Linking The Past To The Future - Catalogs

When is the last time you said to yourself, "geez, I wish I could just link my cell phone to my home phone, so all my calls could come through my land line?".

The past decade has been all about technology. Technology is pulling us in one direction.

History, however, tries to pull us back to the past. There are so many folks who have a vested interest in protecting history. Jobs count on preserving history. In this case, Panasonic has a vested interest in protecting history. Panasonic must find a way to link a 1994-style phone and answering machine to a 2014 smart phone. So they devise a solution to route your smart phone through old-school technology.

We can look at an example like this land line phone, and easily understand that it is not likely to succeed, long-term. Our unbiased perspective allows us to see the future.

But when we look at catalogs, our perspective changes. Now we're biased, and this bias causes us to see things differently.

In catalog marketing, we do the same thing that Panasonic does with a land-line phone. The exact same thing.

I'm sure Panasonic sees that sales of their answering machines are on the decline, just like catalogers know that catalogs mailed are down 40% since 2007 (click here). Panasonic responds by linking the past to the future. Catalogers respond by linking catalogs to the future - calling it "omnichannel".

There are two major trends in catalog marketing:

• Trend #1 = The catalog business model is ending.
• Trend #2 = The catalog as an advertising vehicle within an omnichannel framework.

Too few people understand the distinction, causing a whole bunch of pointless static about how catalogs are either dead or vibrant.

Trend #1: The catalog business model is ending.

• In the catalog business model, paper came first. You assorted your catalog, then, you put the merchandise online when the catalog dropped. You integrated prices, promotions, and creative. You rented your own list out to others, you rented names from your closest competitors. You paid co-ops for an endless supply of just-below-average prospects. You spent 30% of your annual net sales on printing/paper/postage. Everything in the company was organized to support the catalog.
• This business model is ending.
• The productivity (getting worse), gross margins (discounts & promotions erode margin), and costs (USPS) dictate that circulation will shrink in perpetuity - it's already down 40% over the past seven years!
• Because catalogers focused on "core customers", the merchandise assortment did not evolve. Today, the merchandise offered in catalogs is preferred by "older" customers.
• Because the merchandise appeals to "older" customers, when co-ops execute their models, they find "older" customers who like merchandise preferred by "older" customers.
• As a result, catalogers continually acquire new customers who are "older".
• Because younger customers are not part of this loop, younger customers do not have a preference for catalogs, and will not have a preference for catalogs. Worse, when mailed a catalog, they do not respond, driving down catalog productivity.
• Everybody, and I mean EVERYBODY associated with catalogs (including the vendor community) knows this is happening. Nobody will talk about it, because the consequences are frightening.

Trend #2: The catalog as an advertising vehicle within an omnichannel framework.

• If you are a vendor, and your livelihood is based on the heritage of catalog marketing, and you know that the catalog business model is ending, then you are frightened.
• If you are frightened, and do not have a path to the future (see Panasonic above), you must connect the past to today in order to stay relevant.
• The way you connect the past to today is called "omnichannel".
• In retail, omnichannel theory suggests you align all stores around digital strategies, offering customers what they want, where they want it.
• In catalog, omnichannel theory suggests that catalogs (not the catalog business model, but the mailing of a catalog as a piece of advertising) are an integral part of a suite of advertising tools (catalog, email, search, affiliates, banners, retargeting, cart abandonment, mobile, Facebook, Twitter, Instagram, Pinterest, Vine, countless others) that, when evaluated as a sum total, cause customers to buy stuff.
• By promoting the theory that catalogs are part of this mix, vendors are betting that their customers (not real customers, but actual catalogers) will continue to put catalogs in the mail.
• By continuing to put catalogs in the mail, vendors assure their short-term viability, while searching for a path to the future (this is like Panasonic creating a land-line phone that connects to a mobile device, buying Panasonic time to iterate to the future).
• As a result, vendors and consultants and trade journalists, all dependent upon you (the cataloger) for their short-term financial success, find a way (omnichannel) to keep you mailing catalogs, so they can continue to stay in business.
• Omichannel is not real. It is an astroturfed concept used by vendors, consultants, and trade journalists, to keep you executing historical channels in an effort to keep vendors, consultants, and trade journalists financially viable.
• Customers using multiple channels to shop - that's real, and not fundamentally different than ten years ago, when customers used multiple channels to shop but we couldn't track it or measure it easily.

Almost everything you read about catalog marketing is a theory that enables the publisher of content to do what Panasonic is doing above - trying to keep you with one foot in the past, so that the vendor / consultant / trade journalist can stay in business today.

All of the noise is around issue #2.

All of our time should be spent focusing on issue #1.

Ask a former employee of Mokrynski or Millard about issue #1.

We will continue to circulate less and less - fewer contacts, fewer pages per contact. We will engineer the catalog down to a postcard over the next decade - economics and customer productivity dictate this to be the case. That will be the 30,000 foot level trend. At the 30 foot level, there will always be a subset of customers who love catalogs - this subset will cause vendors / consultants / trade journalists to use this subset as a case to market to the whole.

Issue #1 should cause us to ask ourselves a series of questions.

• As productivity declines and costs increase, circulation will decrease. How will we maintain sales increases in an environment when the primary marketing vehicle is slowly being eliminated?
• Is the most important element of our brand the merchandise we sell, the service we offer, the price the merchandise is sold at, or the catalog? If the answer is "the catalog", what does it mean to our "brand" when the catalog is de-emphasized over time?
• Who are the business partners who are willing to give us an unbiased and fair evaluation of our business, even if it means that the business partner eventually loses money because of it?
• How do we staff our business if as many as 25% or 30% of our employees are dedicated to producing paper-based content that will not exist in the future at the same rate as today?
• How do we tell our "customer of the future" that we have something new to offer?
• When the current customer (age 55 - 64) retires and stops buying from our business, can we count on a younger customer (currently age 45 - 54) to buy what we sell? In other words, will younger customers move into our product assortment, or are we following a customer cohort into retirement?
• In the future, proprietary merchandise, service, price, and story are going to be critically important, independent of a catalog. How are we going to integrate these key concepts independent of a catalog?

Most assuredly, the answer to our questions is to not replicate what Panasonic did with their land-based phone.

Most likely, vendors / consultants / trade journalists will encourage us to do what Panasonic did.