January 03, 2016

The Four Paths Catalogers Will Take

Here's my Catalog Thesis for 2016, as it stands:
  • Housefile names are somewhat protected by increasing organic percentages, but regardless, catalog life issues mean catalog productivity issues.
  • Acquisition name performance is not great, and is being impacted by a shortened "life of a catalog".
  • Math dictates that we will have to mail smaller catalogs in response.
  • Smaller catalogs generate less demand.
  • We will have to mail smaller catalogs more frequently.
  • Should the life of a catalog continue to erode, smaller catalogs will struggle to perform well, requiring us to personalize the merchandise assortment to each individual customer, based on customer history (both our history and recent co-op history).
  • In response to these trends, catalogers are going to take one of four paths.
Let's talk about the four paths.

Path #1 = Crossing The Bridge:  It takes courage to go down this path, and it usually (but not always) takes a customer base < 50 years old to cross the bridge. What bridge, you ask? The bridge to being a full-fledged e-commerce brand. Analyze any cataloger with a customer base < age 50, and you see that the brand is in the process of crossing the bridge. When online marketing demand makes up 50% of total volume, the cataloger has "crossed the bridge". For these businesses, online marketing is the primary demand generation vehicle, and catalogs are simply support vehicles. 

Companies that have "crossed the bridge" have a fully developed customer acquisition program that is independent of the co-ops. Think Duluth Trading Company and their customer acquisition strategy ... they are in the process of crossing the bridge. Oh, and their sales have doubled in recent years. My customer acquisition "work in progress presentation" (click here) largely deals with companies headed down Path #1, companies that are crossing the bridge.

Most retailers with a catalog division have crossed the bridge.

Most catalogers will not like Path #1, and will avoid Path #1. We know this to be true, because we have more than fifteen years of evidence demonstrating this to be true.


Path #2 = Status Quo:  Imagine a catalog brand with a customer base age 50-70. This catalog brand can see the future, but does not agree with my thesis. At all. They do not want to mail a veritable plethora of 36 page catalogs tailored to specific customers. They do not want to personalize the home page, landing pages, email campaigns, or their in-app experience. They don't want an in-app experience, period!! These catalogers do not want to diversify their customer acquisition programs (those ideas 'don't work'). These catalogers love working with the co-ops, they love practicing their craft.

There will be winners in Path #2. Some will experience merchandising epiphanies. Merchandise Productivity gains will be essential for those who follow Path #2.  You can win by going down Path #2. As time progresses, the odds bend against winning in Path #2.


Path #3 = Catalog Optimization:  A subset of catalogers love cataloging, and will do anything to keep mailing catalogs. These companies are catalog leaders. No, they aren't leaders in a Silicon Valley sense. But make no mistake, they are leaders. These catalogers are inventive within their craft. They will engineer catalogs for ruthless efficiency ... lowering page counts ... increasing contact frequency ... and personalizing the merchandise assortment to each individual customer. 

Vendors will love brands who go down this path, and that's a good thing. The entire catalog ecosystem ... catalogers and vendors ... will generate a ton of profit by optimizing the living daylights out what is left of catalog marketing. Websites will be optimized and personalized. Email marketing will be optimized and personalized. Catalogs will offer a fully personalized print-centric merchandise assortment, in an effort to boost productivity. For these brands, another 10-15 years of profit will easily be harvested before the bridge must be crossed.


Path #4 = Catalog Holding Companies:  Oh, this is a very interesting path. Very interesting. At some point, the battle becomes tedious. "Can't somebody else do it?" There will be many, many catalogers who do not want to cross the bridge. They will not tolerate the status quo. They will not pursue the catalog optimization route. They will simply say "enough".

These catalogers will sell to what I call "Catalog Holding Companies".

Potpourri Group is an example of a Catalog Holding Company.

There will probably be +/- a dozen Catalog Holding Companies (CHCs, for short). Their goal is simple. They will strive to achieve what I call the "Magic 8,000,000 Level". What is the "Magic 8,000,000 Level?" Simply put, CHCs will work hard to possess the names and addresses of every one of the 8,000,000 customers who are tried-and-true loyal catalog shoppers. By having the name/address of every single tried-and-true loyal catalog shopper, the CHC bypasses the toll collection booth of the co-ops. The CHC simply cross-shops the 8,000,000 customers across the portfolio of catalog brands owned by the Catalog Holding Company, thereby avoiding the customer acquisition challenge we're all facing.

The CHC can employ bits and pieces of Path #1 and Path #3, as appropriate. But most important, the CHC will look to squeeze as much profit out of each catalog brand as possible. When a catalog brand is no longer profitable, the CHC throws it away ... choosing instead to search for the next catalog brand that meaningfully contributes to the "Magic 8,000,000 Level" while generating profit.

The CHC won't care about the individual catalog brand, much in the same way that you don't care much about the individual stocks in your 401k. Do you know what stocks are in your 401k? Similarly, the CHC will use catalog brands to generate centralized efficiencies, skimming profit off the top until the catalog brand can no longer generate profit anymore.


I see the four paths in all of my work. Every cataloger can be easily placed into Path #1, Path #2, Path #3, and Path #4. I bet you can determine which path the catalog brand you work for is on.


The thesis is complete.
  • Customers (especially younger customers) are throwing out catalogs faster than ever before, reducing the "life of a catalog", and thereby reducing catalog productivity.
  • Housefile names are somewhat protected by increasing organic percentages, but are being impacted nonetheless by a shortened "life of a catalog".
  • Acquisition name performance is not great, and is being significantly impacted by a shortened "life of a catalog".
  • Math dictates that we will have to mail smaller catalogs in response.
  • Smaller catalogs generate less demand.
  • We will have to mail smaller catalogs more frequently.
  • Should the life of a catalog continue to erode, smaller catalogs will struggle to perform well, requiring us to personalize the merchandise assortment to each individual customer, based on customer history (both our history and recent co-op history).
  • Given these trends, catalogers will pursue one of four paths.
  • Path #1 = Crossing The Bridge to E-Commerce (requiring a comprehensive and low-cost customer acquisition program).
  • Path #2 = Status Quo (requiring co-op productivity and high merchandise productivity).
  • Path #3 = Catalog Optimization (requiring merchandise personalization and low page counts).
  • Path #4 = Catalog Holding Companies.