July 16, 2017

Rolling 'em Up

We're in the process of rolling up weaker companies, aren't we (click here)?

This book is from 20 years ago, but it is one of my ten favorite books of all time (click here). The authors demonstrate how an industry expands (many new companies), then is rolled-up (big companies buy weaker companies), then innovation happens once the industry is too concentrated.

The traditional catalog ecosytem was rolled-up in two stages ... 10-15 years ago the co-ops rolled-up the data ... today a half-dozen companies (+/-) are rolling up brands. This seems to be the way the world works now ... in e-commerce Google+Facebook rolled-up the data, and then retail brands are rolling-up e-commerce brands in response to Amazon owning e-commerce.

There are three big trends surrounding businesses that are being "rolled-up".
  1. Access to New Customers.
  2. Reduced Fixed and Variable Expenses.
  3. Access to Merchandising Trends.
Catalogers are being starved of new customers - no two ways about it. If a cataloger is part of a "brand portfolio", there are a ton of customers that can be "accessed" (but not necessarily converted).

The standalone cataloger has to have a response when competition is being "rolled up".
  • Low-Cost / No-Cost customer acquisition programs to defeat access to sister brand lists.
  • Greatly reduced catalog marketing expense to free up resources to be invested elsewhere.
  • A strong New Merchandise program designed to protect the future health of the business.
The three strategies above are not strategies that a ton of catalogers are focusing on ... which does not bode well for standalone catalogers going forward.

We know where we need to expend energies. Let's go do that!