February 02, 2014

Monday Mailbag

Email me your questions (kevinh@minethatdata.com).

We have one question this week - it comes from Alan:  "What is going on with catalogs, Kevin? The information is all over the board. Lois Brayfield says catalogs work (click here). You have a very different point of view. Who is right?"

  • Alan, in 2014, everybody is right. Everybody. Lois is most certainly right. So am I.
  • On the one hand, if you are aligned with an organization like "Catalog University" (click here), you have no choice but to support a thesis that advocates a healthy catalog industry. Be honest - how could the good folks who support that organization do anything but recommend that catalog marketing is alive and well? And if you ask the folks at Catalog University, they'll produce dozens of case studies of success - and they are right. They are right.
  • On the other hand, you have two facts that cannot be denied. First, the mailing industry has lost 1,000,000 jobs in seven years. This cannot be the fault of the economy - e-commerce grew 10% per year (or more) in each year of that time frame. The second fact is that the raw number of catalogs mailed is down 40% from seven years ago. 40%! The decision to cut that much circulation out of the mail stream was not done carelessly, it was done because all that paper was highly unprofitable.
Take a Chasing Fireflies - born nine years ago, sold to HSN for tens of millions of dollars. That business was built by catalogs, plain and simple. Catalogs work.

I consult with numerous catalog businesses that cater to Judy (61 year old customer). Many of these businesses are healthy. Catalogs work, when targeted to Judy.

And yet, the 30,000 foot trend is undeniable, and cannot be avoided. At a 30,000 foot level, we all know where catalog marketing will eventually land.

For whatever the reason, we are unable to hold two inconsistent factors in our head at the same time? Why is that? In 2014, there are businesses that use catalogs in a highly successful manner. And in 2014, we can see that customers age 45 or younger are never going to embrace catalogs - why would they, when they rent every piece of information ever created, on a mobile device, for $80 a month? I don't need a catalog when I can visit Forever 21 on my phone at any time, at any place.

In 2014, catalogs are highly successful marketing tools for customers age 55+. And in 2014, it is obvious that the long-term future of catalogs couldn't be bleaker.

We can hold two opposite thoughts in our head at the same time. This isn't an either/or proposition.

We should also consider the three problems that are creating great pain in catalog marketing.

  1. Amazon.
  2. Retail Discounting.
  3. Demographics.