You Reacted!

Talk about catalog marketing dying and you'll get feedback, pro and con.

Talk about apparel dying? Overwhelmingly positive feedback, and plenty of it! As much as I've received from a post in a decade.

One of our readers offered an interesting thesis ... "There is a proliferation of $5 million to $10 million apparel brands online ... There is no one place to see them like ... Amazon".

Let's test this thesis. Send me an email (kevinh@minethatdata.com), listing a small apparel brand you shop from. You are also required to tell me what the marketing hook is that they use to give you a reason to purchase from them. If I get enough responses, I'll share your perspectives.

So, please, overwhelm my mailbox with the small apparel brands you are buying from and the "hook" they use to cause you to avoid luxury apparel or commodity apparel. Go!

Apparel (Not All of It) is Dying

Many of my clients sell apparel ... often Women's Apparel.

And many of you are telling me that Apparel is dying.

Some of you don't say it specifically ... you tell me things like "Our sporting goods business is solid but apparel just keeps losing ground". There is some synergy between apparel losing ground and catalog marketing now in a free fall ... both interact with each other in a negative feedback loop.

A decade ago I consulted with a business that ended selling casual apparel (which was a reasonable percentage of the business), favoring outdoor apparel instead. Lots of internal strife ... "this is the end of the brand".

• Narrator:  "It was not the end of the brand."

Sure, the brand got smaller, but then the brand stood for something, and moved forward. Their marketing tactics changed. Their creative treatment of products and personas completely changed. They were free to be "who they wanted to be" because they didn't have to constantly cater to a casual apparel customer that was ... well ... different.

As we ease into 2025, we're at an inflection point if you are an apparel brand. You are being squeezed into oblivion.

• Amazon / Target / Walmart:  They commoditized apparel. Why should I pay $79 for something from Under Armour or Nike when I can get something that is 85% as good from Amazon for $19 and if it fails I can get two more and still have $20 in my pocket?
• Fashion:  Meanwhile, some brands think they can get you to spend $149 on a dress. They can. A "comparable" item might cost $25 on Amazon ... it's not comparable, but it is comparable enough that most traffic heads to $25 while a small fraction spend $149. But it is the "right" traffic for that brand. They are competing on a very different level, and they have to pay for that, don't they? But they made a choice.

So, if you are Lands' End and you have a comparable dress for $89 at 40% off for $54, where do you fit? Why should the customer pay $54 when the customer can pay $25 and save money? Why should the customer pay $54 when the customer can pay $149 and get the ooohs and aaahs from the public? Financial benefits on one end. Social/Emotional benefits on the other end. What does $54 buy you?

One of my favorite books is The Demography of Corporations and Industries. One of the chapters deals with beer. There used to be hundreds/thousands of breweries ... which all were whittled down to a handful of "macro-breweries" by the 1990s. Bud or Miller. Enjoy! If you sold a middling beer at a middling price? Good luck, you were doomed. Only a handful of breweries existed by the mid-1990s.

What happened next? Micro-breweries. Walk down the beer aisle at Safeway in 2024 and you'll see a small area of macro-brews and an extensive array of micro-brews, all generally more expensive than the macro-brews that wiped out the beer industry thirty years ago. Who would have thought that "Summer Shandy" would command a higher price and that people would want beer that tasted like (checks notes) a lemon?

• You have luxury beers.
• You have quirky beers ... the "Summer Shandy's" of the world.
• You have commoditized beers.

When apparel reinvents itself over the next decade, it will likely take the "Summer Shandy" path ... it will be apparel ... plus something ... like beer plus lemon, for instance. Might be quirky, might be different. 

I can't tell you what that "plus something" is ... that's your job, that's what you get paid to do. You don't get paid to send money to Facebook in exchange for customers, a bot can do that.

Apparel isn't the only thing that is dying. Gifts are dying. Home products are dying. Electronics already died years ago (commoditized to Best Buy and Costco and Amazon). I speak often about headphones ... headphones are being re-invented after the market was decimated by Apple and Beats and Noise Cancelling offerings from Bose / Sony / Sennheiser. Go buy a Zero:2 iem for $25 and tell me why you'd buy a Beats headphone for $200 - $300 ever again?

It's your job to find the "plus something" that causes an item to be appealing when compared to "monopoly brands" like Apple, Target, Walmart, Amazon, Best Buy etc. I know, you don't want to hear that, some of you will email me and tell me I'm wrong. That's ok. But you can't fight progress, and if you don't figure it out, somebody else will, at your expense.

Built-In Newness

Some of you keep telling me that "apparel is dying".

It's certainly changing. It's way too easy for me to buy some knockoff brand on Amazon for $19 and have it shipped to me in eighteen hours when I need a pickleball shirt. More on the commoditization of product in an upcoming post.

If you are a member of a wine club, you get to see the myriad benefits of Built-In Newness. Say you belonged to Reininger Winery (click here). They have a subscription service (four shipments per year, twelve bottles per shipment though you can do less/more).

Each year they introduce a new version of Mr. Owl's Red (click here to learn more). There's a new reason to buy a comparable version of a product purchased previously. They have virtual tastings and they leverage social media and email marketing, they text you that your next shipment is coming and you can change quantities. They CALL you if you are a good customer. Yeah, a dedicated sales rep ... just like a B2B brand ... except they aren't a B2B brand. You'll tell me you couldn't "scale" that. You could as part of your loyalty program.

In other words, they build excitement through the "Built-In Newness" of their products.

Now, I get it, you are bored silly with what you sell ... I can tell because in email marketing you literally do not talk about what you sell. Who cares about your Cyber Monday Preview Sale when you print 60% off in a 72 point font while having an 8 point font hyperlink to your "new arrivals"?

You could have an "annual version" of a product ... with modifications from the prior year. Instead of working hard to link sku numbers behind the scenes to maintain "merchandise integrity", have different sku numbers with items that actually have differences year-over-year, and then market the living daylights out of the improvements you made ... just like a winery does when they brag about how the "cold night" impacted grapes.

Use Built-In Newness to your advantage.

Q&A: Reactivation

Here's a short video where I discuss Reactivating Customers. Enjoy!  

https://youtu.be/SG67ge7k1F4

Price / Customer Relationship

There's a reason marketers lust for discounts/promotions.

• More customers purchase when prices are lower.

For many of you, your cost of goods soared in the last three years. You had to make a choice ... do you pass the costs along to your customer, or do you eat the costs?

Almost all of you chose to pass the costs along to the customer.

And the customer responded by saying, "I have a budget".

It's common to see the following.

• Brand increases prices by 20%.
• New/Reactivated customers decrease by 10%.
• Brand thinks the math works for awhile.
• Not enough new/reactivated customers are acquired to fuel future growth.
• Brand observes sales declines in years two/three/four.
• Brand asks "what is wrong with our business?"

There's a reason companies like Macy's eventually gamified purchases to the point where merchandise has no relevance and the brand stands for nothing. At some point in the past, Macy's learned that lower prices = more customers. They got the customers, but lost their soul.

It's a horribly difficult job to not become Macy's, and to not increase prices too much. Regardless, we're paid to balance this relationship.

1%

If you are having a hard time acquiring customers (and many of you are), you are looking at all of your lapsed buyers and you're saying to yourself ... "let's convert THOSE buyers".

Which always leads to the following thought on my end ... "you've had 25 years of e-commerce at your disposal to accomplish that task, so why haven't you already done that?"

The reason you haven't accomplished the task is that it can be really, really hard to accomplish the task. A lapsed customer does not want to be reactivated ... if they wanted to be reactivated, they'd have purchased from you.

The "Life Table" is a methodology tailor-made for understanding "if" a customer can be reactivated. I've been talking about this methodology forever ... this post is from January 2008 comes to mind. I've found that the methodology illustrates a fundamental truth about reactivation.

• If a lapsed customer has a 1% (or better) chance of purchasing in the next month, the lapsed customer "could" be reactivated and therefore deserves marketing attention.

Pretend you have a $100 AOV and 40% of sales flow-through to profit.

• 0.01 * 100 * 0.40 = $0.40 of profit can be generated by this customer.

This means you can attempt to spend money marketing to this customer ... even if you lose some money (say a dime per customer) you can come out ahead on a lifetime value standpoint.

Once the customer dips below a 1% chance of buying in the next month, it's horribly hard to encourage the customer to buy again. That's where essentially free (Social, YouTube) and nearly free (email) efforts take over. 

Above 1% on a monthly basis is where you can think about spending money.

Score every single customer in your database for the annual probability of purchasing again ... a 1%+ monthly rate roughly translates to a 12% - 15%+ annual rate:

• Twelve-Month Buyer 75%+ = Elite.
• Twelve-Month Buyer 60% - 74% = Loyal.
• Twelve-Month Buyer 40% - 59% = Quality.
• Twelve-Month Buyer 20% - 49% = Average.
• Twelve-Month Buyer 1% - 19% = Struggling.
• Lapsed Buyer 15%+ = Lapsed Spend Money.
• Lapsed Buyer 5% - 14% = Lapsed Experiment.
• Lapsed Buyer 0% - 4% = Lapsed Save Money.

Contact me right now for your own, customized scoring process (kevinh@minethatdata.com).

Old School

From 1996 - 2006 a great transition happened.

As e-commerce took hold, customers shifted behavior. Behavior shifted in two ways.

1. Customers who used to call the contact center to place an order with a sales associate instead ordered online. If you ran a contact center back in the day, these were depressing times.
2. Different customers purchased ... customers who didn't focus on old-school channels bought online. They behaved differently, as well.

The latter point was always a fascinating one.

In the early days of e-commerce at Eddie Bauer, we performed demographic studies of who was buying online ... way back then the core customer had shifted from an outdoor enthusiast to a women's apparel buyer (that fact alone transformed the brand in unrecognizable ways) ... but the customer buying online skewed to men, maybe toward technology enthusiasts. They bought from a different portion of our assortment. They didn't interact with our catalog. And most importantly ...

• Their long-term value appeared to be significantly less than the core customer buying from traditional channels.

This pattern, this "old school" pattern of new channels yielding customers with lower long-term value than the core brand repeats over and over again.

• 1994:  New customers purchasing from specialty catalogs (i.e. a Home catalog within an Apparel brand) were worth less than new customers from the core brand.
• 1996 - 2006:  New customers purchasing via e-commerce were worth less than new customers acquired via catalog or stores.
• 2006 - 2011:  New customers acquired via search were worth less than new customers acquired via email or direct load.
• 2011 - 2016:  New customers acquired via social were worth less than new customers acquired via search.

Here we are, late in 2024, and the tradition continues ... it's appearing via new merchandise. When you offer new products, customers in different channels embrace new products/merchandise, with the change in assortment often delivering customers who are less valuable than the core customer buying from the core assortment. On the surface, this analysis suggests to "stick to the basics" ... keep doing what you've always done, keep selling what you've always sold.

And yet ... history tells us the opposite ... that in the short-term, anything new you try is not likely to work, and if it appears to work in the short-term it might not work in the long-term ... and then whatever you do becomes "normal".

Always be willing to be patient with anything "new".