December 09, 2012

Dear Catalog CEOs: Looking Ahead

Dear Catalog CEOs:

Who do you look to, when trying to conceive what the future might look like?

We have research organizations, folks who tell us that "77% of website visits will be on mobile devices in 2016".  Might be true.  Anybody can conceive a future where more people are using mobile devices.

Few people seem to be able to articulate what that metric means for a business, like, say, a catalog business.

My favorite example of this takes us back to January 2000, at Eddie Bauer.  I created a simulation tool that forecasted the sales trajectory at Eddie Bauer between 2000 and 2005.  I had three key points in the presentation.
  1. Online sales would surpass call center sales early in 2003.
  2. When online sales became more than 50% of the direct channel total, both customers and employees would perceive the online experience differently, changing expectations both within the company and outside the company, causing all sorts of in-house employee arguments.
  3. Call center sales would skew to older customers who liked the catalog, causing a disconnect in marketing strategy (i.e. catalog productivity suffers, the products that still work are preferred by older customers, thereby further alienating younger customers, thereby driving catalog productivity even lower).
I presented the findings to Eddie Bauer Management and Spiegel Management (at the time, Spiegel owned Eddie Bauer).  My comments elicited one response.
  • Laughter!  Lots, and lots, of laughter.
They found my imagination curiously humorous:
  • "Online sales won't surpass e-commerce sales for a decade."
  • "Customers love catalogs, they find the e-commerce experience on a 56k modem to be a clunky and untrustworthy."
  • "Catalogs tell better stories than websites tell."
  • "Are you really expecting email to matter?  Email is spam."
  • "Retail customers cannot carry a website into a store, but they sure can carry a catalog into a store."
  • "Online customers are disproportionately male, but our sales are disproportionately female, so your logic doesn't make any sense."
  • "Catalogs are the driver in a multi-channel experience, so there will not be a disconnect in the age of customers across channels."
  • "Your forecasts have a high margin of error, so we shouldn't trust them, right?"
  • "What if we listen to you and you are wrong?  Then what?"
  • "What could possibly make up the sales lost if catalogs are reduced?  Are you suggesting customers will voluntarily click on a bookmark and visit a website without being prompted by marketing?  Ha!"
  • "Look at Amazon.  They're an online brand that is about to go out of business.  They don't have a catalog to drive customers to their website, in fact, outside of low prices, they don't have any way to drive traffic to their website.  Researchers say they only have enough cash to make it to the end of 2001.  They're finished, multi-channel bricks 'n clicks strategies are the future."
Hard to argue with the logic, back in January 2000.

Hard to look at those comments in 2012 without wanting to yell "WAKE UP" at those folks back in 2000.

Which is why I asked you what information/advice you pay attention to as you look ahead? We actively shape what 2016 will look like, based on our responses to business challenges in 2012.

Do you have tools that allow you to see what 2016, 2017, or 2020 will look like?

Does your Executive Team have an active imagination?  Do you allow them to fertilize their imagination without being attacked by the kind of small thinking outlined in the quotes listed above?

Do you run various simulations to aid your ability to imagine the future?

Thoughts?

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