The CATALOG AGE 100: Bigger and Better

Aug 01, 2003 9:30 PM  By

If the Catalog Age 100 is any indication, the economy may be on the road to recovery — albeit slowly.

Sixty of the companies on this year’s list of the industry’s 100 largest players enjoyed year-over-year direct sales growth. That’s an appreciable improvement from last year, when only 46 of the companies saw year-over-year catalog and Internet sales increase.

What’s more, while 42 of last year’s Catalog Age 100 companies suffered declines in annual direct sales, this year only 29 did. Eleven companies reported flat sales, compared with 12 last year.

Collectively the companies in this year’s Catalog Age 100 increased their direct sales 4.6%, to $118.39 billion. That’s a welcome change from last year. The catalogers that made last year’s list actually suffered a collective 1.9% decline in sales in 2001.

But don’t pop the bubbly just yet. That nearly one-third of the country’s largest catalogers saw direct sales decline suggests that the recovery is a shaky one. And when you consider that two years ago, only 14 of the Catalog Age 100 companies experienced year-over-year sales declines, it’s clear that we’ve got some way to go until we can say that the economy has rebounded.

Conventional wisdom holds that business-to-business marketers are slower to feel the effects of an economic downturn than their consumer counterparts, and slower to recover. Indeed, of the 51 companies on this year’s Catalog Age 100 that sell primarily or exclusively to businesses, 16 — or 31% — had lower direct sales in 2002 than the previous year. In comparison, 13 of the 49 consumer marketers, or 27%, saw direct sales fall last year.

The business of b-to-b

No single market segment performed uniformly poorly, or uniformly well, for that matter. Take the computer and IT sector. Six of the 10 computer marketers on this year’s list managed to grow sales, including the number-one marketer, Dell Computer Corp.

Acquisitions aided some of the computer resellers. Most, if not all, of PC Connection’s (#20) 4% sales growth last year can be credited to the company’s April 2002 purchase of MoreDirect, an e-procurement provider that targets large corporations. For instance, PC Connection’s total fourth-quarter sales rose 18% in 2002. But if you exclude MoreDirect, year-over-year sales for the quarter actually fell 8%.

Other computer marketers thrived by going after the public sector. Spending by the federal government in particular has not been hurt by the drab economy. Sales to the federal government accounted for $555.7 million of Dell’s $35.40 billion in revenue; $86.6 million of MPC Computers’ (#22) estimated $1.13 billion in sales; and $62.2 million of CDW Corp.’s (#5) more than $4.26 billion in revenue.

The industrial supplies market fared somewhat worse. As David Sandler, executive vice president/chief operating officer of MSC Industrial Direct Co. (#29) said in an April earnings call, “It’s clear to us that the economic recovery has not yet reached the industrial sector…. Feedback from our customers is that their customers are reducing orders to the bare minimum or putting them on hold.” Annual sales for MSC fell 9% last year.

In fact, year-over-year direct sales fell for eight of the 14 catalogers selling electronics components; maintenance, repair, and operating (MRO) supplies; and other industrial products. A 12% drop in sales at its Lab Safety Supply title contributed to the 2% dip in direct sales at W.W. Grainger (#3).

Reduced capital spending in the telecommunications field led to a 5% sales decline at Andrew Corp. (#23); it also led the telecom equipment supplier to lay off 800 workers. Newport Corp. (#88) laid off 187 workers last year and expected to lay off more than 100 this year, as the weak fiber optics and semiconductor markets resulted in a 43% plummet in sales for the components supplier.

As was the case among the computer catalogers, however, it wasn’t all doom and gloom for industrial suppliers. Multititle MRO mailer Interline Brands (#31) grew sales 4%, in part because of a customer relationship management strategy it introduced last year. When implemented among the customer database of its Barnett catalog, response rates rose up to 5%, while average order sizes increased more than 1%.

And despite a flood in October that destroyed its headquarters and central network, Tessco Technologies (#63) managed to increase sales 8%. The marketer of wireless communications supplies credits much of its growth to its affinity-marketing programs, in which it sells cell phones, pagers, and related services directly and “invisibly” to consumers on behalf of manufacturers and local dealers.

Some b-to-b categories seem to be impervious to the economy. Take medical and dental supplies: Revenue at Henry Schein (#9) grew 10%; at Patterson Dental Supply (#15), 22%; at Darby Group Cos. (#30), an estimated 7%.

Laboratory supplies is another sturdy niche. Fisher Scientific International (#8) increased direct sales 12% last year. VWR International (#14) and Sigma-Aldrich Corp. (#21) had more-modest increases of 1% and 3%.

Consuming concerns

The consumer marketers on the Catalog Age 100 had their own ups and downs. But some of the companies that posted lower sales in 2002 than in 2001 actually performed better last year than the year before.

For instance, sales at multititle apparel and home goods mailer Blair Corp. (#33) dipped 2% last year. But its net income more than doubled, from $9.3 million in 2001 to $19.1 million last year.

Similarly, direct sales at apparel cataloger/retailer The Talbots (#67) declined 7%. But the company had cut circulation nearly 13%. In fact, sales per catalog distributed increased 6%. And while jewelry and tabletop items marketer Ross-Simons (#80) saw sales dip nearly 2%, the company had chopped circulation 10%.

Conversely, women’s apparel cataloger/retailer The J. Jill Group (#72) grew direct sales 4% last year. That growth can be considered disappointing, however, in light of the company’s 26% circulation hike in 2002, to 78 million catalogs mailed.

For Bear Creek Corp. (#35), a greater emphasis on marketing to corporate customers contributed to its roughly 25% direct sales growth. The parent company of the Harry and David food gifts catalog and Jackson & Perkins horticultural title increased its b-to-b spending approximately 15%. The investment apparently paid off, as the company has said that its b-to-b customers have an appreciably higher lifetime value than their consumer counterparts.

A subtle expansion in its merchandising mix appears to have helped two cataloger/retailers of outdoor sporting goods, Cabela’s (#25) and Bass Pro Shops (#74). For sporting goods marketers, the first three quarters, rather than the holiday season, are generally the busiest times of the year. To bolster their fourth-quarter business, both marketers added hunting- and fishing-themed gift items to their lines. Both companies are also opening additional destination superstores, which help create even greater awareness of their brands among outdoors enthusiasts. Last year Cabela’s increased its direct sales roughly 16%; Bass Pro Shops, an estimated 5%.

Another marketer of outdoor sporting gear, The Sportsman’s Guide (#81), also increased its sales, by 6%. The cataloger’s Buyer’s Club is responsible for at least some of that growth. Introduced in fall 2000, the club now has approximately 300,000 members, who pay $29.99 a year to receive discounts and special offers. Sportsman’s Guide executives have said that members spend two to three times as much with the company as nonmembers. Sportsman’s Guide has also returned to its value-pricing roots, which has no doubt helped the company during this recession.

Athletic shoes marketer Foot Locker (#55) attributes much of its 7% increase in catalog and Web sales to its marketing alliances. Like Tessco Technologies, Foot Locker manages the catalog and e-commerce businesses of companies such as the National Football League, although the majority of its direct business comes from its Eastbay catalog.

Some catalogers increased their sales the old-fashioned way: via acquisitions. Alloy (#86) boasted an impressive 35% gain in catalog and online product sales largely because of its September 2001 acquisition of BMX supplies title Dan’s Comp and its March 2002 purchase of teen girl’s apparel book Girlfriends L.A. Alloy’s December 2002 acquisition of Old Glory Boutique Distributing will give the catalog a similar bump this year. Meanwhile, new entrant to the list 1-800-Flowers.com (#82) increased its sales significantly by acquiring The Popcorn Factory in May 2002.

Hello and goodbye

1-800-Flowers.com isn’t the only newbie to the Catalog Age 100. Athletic gear cataloger Road Runner Sports (#98) made the cut, having increased sales nearly 18%. Last year’s successful spin-off of a book targeting women, Activa, contributed to the company’s impressive performance.

Cataloger/retailer Crate & Barrel (#100) returned to the ranking this year thanks to a roughly 5% growth in catalog and Web sales. The marketer of home furnishings and accessories benefited from the continuing “nesting” trend as well as by offering affordable decor alternatives to cost-conscious but still style-conscious consumers.

So who’s gone? MRO distributor Wesco International, #94 on last year’s list, just missed the cut. Its catalog sales slid about 11%, to approximately $125 million. Don’t cry too many tears for the company, though: Its total sales are $3.33 billion.

With sales of $120 million in 2002, gifts and home decor cataloger Miles Kimball fell off the list as well. Last year’s #95 saw sales fall 13%; the company, which was acquired by Blyth earlier this year, shut its Exposures Home title in late 2001.

Likewise, its decision to divest itself of its flagship Mark, Fore & Strike catalog title last year led to a decline in year-over-year sales for apparel, gifts and home goods mailer The Mark Group. The company was ranked #98 in last year’s Catalog Age 100, with sales of $125 million.


THE TOP 10
Rank Company 2002 sales ($ millions) 2001 sales ($ millions)
1 Dell Computer Corp. $35,404.0 $31,168.0
2 IBM $6,820.8* $7,342.9*
3 W.W. Grainger $4,643.9 $4,754.3
4 Corporate Express North America $4,630.2 $4,907.7
5 CDW Corp. $4,264.6 $3,961.5
6 Office Depot $3,913.9 $3,763.0
7 Staples $3,389.6 $3,008.6
8 Fisher Scientific International $3,238.0 $2,880.0
9 Henry Schein $2,825.0 $2,558.2
10 Boise Office Solutions $2,760.0 $2,700.0
* Catalog Age estimate

To view the complete 2003 Catalog Age 100, click here

METHODOLOGY

The Catalog Age 100 was compiled by Paul Miller and the rest of the magazine staff through public records, data card analysis, and input from financial analysts and sources within the catalog industry.

To put all 100 companies on the same playing field, sales figures are for the calendar years 2002 and 2001. Several companies report their results on a fiscal year different from the calendar year. When the fiscal year varied from the calendar year by more than one month, Catalog Age backed out the financial data to obtain calendar-year sales.

To ensure the accuracy of all statistics, Catalog Age tried to contact senior executives at each company. Many catalogers couldn’t or declined to confirm sales totals; others didn’t return phone calls or couldn’t be reached. In those cases, or when companies would provide only approximate sales, an asterisk indicates that the figure is an estimate. Based on data card analysis and historical information, Catalog Age estimated the mail order and Internet sales from those multichannel firms that don’t report them separately. In some cases, the Catalog Age figures for 2001 differ from those reported last year, due to updated information.

Wherever possible, sales are net of sales taxes and other extraordinary fees such as personalization. Because of accounting differences, some figures may include that extra revenue. Many companies that make money on shipping and handling record the fees as sales rather than as a reduction in expenses.

Several computer and industrial supplies mailers, including Dell Computer Corp., Fisher Scientific International, and Corporate Express North America, use direct response or telemarketing to augment or complement their catalogs. The Catalog Age 100 sales figures include all direct channels for those marketers because the catalog remains their main sales vehicle. Similarly, sales generated through electronic media are included for both consumer and business-to-business marketers.

For parent companies such as Staples and Mattel, the sales figures listed are for their catalog/Internet divisions only. Likewise, for cataloger/retailers such as The Sharper Image and The J. Jill Group, sales figures are only for the company’s direct divisions, unless otherwise indicated.

In two cases — Crosstown Traders and Sears — year-over-year comparisons include the sales of their core catalogs’ former owners, Arizona Mail Order and Lands’ End.

WHO SELLS WHAT

The Catalog Age 100 is dominated by several product categories: apparel, gifts, home goods, computer-related products, general merchandise, sporting goods, and industrial/maintenance, repair, and operating supplies. Below is a breakdown by product category of companies ranked in this year’s chart. Because some of the catalogers listed sell products in multiple categories, the total adds up to more than 100:

Apparel/footwear: 24
Home-related: 11
Computer-related: 10
Gifts/jewelry: 9
Industrial supplies/MRO: 8
Office products: 6
Electrical components: 5
Food: 5
Medical/dental supplies: 5
Sporting goods: 5
General merchandise: 4
Safety/security products: 4
Consumer electronics: 3
Hardware: 3
Laboratory supplies: 3
Personal healthcare/vitamins 3
Auto/motorcycle supplies: 2
Business apparel: 2
Children’s products: 2
Educational supplies: 2
Communications equipment: 1
Digital and stock images: 1
Farming supplies: 1
Horticultural products: 1
Hotel/restaurant supplies: 1
Luggage: 1
Musical equipment: 1
Pet supplies: 1
Stationery: 1

TALLYING IT UP

Total 2002 direct sales of the Catalog Age 100: $118.39 billion ($118,385.0 million)

Total 2001 direct sales of the Catalog Age 100: $113.21 billion ($113,206.4 million)

Percentage increase from 2002 to 2001: 4.6%

GETTING AND SPENDING

Major acquisitions involving Catalog Age 100 companies in 2002…

Buyer Acquisition Month
Newport Corp. Micro Robotics Systems Feb.
Alloy Girlfriends L.A. March
PC Mall Pacific Business Systems March
Brady Corp. Temtec April
Cintas Corp. selected Angelica Corp. assets April
PC Connection MoreDirect April
1-800-Flowers.com The Popcorn Factory May
Cintas Corp. Omni Services May
Cortec Group Dr. Leonard’s Healthcare Corp. May
Sears, Roebuck & Co. Lands’ End May
FAC Acquisitions Fingerhut June
Riverside Co. J.C. Whitney & Co. June
Black Box Corp. EDC Communications Ireland July
Black Box Corp. Societé d’Installation Reseaux July
Patterson Dental Co. Distribution Quebec DentairDentaire July
PC Mall Wareforce July
School Specialty ABC School Specialty July
Staples Medical Arts Press July
Doctors Foster & Smith Hornbeck’s Aug.
Staples Guilbert July
Doctors Foster & Smith eTropicals.com Sept.
Crosstown Traders (JPMorgan Partners) Arizona Mail Order, Figi’s Nov.
Fisher Scientific International Mimotopes Nov.
Fisher Scientific International Maybridge Chemical Holdings Nov.
Airgas Welding Metals Dec.
Alloy Old Glory Boutique Distributing Dec.
and this year so far
Brady Corp. Tiscor Jan.
Black Box Corp. Rowe Structured Cabling Feb.
School Specialty Sunburst Video Feb.
W.W. Grainger Gempler’s April
Zones Corporate PC Source April
Blyth Miles Kimball May
Brady Corp. Etimark GmbH May
Henry Schein Hager Dental GmbH May
Aristotle Corp. Haan Crafts Corp. June
Henry Schein Colonial Surgical June
NEBS Safeguard Business Systems June
School Specialty Select Agendas June
Andrew Corp. Allen Telecom pending
NBTY Rexall Sundown pending
Ripplewood Holdings/ZelnickMedia Lillian Vernon Corp. pending
Taylor Corp. G. Neil Cos. pending

INDEX

Catalog Rank
1-800-Flowers.com 82
ABC Distributing 48
AcuSport 76
Airgas 60
Allied Electronics 90
Alloy 86
American Hotel Register Co. 53
Andrew Corp. 23
Aramark Corp. 36
Aristotle Corp. 87
Bass Pro Shops 74
Bear Creek Corp. 35
Black Box Corp. 64
Blair Corp. 33
Boise Office Solutions 10
Bosch Security Systems Corp. 96
Brady Corp. 89
Broder Bros. 37
Brylane 17
Cabela’s 25
CDW Corp. 5
Cintas Corp. 32
Coldwater Creek 51
Cornerstone Brands 43
Corporate Express North America 4
Crate & Barrel 100
Crosstown Traders 49
Crutchfield Corp. 79
Darby Group Cos. 30
Dell Computer Corp. 1
Digi-Key Corp. 54
DMSI 93
Doctors Foster & Smith 91
Dr. Leonard’s Healthcare Corp. 70
Federated Department Stores 98
Fisher Scientific International 8
Foot Locker 55
Getty Images 40
Global Motorsport Group 65
Guitar Center 75
Harriet Carter Gifts 93
Hanover Direct 42
Henry Schein 9
Home Depot 45
Interline Brands 31
International Business Machines Corp. 2
J&R Music World 84
J.C. Penney Co. 11
J. Crew Group 56
J.C. Whitney & Co. 85
The J. Jill Group 72
K+K America 58
Kennametal 71
Knight’s Direct 92
Lillian Vernon Corp. 67
Limited Brands 24
L.L. Bean 18
Mattel 52
McMaster-Carr Supply Co. 46
Micro Warehouse 13
Moore Medical Corp. 97
MPC Computers 22
MSC Industrial Direct Co. 29
NBTY 78
Neiman Marcus Group 41
New England Business Service 34
Newport Corp. 88
Nordstrom 62
Norm Thompson Outfitters 69
Northern Tool & Equipment Co. 61
Office Depot 6
OfficeMax 37
Omaha Steaks 57
Oriental Trading Co. 43
Orvis 93
Patterson Dental Supply 15
PC Connection 20
PC Mall 26
Premier Farnell 39
Road Runner Sports 98
Ross-Simons 80
Sara Lee Corp. 76
School Specialty 27
Sears, Roebuck & Co. 12
Sharper Image Corp. 73
Sigma-Aldrich Corp. 21
Spiegel 19
The Sportsman’s Guide 81
Staples 7
Starcrest of California 59
The Swiss Colony 49
Systemax 16
The Talbots 67
Taylor Corp. 65
Tessco Technologies 63
Tiffany & Co. 83
VWR International 14
Williams-Sonoma 28
W.W. Grainger 3
Zones 47