August 25, 2013

Dear Catalog CEOs: 2020

Dear Catalog CEOs:

Hi! How was your summer? It's really winding down ... a week to go in our traditional summer.

While I was away, did you spend any time talking about the future? No, not Cyber Monday 2013, I'm talking about the real future, like the year 2020?

We sure do talk about the past. Recently, somebody dropped the "Lands' End cut back on catalogs in 1999 and it hurt their business, so we're not going to do that" line on me. I keep hearing that one from catalog experts.

A quote from 1999.

When that's what we talk about, we don't want to face the future.

For too many of us, the average age of our customer increased by about five years since 2006, and is now +/- 60 years old.


We can thank the co-ops for this, we can thank pundits for this, and we can thank ourselves for this.
  • Ourselves: On the marketing side of the table, we completely ignored merchandise productivity. We measured what sold best - we did not think about what this meant. What sold best was what appealed to a +/- 60 year old customer, causing us to offer even more merchandise for these customers, causing us to attract even more +/- 60 year old customers, creating and endless cycle of age increase.
  • Co-Ops: We paid +/- $0.06 a pop for millions of names, and couldn't have cared less who these people were, as long as they responded. Co-ops obliged, giving us buyers who were ... wait for it ... wait for it ... +/- 60 years old!  Woo-hoo!
  • Pundits: They told us we had to be "multi-channel". We listened. We listened because it allowed us to keep mailing catalogs. The alternative was to truly compete with Amazon, and who the heck wants to do that? In order to keep mailing catalogs, we had to goose response. How did we do that? By working with co-ops, who gave us +/- 60 year old customers who liked merchandise that appealed to +/- 60 year olds, which caused our customer file to separate from the mainstream population of the United States.
We are where we are, now. I suppose there's no need to look back anymore.

So let's look ahead to the year 2020.

We'll need to make a few assumptions, won't we?
  • Unless we separate from the co-ops, our customer file will age another five years, and will be +/- 65 years old in 2020.
  • Co-ops will continue to separate from us - some of 'em are actively working with Facebook and their ilk to match offline purchases to online sentiments - we will fund the research that allows them to separate from us and have a future. Think about that one for a moment - they run us into the ground, and use our funding to protect their future. Interesting, huh?
  • Big Data, a complete lack of privacy, and the sensing of our every offline move (mobile devices track every offline bread crumb) create a real-time marketing world that catalogs have no place in whatsoever. Why send a catalog when you can respond in real time via machine learning / neural networks? We'll either create data, or we'll buy data. Catalogers have a long history of buying data. Those who buy data will struggle to generate 10% pre-tax profit levels. Hint - Amazon creates data.
  • What happens when the average person/customer turns 65 years old? Retirement?
  • If our merchandising strategy appeals to a 65 year old, what products and services do you think we'll be forced to offer to keep response rates high?
  • By 2020, e-commerce as we know it will not exist. Customers 18-29 will respond to businesses that barely exist today, but will be mobile/social/virtual and therefore are competing on a level we cannot even imagine today. Customers age 30-44 (today's Jasmine) will have settled on their preferred brands. Will catalogers be a preferred brand? Unlikely. So the cataloger that struggles with Jennifer (who will be age 45-58) today will need to have Jennifer as a customer in 2020 to have a chance to succeed. Jennifer, the customer who embraced Amazon, will need to switch from whatever the Amazon-like e-commerce experience will evolve to (oh, it will be different) to a catalog-centric business model. What are the odds of that happening?
  • Assuming that the core customer continues to age, it's going to be a splendid time for the private equity folks, don't you think?
Now, we can wait to see how the world evolves between now and 2020. Heck, it's possible in late 2020 that Hillary Clinton will have earned a second term or Rand Paul will have obliterated government as we know it - either possibility causes one to stop and think.

Or we can do something between now and 2020 to create our own future.

Show of hands ... how many of you have a process in place to plan for Catalogs 2020?

How about taking a moment to document your thoughts? What does a catalog brand look like in 2020? And what are we all willing to do to shape that future before the co-ops shape it for us? Discuss in the comments section, or send me an e-mail message (