British invasion

Aug 01, 2006 9:30 PM  By

The British are coming — or at least, their catalogs are. About a decade after several U.S. catalogers — including Lands’ End, Peruvian Connection, and Talbots — expanded into the U.K. market, the trend has reversed, with a number of British catalogers launching catalogs in the States. From furniture title Europe by Net to clothing cataloger Boden to shoes mailer Shipton & Heneage, British merchants are reaching out to the United States with relatively small circulations and coming back with strong sales.

Rosemary Stockdale, managing director of London-based home shopping consultancy Sterling Marketing, says that U.K. catalogers expanding internationally tend to launch in either Germany, because of its proximity to England and general proclivity to shopping by mail, or the U.S., because of its market size and potential for customers to purchase from niche catalogs. “Many successful U.K. catalogers are reaching maturity in this market and are now looking at new channels or new markets to develop, and in some instances both,” Stockdale says.

Indeed, the opportunity to expand market share in a large country is a great part of the appeal of the U.S. marketer, says David Ballard, managing director of Pelham, NY-based consultancy Ballard Direct, whose U.K. catalog clients include shirt maker Charles Tyrwhitt, Shipton & Heneage, and apparel merchant Wrap. “You can have a fraction of the market share you have in the U.K. in the U.S., and you’ve still doubled your size,” he says. The U.K. population of 60.4 million people is roughly about one-fifth that of the U.S.

Attesting to the size difference of the countries’ direct marketing industry, U.K. direct marketing sales in 2003 were an estimated $120.54 billion, according to the U.S. Direct Marketing Association’s economic database on 30 countries worldwide. Meanwhile, direct and interactive marketing sales in the U.S. for the same year exceeded $2.2 trillion, according to a DMA-commissioned study by Global Insight.

“U.K. catalogers have the skill set to create, print, and distribute catalogs,” says Geoff Batrouney, executive vice president of New Rochelle, NY-based list and marketing services firm Estee Marketing. “Why not come over the pond and spread the cost of that skill set across a market five times the size of the U.K.? And recall, our costs here — postage being the biggie — are lower than in the U.K., and we have a less hostile regulatory environment than in Europe.”

Testing the waters on the Web

For a number of U.K. merchants, a U.S. launch began with testing a U.S.-specific Website. Testing the waters via the Internet is much less costly than producing and mailing a print catalog, says Sterling Marketing’s Stockdale.

“Internet selling has widened markets and allowed U.K. companies to experiment with overseas markets on a low scale,” says Iain MacDonald, principal at London-based catalog consultancy Casa Consulting. “It provides a learning experience as well as a low-cost, low-risk test bed for overseas expansion, allowing them to build confidence both in terms of customer interest/response and in checking out the competitive environment.”

London-based Europe by Net was one such merchant that entered the U.S. market via cyberspace prior to mailing a catalog. Founded as a Website for U.K. customers in 2000, Europe by Net launched a U.S. version of the site in 2001; it didn’t introduce a U.S. print catalog until May 2005 — a month before the launch of a U.K. catalog.

Julie Edwards, president of the furniture merchant, says U.S. sales have doubled since the initial print mailing last year. Today the U.S. accounts for about half of the merchant’s overall sales. The average order value in the U.S. is $3,000, larger than the U.K. value of $1,800.

Europe by Net also launched a version of the book for the Dubai market this past May, in response to consumer demand, and it will mail 50,000 copies of a Japanese book at the end of the summer. Edwards says fulfilling orders has not been a problem because the company drop-ships products directly from the manufacturers it uses throughout Europe.

While starting off with a U.S. Website is a good way for an overseas merchant to get its feet wet in the U.S., “as a practical matter, you’re not going to know how the U.S. market does until you have a catalog,” says consultant Ballard. “I think if you’re coming to the U.S. you’ve got to have a Website, but you’re probably not going to know how you’re going to do until you have a catalog mailing.”

London-based Shipton & Heneage took that advice to heart and launched its U.S. catalog and Website “in one fell swoop,” says Alastair Baxter, managing director of the marketer of high-end men’s footwear. Shipton & Heneage started 15 years ago as a group of sales reps visiting offices in London’s financial district and fulfilling orders from a showroom outside the city. The company entered the U.S. market about three years ago because of traffic from U.S. consumers on its U.K. Website. Today the company mails about 200,000 copies annually of the 32-page digest-size catalog to U.S. customers and rented names.

The overwhelming majority of Shipton & Heneage’s sales — 90% — come via the Web; the company encourages customers to use the catalog as a resource and place orders online. Baxter says he’s been pleasantly surprised by results, although he wouldn’t release exact figures. Orders are fulfilled from the U.K. using standard three-day shipping.

Color or colour?

Deciding which channel to use to enter the U.S. market is hardly the only consideration for U.K. merchants heading over here. Just like U.S. mailers entering the British market, U.K. marketers must address the question of using American vs. British spelling. Stockton advises her U.S. clients to translate into U.K. English and vice versa to avoid confusion while ordering and to instill confidence that the products will arrive and on time.

“For some very English catalogs, keeping the U.K. spelling might add to its appeal, but there are areas where it might be misunderstood,” Stockton says. “So copy about lifestyle and product might be okay, but calls to action, how to order, sizing, and product details should be translated effectively.”

Shipton & Heneage’s Baxter chose to use U.S. spellings and terminology in his catalog because “we thought it would be easier if people knew what we were talking about.” For example, the U.S. catalog calls a two-tone men’s oxford a “spectator,” while the U.K. catalog calls the same shoe a “correspondent.”

Edwards, who was born in the U.S., says Europe by Net opted not to use U.S. spellings in the U.S. catalog after consulting with friends and family, who said the British spellings — “catalogue” for “catalog” and “colour” for “color” — were “cute.”

But Europe by Net does use local currency for pricing. When the company debuted in the U.S., Edwards realized that although prices were listed in dollars on the Website, customers were being charged in British pounds. North American customers were concerned about poor exchange rates between the pound and U.S. dollar. Two years ago, the company received approval to charge credit cards in dollars, which Edwards says has eased customer anxiety.

Where to print the catalogs and mail them from is another point of consideration for U.K. catalogers. Although printing in the U.K. can turn out to be cheaper if the mailer has large domestic printing jobs already in the queue, Ballard says mailing books from the States is usually more profitable because of the more sophisticated and affordable merge/purge programs and the lower postage costs. Ballard says merchants that print overseas will typically ship the catalogs by boat to the U.S. and deposit them into the mail system upon arrival.

All agree that the most important task to accomplish in launching a U.S. catalog is to provide top-notch customer service, whether from U.S. or U.K. reps. “We want to impress them by the speed in which they get what they want. I think it’s important that if you’re mailing from one country to another that you impress them with what you’re doing,” says Baxter, adding that international merchants must deliver on fast shipping, good service, and good prices.

Friends or foes?

While expanding into the U.S. may boost business for British mailers, it means more competition for American catalogers. But Ballard says the impact on stateside merchants is the same as if a U.S. company launched a new catalog.

And despite the current trend, it’s not likely that the U.S. market will be flooded with British catalogs. “Expanding into an overseas market is costly and not without risk,” Stockdale says. “I do not think there will be a flood but a definite trickle” of U.K. mailings here.

Jack Schmid, founder of Mission, KS-based catalog consultancy J. Schmid and Associates, believes that U.S. mailers have little to worry about. “It’s not much of a threat to U.S. catalogs unless they’re not doing their job very well,” he says. What’s more, “I like the idea of people raising the bar in terms of product offering.”

Indeed, Ballard notes, “in some cases it’s definitely the ‘U.K.-ishness’ of products” that makes British catalogs a hit here. When Charles Tyrwhitt launched a U.S. catalog six years ago, Ballard says, the London-based cataloger/retailer’s products featured many shirts with stripes and checks, a style that Americans weren’t accustomed to seeing. The distinctive design made Charles Tyrwhitt a success.

The United States’ natural affinity for British products such as well-made men’s shoes and classic clothing, as well as strong response to catalog purchasing, have worked in favor of some U.K. catalogers. “Both Boden and Charles Tyrwhitt have played on their Englishness and probably in the fashion world, English appeal and European design are key factors,” says Stockdale. “Whichever product category it is, it needs to match the aspirations of the U.S. target customer, so price, design/style, and quality must appeal to the U.S. customer.”