichannel" To Rest

In 2008, we'll realize that a decade of pundit-speak about having to be "multichannel" didn't result in improved sales, EBIT, or customer retention. Instead, we'll learn that we're simply going through an epic transformation in the way that consumers interact with brands.

We'll learn that free next-day shipping, free returns, fair prices and spectacular customer service mean a lot more to consumers than a beautifully-integrated e-mail, paid search and catalog marketing program featuring the same product and creative styling across all channels.

And once we realize that customer service matters more than multichannel marketing, we'll be playing catch-up with brands that have a huge head start in this arena (i.e. Zappos, a single-channel brand that dominates online shoe sales).


We Will Fiercely Cling To Tradition

We'll descend upon Orlando in May for the Catalog Conference (or the ACCM, per re-branding efforts from earlier this decade), eager to see how "other folks are innovating", but longing to go back to a time when cataloging was a beautiful and noble craft not being disrupted by the internet. As always, we'll adapt to change, but not without a heartfelt longing for the past.


What Does 2008 Mean To You?

Share your thoughts on how 2008 will bring change to the multichannel retail and catalog industry. What are the trends you plan to follow? How do you think our industry will change? What role will you have in the evolution of our industry?

4 comments:

  1. Chuck Teller9:42 AM

    Kevin:

    In 2008, there will be a conversation between consumers and merchants about eco-friendly and privacy matters. I look forward to having you and as many members of the multi-channel merchant industry involved in the conversation. I know the consumers are ready to voice their opinion.

    I like the fact that you refer to Catalog Choice as an eco-friendly organization. There is a seat at the table for merchants who want to be eco-friendly. In 2008, we will be rolling out a series of Eco-Friendly Best Practices.

    My only request at this time is to not add the pre-fix "third party". Catalog Choice and our sponsor organizations (NWF, NRDC and Ecology Center) are not "third-parties". For example, the Ecology Center runs the curbside recycling program in the city of Berkeley. We are an integral component of the direct marketing lifecycle. We do the dirty work of driving around picking up those recycled catalogs.

    Happy New Year - looking forward to 2008.

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  3. Let me try this again!

    I should have listed all organizations as being "third party", not just the line that outlined organizations like yours.

    The USPS, co-ops, printers, paper industry are all third party, according to my definition. These are organizations that would be weakened without the catalog industry, yet directly impact the profit and loss of catalogers.

    Your organization can theoretically help ... the fear in my industry is that your organization will do harm, to the extent that it will cost people their jobs.

    Having closed down a catalog division, and having dealt with the sad human aspect of a decision of that nature, I can appreciate why catalog folks feel angst --- especially those who do good.

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  4. Hamilton Davison10:42 AM

    Kevin: Three cheers for highlighting some of the more important trends coming at the catalog community in 2008. Thanks also for putting the ACMA in your blog so my Google alert would let me know you posted something I should respond to. I concur that we must monitor what is being said about our brands and company, responding when we can. Without this, the conversation lacks balance and meaning. We must also monitor what is being said about our industry for the same reason.

    If one has been following popular print, net and broadcast media coverage concerning cataloging over the past three months, and assuming catalogs are an important part of one’s marketing overall mix, one must be deeply troubled by some popular notions that seem to be emerging: “cataloging is not eco-friendly” or “catalog companies are indifferent or do not honor the interests of customers.” Both of these assertions – wholly unopposed as far as I have been able to tell – are completely false. The catalog companies we work with at American Catalog Mailing Association are customer focused, corporately responsible and completely committed to environmental stewardship. ACMA catalogers I speak with regularly relate changes to their business processes, purchasing specifications, supplier compliance requirements, and marketing decisions made to specifically accede to customer preferences or global concerns. Unfortunately, as you point out in your December 26th entry, no one seems to be telling this side of the story, nor extolling the environmental positives of cataloging. Unfortunately, ACMA is not currently configured to address this industry need; it is up to our members and board to determine if this is a focus area for our new association. However, you do touch on some areas the ACMA is very active in.

    “The silent partners pointing [us] toward a future that we find increasingly difficult to understand and control” are external parties on whom catalogers depend and who increasingly control the economic environment underlying catalog success. A properly organized and funded trade association can make significant progress impacting some of these external influencers to a degree difficult for even the largest (>$1 billion) companies and virtually impossible for smaller companies. One of the more significant external influencers is the USPS. ACMA has been actively addressing the postal environment. Our work in this past eight months has convinced us that this industry can manage its postal affairs more effectively than in the past. With so many issues on the table that will control our future for decades, provided we continue our aggressive work, 2008 will be a much better year than the one now ending.

    ACMA is also at work to understand better the issues surrounding do not mail, consumer choice and the environmental impact of catalog mailing. We expect to take a public position on these issues in 2008 and to work with the catalog community and the broader public constituency to help navigate across these complex and related issues.

    As an industry we must come together to proactively manage our business environment. There is an enormous amount we can do together efficiently. ACMA is a perfect vehicle for this. While we are puny compared to the other established trade organizations covering this market space, unlike most others we are wholly focused on issues for those merchants who use catalogs as an important part of their business strategy. Yet with only 60 out of an estimated 20,000 catalogers actively supporting our work, we must continue our rapid growth. In 2008, I would challenge all such firms to take a close look at ACMA and to consider getting involved with us. We cannot continue this work without significant support from all catalog merchants.

    Thank you for your work to highlight some important issues. I look forward to continuing the conversation in the year to come!

    Posted by Hamilton Davison, Executive Director, American Catalog Mailers Association

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