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.
Thoughts?

2 comments:

  1. Hi Kevin, I agree, I think you and Lois are both right. Time is the missing variable.
    When I was in high school and college the idea that anything I posted online would remain there FOREVER would have severely limited my online social interaction. I would have chosen SnapChat. Once I graduated and got a job I simply wasn't capable of earning a living, doing housework, having a life, and keeping up with things that disappeared in an hour. At that point I would have moved from SnapChat to Facebook. (Forever would have started to look a lot better once I stopped doing things I needed to delete in an hour.) By the time I was in my thirties even Facebook would have been a significant time commitment. Pinterest would have probably worked best for me. Pinning as I went along and then being able to go back and be reminded of things that caught my eye would have felt right. Now that I'm in my 50's Facebook works for me (so does Pinterest). I can keep up with old friends at my leisure. The largest demographics for Facebook is boomers because it works for the time we are willing to commit to it. Why is SnapChat taking over with younger demographics? They do stupid things that need to be deleted in an hour and they have time to check what's been posted every hour. Why is Facebook not going away? Once those kids get jobs they will need more than an hour to keep up. (Of course SnapChat for geezers, with an extended display time, may be in the offing.)
    Today's youth want to be online and in stores and everything is fast and furious. They don't want to sit in the kitchen with a glass of wine and shop while dinner cooks. That will change.
    What isn't going to change is that people love to shop. How merchants interact with people who want to shop will change. It will change because of technology and it will change because of lifestyle and it will change because of age.
    TV didn't kill radio, there are more radio stations than ever, even satellite radio. The web isn't going to kill catalogs. You can have a direct to consumer business without a catalog. You can't be as big as Lands' End or L.L. Bean without having a catalog.
    Currently, catalogs are the only way for merchants to showcase their goods without permission. They serve a unique and important purpose in any marketing arsenal. We need to do them better. We need to find ways to keep them fresh and interesting. We need to reach out to all the other channels and integrate them so that customers have a great shopping experience. Catalogs are going to change, so is the web, so is social, so are we.

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  2. Hi Sarah, if you like, I will publish your response as a standalone blog post, similar to what I did with Don Libey's response.

    Amazon, of course, does not have a catalog, and sells 20 times as much merchandise as L.L. Bean + Lands' End combined - no stores. Amazon, Retailers without Catalogs, and Demographics are challenges that catalogers do not have easy answers for.

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