Demographers will tell you that the population is aging, even as the number of children is slowly increasing, and that for the first time Hispanics are the second-largest racial/ethnic group in the U.S.
Yet for the most part, catalogers haven’t noticed thse broad demographic changes among their customer base. When Catalog Age asked more than a dozen marketers, who have been with their companies an average of 16 years, how their buyers have changed, demographics rarely entered into the discussion.
Nearly all of the catalogers, however, did say that customers have become more demanding over the years. As several noted, the industry is as much to blame for this development as anything else: By continually improving fulfillment and turnaround times, catalogers trained buyers to expect near-instant gratification.
CHRIS MCCORMICK has been with Freeport, ME-based L.L. Bean for 18 years. He has been president/CEO of the $1.14 billion outdoor gear and apparel cataloger since May 2001.
Q. How has the L.L. Bean customer changed during the time you’ve been with the company?
A. Because customer retention is so strong at L.L. Bean, I think we enjoy a slightly older and perhaps even more affluent customer base than most. The trick is how to bring onboard new customers who will grow into the same demographic.
Q. Have customers’ expectations changed?
A. One of the greatest challenges we face is convincing prospective customers that L.L. Bean offers one of the best value propositions around. We are not a company that aggressively uses price points and promotions to get the customer’s attention. Admittedly, this means that it may take some time before a prospective “core customer” can appreciate the value of the L.L. Bean label. For example, it could take a number of years before someone who received an L.L. Bean shirt as a gift realizes that his Bean shirt has outlasted all the other shirts in their closet and now it’s his favorite.
Q. How has your company changed to accommodate the customer?
A. I’ll start with what hasn’t changed, and that’s the company founder’s creed: Sell good merchandise at a reasonable profit, treat customers like human beings, and they will always come back for more. In the past, we’ve been criticized for being too predictable, but I hold predictability as a virtue. When it comes to handing over your hard-earned money for product, the last thing consumers want is unpredictability.
How we interface with the customer, however, is where things have shifted. Our decision to become a “multichannel” retailer stands as perhaps the most obvious example. In the past, you either drove to Freeport or requested our catalog in order to do business with us. Now you’ll find us on the Web — we’ve been online since 1995 — and at several new store locations, and we learn more about merchandising in these channels every day. We continue to see a strong migration and preference toward doing business online, so it’s the convenience and technology available to consumers that’s most likely to drive changes in how they transact.
TODD D. SIMON is senior vice president of Omaha Steaks International, a multichannel food marketer that is celebrating its 85th anniversary this year. Simon has been involved in the Omaha-based family business for 16 years.
Q. How has your customer changed since you started working at Omaha Steaks?
A. The Internet has brought a younger and more male demo to our file. In general, we’re seeing our buyers become older, as the population of the boomers gets older, but we are also seeing pockets of younger customers from online sales. They’re also more affluent and more value-conscious. You’ve got to add value.
Q. How has Omaha Steaks changed to accommodate its changing customer?
A. Since our business has always been based on high-quality products and service, it hasn’t changed a whole lot. We’ve added new products: smaller portions, complete meals, side dishes, etc. We’ve made it easy to order and communicate with us by embracing new technologies like fax, Internet, etc.
Q. What changes do you expect to see in customers?
A. As we concentrate on more “time-saving” products, such as prepared meals, I expect we’ll have more young families and single people on the file.
NINO VELLA is president/CEO of Tipton, PA-based New Pig, a cataloger of industrial cleanup supplies. He joined the company nine months after it was founded in 1985.
Q. How has the New Pig customer changed during the past 16 years?
A. In some way, customers in our industry are more skeptical and tired of the hype of marketing and of companies underdelivering. You didn’t see that a few years ago. We are trying to realize how more-subtle marketing attempts can help us. We examine every promotion and question the validity of the copy and the language that we use in those offerings. It may go against the old Madison Avenue way with superlatives and fancy language, but it is true to who we are as a brand. We are an honest brand. “The product works” rather than “the product works great” is better suited for us.
We have stayed focused on our core group of customers. There may have been a shift long ago from end users being the primary purchasers to purchasing people being the buyers.
The industrial customer base is shrinking due to the economy. Many companies are literally going away.
Q. Do customers expect more now when it comes to service?
A. The customers are definitely more demanding, but I think that is the way of the world. We have always offered guarantees and fast delivery, and those have really become the norm these days. We try to go above and beyond with customer service innovations, but at the same time we try to keep the same high level of service in the other areas that have helped us differentiate ourselves as a service provider. The baseline for customer service is definitely catching up, so we need to find new areas in which to excel.
Q. Have customers become more value-oriented?
A. “Value” is a funny word because it means so many things. Yes, customers are trying to save as much money as possible, but they also see that you can’t replace good and prompt service. There are definite segments of our market that place a premium on the whole package of superior product and service along with the appropriate cost rather than gravitating to the cheapest option. When we do surveys, our customers rate service and product ahead of cost, and that quite frankly surprised us. The shift even with the economy has not been as dramatic as we would have thought.
Q. What changes do you see down the road?
A. When I look over the past six or seven years, I regret not seeing through the hype of what was “supposed” to happen, so I have learned to realize that nothing is certain. I try to be prepared for anything but predict nothing.
For example, the Internet was supposed to change everything, but for us it has shown little change, and I don’t think we are ostriches with our head in the sand. I just think it did not live up to its hype.
PATRICIA GALLUP is chairman/founder of PC Connection, a $1.12 billion computer reseller. Gallup founded the Merrimack, NH-based cataloger in 1982.
Q. How has your customer changed since you launched PC Connection?
A. We started our company in response to the launch of the IBM-PC, the first “personal” computer meant for business. From the beginning, our goal was to help customers become more-effective technology users and to help business owners use technology to grow their companies.
Today our customers are more technology-savvy. In the early days, we’d get basic questions about monitors and hard drives; today the questions involve issues such as storage, throughput, multisite networks, and security. In addition, our customer base has broadened to include academic institutions, government agencies, and large enterprise customers.
Q. How has PC Connection changed to accommodate its customers?
A. Until a few years ago, the majority of our business came from buyers who would browse our catalogs and then call us. In the mid-1990s, however, it became clear that there was tremendous growth potential in marketing products to small and medium-size businesses through an “outbound” managed-account approach. Companies of all sizes were beginning to make significant investments in IT equipment. So we began recruiting and training a corporate sales force that sought out leads and developed business.
In 1999, we complemented our organic growth through the acquisition of ComTeq Federal; it’s now our GovConnection subsidiary. Similarly, we recently acquired MoreDirect, a premier e-procurement supplier of IT products for medium and large corporations and government organizations nationwide.
In recent years, we’ve continued to expand our product lines to include higher-end enterprise products, enhancing our ability to be a source for complete IT solutions for business. We created teams of experts ready to assist account managers with high value-added activities such as networking and data storage. We’ve also developed partnerships that allow us to offer a complete menu of services, including installation.
And then there’s the Web. Our customers expected a certain level of service from us, and also expected detailed information about the products that they were buying. All this had to appear online, which meant developing and maintaining a publicly accessible database of detailed specs for our constantly changing inventory of tens of thousands of items. Once all of that was in place, we launched our Internet Business Account (IBA) program, which enables our business customers to log in and manage their account online at their convenience. Today online sales account for about 10% of our total business, and we expect that percentage to grow.
Q. What sort of changes in your customer do you expect to see down the road?
A. Increasingly, buyers expect a customized experience and a one-to-one relationship with suppliers. With the rise of the Internet, buyers have more information available to them. Also, business customers increasingly expect a one-stop shopping experience from their chosen IT suppliers, which means we’ll continue to expand the array of products and value-added services we offer.
We’ve experimented with several more-targeted catalogs, including separate books tailored to business, academic, and government customers. Expect to see more experimentation, segmentation, and specialization in our catalogs and other direct mailings as we go forward. And we include information about how to use IT to work smarter, faster, and be more competitive. Some of our newer catalogs have included articles about key business topics such as technology security or data storage.
GEOFF WOLF is general manager of Back in the Saddle, a catalog of horse-related gifts that he founded with his wife 10 years ago. The Durango, CO-based catalog, which has sales of more than $10 million, was bought by multititle mailer Potpourri Collection in 1998.
Q. How has your catalog’s customer changed since you started the company?
A. We started with a very specific buyer profile and had to keep reaching to different types of segments. For example, we started with really serious riders who compete and show horses. Now we have added a lot of hobbyists and gift-givers with a love of horses.
Customers are definitely more demanding, though. People are getting better service industrywide, so we have created higher expectations by really performing for the customers. We in the catalog industry keep raising the bar by our own performance.
Q. Are customers more value-conscious now?
A. Absolutely. Customers are more savvy about what is available at various price points due to the Internet. Ten years ago, customers couldn’t do a quick online search and comparison-shop.
Q. How has your company changed to accommodate the customer?
A. In order to compete we needed to be part of a larger company, so there came the opportunity with Potpourri. We really needed that umbrella to help us grow.
We did things like real-time inventory on the Net to address the growing demands of Web buyers. To create better control over customer service, we brought the call center inhouse in 1998 right after the acquisition and combined fulfillment with the other Potpourri titles. We brought prepress inhouse so that we can be more flexible about quality issues and versioning to better serve a larger pool of buyers.
The demographic of the niche really determines how much your customer changes. The lower the age of the typical buyer, the more you are prone to change and the more you need to really look for those changes coming down the road.
Q. Speaking of which, what changes do you expect?
A. We do 25% of our business on the Net. That 25% piece of the pie will invariably change our demographic. I think Internet buyers are very different. Web buyers really control what they see rather than your simply putting that catalog in front of them. Down the road, customer expectations will be further heightened, and these customers will understand more about how our businesses function.
DARRELL ROSS is president/CEO of $191 million jewelry and gifts marketer Ross-Simons. Darrell’s father, Sidney, founded the company as a store in 1952. Darrell joined the Cranston, RI-based business in 1975, launching the catalog in 1981. He’s been president/CEO since 1985.
Q. How have your customers changed over the years?
A. Surprisingly, the profile of our customers has been pretty steady: upper-middle to upper income, looking to be served well while looking for value. It’s an astute customer who wants a shopping experience with good service, good selection, and good value.
What has changed is customers have become increasingly demanding in their expectations for quality, freshness, and service. For example, 20 years ago, if we mailed a package, a customer might not start calling our customer service department to check on it until, say, 10 days had passed. Now, customers will call after four days.
Q. How has your company changed to meet those expectations?
A. Early on, if we took an order on a Monday, it would be shipped on Thursday by ground, and depending on where the customer was, she’d probably get it some time the following week. Now we’ll ship that Monday order by Tuesday, and the customer can receive it by Wednesday or Thursday if she prefers it shipped overnight.
And because customers now have the ability to check their order shipments over our Website, the overall experience is more rewarding for them. Customers can zoom in on products, blow them up, and get better visuals than they can in the catalog.
MIKE SHOUP is president/owner of $3 million Antique Rose Emporium, which he co-founded in 1983. The Brenham, TX-based company, which specializes in heirloom roses, includes two retail centers and a $1 million catalog business.
Q. How has your catalog’s customer changed since you started the company?
A. To some extent we have had the same type of buyers. Eighty percent are female, usually married and educated, in the higher income bracket. That has been pretty stable throughout the years. We have a merchandising limitation because we are niche. The stability is good on the one hand, but it also indicates that there is room for us to expand to appeal to a more diverse group of buyers.
Q. Do you think your customers have become more demanding in terms of service?
A. I have always felt that our customer wants personal interaction and accessibility to us over the phone. Even with the advent of the Internet, customers still seem to need that personal touch and to talk with a live CSR.
Q. Have your customers become more value-conscious?
A. The value of our plants is intrinsic and is borne out of their performance and rarity. Price-point value is secondary to our customers. People comparing prices rarely enters the mix, since there is no other line like ours.
Q. Has your company changed to better accommodate the customer?
A. I think we are different in that we really see a lot of stability in the way we treat the customer. We aren’t really invested in a lot of automation, especially with phone systems. We purposely kept it simple. Of course, we have a Website, which was founded in 2000, so that was a change, but we still heavily promote the 800-number to encourage people to call in orders.
DAVE VANDER ZANDEN is president/chief operating officer of Middleton, WI-based School Specialty. Through its 12 titles, which include Childcraft and Frey Scientific, the $692 million cataloger sells nontextbook educational supplies to schools and instructors. Vander Zanden has been with the company for five years.
Q. How has your customer changed over the years?
A. Our customer base is pretty much educators. That includes teachers and all the administrators in public schools in the United States. We have a defined audience of about 3.5 million people. It doesn’t change a lot.
In the education business, the teachers generally spend about $500 of their own out-of-pocket money, so that’s an audience for us. In a lot of cases, the schools give teachers money. It used to be that the districts bought everything; they give some money now to the schools, and the principal or the secretary or the purchasing agent can spend money, and the schools in turn give some dollars to the teachers. All three of those groups are now a target audience for us.
Q. Have you made any changes in response to these changes among your target audiences?
A. Our customer wants a complete order, delivered on time. Once we get past that, we’ve got a lot of services that we offer teachers.
Schools don’t have loading docks. Most of the time when the product hits the front door it goes right to a classroom. So the easier we make it for the school to distribute product… a school might come in and give us an order for $40,000 or $50,000 from the catalogs, broken down by teacher or by classroom, and we’ll pack it that way and send it right into the classrooms for them. That sort of service is getting more and more in demand.
Then there’s the Internet. The schools give the teachers so many dollars to spend; we can keep track of that spending for them on our Internet site. The percentage of business that comes from the Internet continues to grow. In the last year, we’ve seen Internet orders accelerate more.
MICHAEL MUOIO is CEO of Oshkosh, WI-based Miles Kimball Co. Founded in 1934, the company mails the Miles Kimball gifts titles as well as Exposures, a catalog of picture frames and other photo accessories. Muoio joined the company in 1991.
Q. What changes have you seen among your company’s customers?
A. Customers have gotten younger, and they’ve gotten wealthier. We started Web activity three years ago, and it now represents about 20% of our business. Website sales have come from customers who moved over from the catalog, and the Web has also attracted new customers to Miles Kimball.
Q. Have your customers become more value-conscious over the years?
A. Customers today are more price-sensitive than they have ever been in my tenure here. I don’t think it has much to do with the economy, because even prior to this little recession we’ve felt that price-consciousness and price-driven demand had sort of taken over.
Q. Have you made any changes in response to this greater price-awareness?
A. In the past three years we’ve had 15%-20% of our items on sale all the time.
Q. What changes do you see ahead?
A. I see continued pressure on margins, I see continued downward pressure on prices, I see the Web being used for competitive price analysis, and I see a much more demanding customer. I don’t see service as an issue, because we’ve always been there in that regard. But if you are deficient in customer service, you’re going to be at a distinct disadvantage in terms of the marketplace.
WILLIAM IHLE is senior vice president of corporate relations for Medford, OR-based Bear Creek Corp. He has been with the parent company of food cataloger Harry and David and horticultural cataloger Jackson & Perkins for six years.
Q. How have the catalogs’ customers changed since you started with Bear Creek?
A. They’ve definitely gotten younger. They’re typically in their 30s to 40s, which is about 10 years younger than they had been prior to the popularity of the Internet and our increased emphasis on stores, which started about three or four years ago.
They’re also more affluent. We are seeing more ordering from younger baby boomers with money because of the ease of Internet ordering. From a merchandising perspective, our products appeal to more and more affluent buyers. There is a recognition of Harry and David as a strong brand. Also, we have proved decade after decade to have world-class service, and that has meant repeat customers and younger generations coming on board because their parents are longstanding customers.
Q. How has Bear Creek changed to better accommodate its customer?
A. The e-commerce component specifically comes to mind. Most customers are ordering not for themselves but for gifts, so making the experience seamless is important for two parties rather than one, and accommodating the customer becomes twice as important.
DENNIS PENCE cofounded women’s apparel cataloger Coldwater Creek in 1984. The Sandpoint, ID-based company, of which he remains chairman, has become a $464.0 million cataloger/retailer.
Q. How has your customer changed since you started running the business?
A. Amazingly, after 18 years we are still servicing the same customer from the point of view of demographics. She is 35-60 years old, college educated, and relatively affluent, and lives near a major metropolitan area. Even her interests have remained the same, including gourmet cooking, wine, and foreign travel.
What has changed is that her life is more hurried, faster paced, and more tied into technology than before. Eighteen years ago customers expected to receive merchandise within two weeks of making a purchase, and they were fine with a letter response to an inquiry. Now they expect the merchandise in a matter of days and want answers to questions online, 24 hours a day.
They are also more value-conscious. Even affluent consumers now shop from mass-market discounters.
Q. How has Coldwater Creek changed to accommodate the changing habits of the customer?
A. We have had to process orders faster, ship them faster, answer the phone faster, make the Website faster, process returns faster, offer new merchandise more often, refresh our look more often, and, in general, move faster than ever to respond to her expectations.
IRWIN HELFORD is the former vice chairman of the board of directors of Delray Beach, FL-based Office Depot and chairman emeritus of its Los Angeles-based Viking Office Products division, having retired from active service in March. Helford joined Viking in 1985 as president/chief operating officer.
Q. How has the Viking customer changed since you joined the company?
A. Our catalog customer has not really changed over the years. Most are small to medium-size businesses. They respond to valid offers on products they need at competitive prices. Price attracts them the first time, but our “fanatical service” by exceptional people is what keeps them a customer of Viking.
What has changed, however, is the products they buy. Today: ink cartridges; yesterday: ribbons. Today: papers for laser and ink-jet printers; yesterday: printout paper.
Our customers also have a greater awareness of commodity prices due to today’s widely advertised superstores. And they have greater service expectations. We were one of the first catalogers to offer overnight delivery for free, a toll-free number, one-year guarantees, and other services. Now most everyone else does too.
MICHAEL TIERNAN is chairman/president/CEO of Boca Raton, FL-based The Mark Group. Its first catalog launched in the late 1970s. Today the $125 million company mails the Boston Proper women’s clothing book and the Charles Keath gifts title. Tiernan started as the company’s advertising director in 1976 and was named president in 1984.
Q. How has your customer changed over the years?
A. When I started the Mark, Fore & Strike catalog in late ’70s, we were targeting a 45- to 65-year-old female. Our core customer aged from an average of 50 to now over 60. As for our customers’ income, our surveys show that their income remained relatively the same when not adjusted for inflation. The current average income is $75,000-plus.
As our customers have aged, comfort has become much more of an issue. So we introduced a lot of products with elastic waists — loose-fitting, easy-fit kinds of products.
But the Mark catalog stopped growing. And our Boston Proper catalog is growing at a very healthy pace and was more profitable this spring. We had a pretty good season with Mark. If it were our only business, we’d have continued to develop it as a healthy $50 million-$75 million catalog business. [The Mark Group is folding the Mark, Fore & Strike catalog, though it will continue to operate the brand’s 12 stores.]
We bought Boston Proper out of bankruptcy in the early ’90s, just bought its name and mailing list. There was no inventory, no revenue, no people involved. The old Boston Proper was more of an eclectic mix of apparel and some gifts, some children’s clothing, and some toys. So the big change we made was to focus it on a target market that was younger — baby boomers — and make it a fashion offering. The age range is 35-49.
Q. What changes have you made to accommodate your customers’ changing preferences and habits?
A. The biggest change we’ve made in the Boston Proper catalog was a major investment in e-commerce, which now accounts for more than 20% of our sales. I expect e-commerce sales for Boston Proper to continue to grow as these customers continue to come online.