What Recession?

May 01, 2009 9:30 PM  By

If you’re tired of hearing about how horrible the economy is and how far sales have fallen, talk to some gardening catalogers. Most of them aren’t complaining right now.

Sure, seed and plants mailers often see a lift in recessions — people realize it can be cheaper to grow their own food, plus unemployed consumers may suddenly have more time to tend a garden.

But even gardening products merchants who have weathered many an economic storm say that this particular downturn is driving business up substantially. Especially the companies that sell vegetable seeds and plants.

Take the case of Dixondale Farms, which sells onion plants. The company’s sales this year are up an astonishing 40%. “Economy is the number-one factor,” says Bruce “Onionman” Frasier, president of Dixondale Farms. “People realize it is cheaper to grow their own.”

Part of the company’s success is its expertise in its market. “Onions are difficult to get established from seed,” he says. “We offer over 22 varieties of onions and leek plants.”

Service is another selling point: “Since we grow 70% of the onion plants in the U.S., we have the volume to move our product by refrigerated trucks right in to UPS hubs and skip zones. They get delivered the next day from the various hubs, and this adds to our quality.”

Located in Carrizo Springs, TX, Dixondale Farms traces its history to 1913. “We started doing mail order in 1993 with three copies of the order form Xeroxed across it,” Frasier says. “We now have an annual catalog circ of 130,000. It has increased about 12% per year.”

What’s more, Frasier says, Dixondale Farms experienced a 16% rise in new customers in 2008 and a 40% increase in average order size. “I usually mail twice, but with the response so great from just one mailing, I only mailed once this year,” Frasier says.

“Since these are live plants, and they take about three months to grow to the size we ship them, I was concerned about running out of product.”

Dixondale Farms is lucky to be “selling the right product at the right time,” Frasier says. Consumers are more concerned about healthy eating, thanks to some of the food recalls, and that’s boosted the popularity of farmers’ markets and locally grown produce.

That’s been great for Dixondale, he adds: “These farmers buy their onion plants from us.”

GETTING SEEDY

Seeds of Change is also enjoying the ride. The organic seed merchant’s sales are up 30% year-to-date, says director Marc Cool.

Part of this is thanks to First Lady Michelle Obama, whose victory garden has generated more momentum for gardening and organic vegetables. Since Obama planted her garden in mid-March, Seeds of Change has had a lot of customer interest. It’s not a big spike, Cool notes, “but with the Obama administration’s organic gardening concerns, it looks like there will be some long-term interest.”

About 85% of Seeds of Change’s sales come in online; the merchant is trying to connect with more of its customers in that medium by increasing its paid and natural search.

Cool says he wants to make a smaller carbon footprint by mailing fewer than the 600,000 108-page catalogs it drops three times a year. The mailer has already made progress on that front; it mailed a 46-page, 6-1/2″ × 11″ spring catalog to prospects.

It’s kind of a perfect storm for many gardening products merchants. “In good times, people might hire a landscaper,” says Niles Kinerk, founder/president/CEO of Gardens Alive! “But now they might buy a small plant or shrub from us and plant it themselves.”

The company’s namesake title specializes in products for the biological control of garden pests. Gardens Alive! also includes the Breck’s, Gurney Seeds, Henry Field’s, Michigan Bulb, Spring Hill Nurseries, New Holland Bulb, and Audubon Workshop horticultural catalogs.

The merchant’s seed category sales rose 20% in the past year on the same circulation as last spring. About 35% to 40% of Gardens Alive!’s business comes in over the Web, “but the catalog is the main driver of that,” Kinerk says. The company is above plan for 2008, though the plan was pretty flat.

“We’ve always said we’re counter-cyclical,” Kinerk explains. “The golden years were in the 1970s through the Nixon administration — gardening was just booming during those years.” Why the surge in seed sales? People are unsure about their jobs, he says, “and they see a way, especially with seeds, where they can save money and plant their own.”

Kinerk is quick to point out that companies like Gardens Alive! “struggled when everyone else was having fun. The way I look at it is, we’ve had a long walk through the wilderness. It’s our time.”

The down economy might inspire people to change their habits and expectations, Kinerk notes. “And that could last for a while, which for us would be a glorious repeat of the ’70s.”

Seeds and gardening mailers aren’t the only merchants doing well these days, however. We unearthed several marketers in various niches who are, relatively speaking, raking it in right now.

LA TIENDA’S TASTE FOR MULTICHANNEL

La Tienda is en fuego. The Spanish foods importer saw its 2008 sales rise about 25%, and it’s trending year-to-date at 15% over last year, says owner Tim Harris.

What’s more, La Tienda actually cut its prospecting circulation by 34% in 2008, but “our rental lists performed very well,” Harris says.

A family-owned business with about 20 employees, La Tienda mails a 32-page catalog to its house file of about 130,000 five times a year.

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The company’s goal is to ship 75,000 orders by the end of 2009, which is 15% more than it shipped in 2008.

La Tienda did make a few improvements to its creative and marketing efforts, which may have contributed to its strong results. For one, it revamped its catalog this past fall to increase the emphasis on photography, Harris says.

The merchant has also concentrated on e-mail acquisition, upping catalog requests, as well as improving both online conversion and e-mail relevancy. And it’s working on better internal search and more compelling product suggestions on its Website.

What’s more, La Tienda in early 2008 became a sponsor of the nationally televised PBS cooking show Made in Spain, featuring chef Jose Andres — a longtime friend of the Harris family. Harris believes that exposure helped La Tienda: “It’s all about leveraging all the different channels: search, television, print, e-mail — so that they complement one another and together create integrated momentum.”

Continually adding new products to the mix helps as well. La Tienda in April introduced the first all-natural jamon Serrano — a type of dry-cured Spanish ham — for sale in the U.S. The merchant at press time was about to add a natural, certified humane chorizo to its line.

The weaker euro against the dollar is also giving the mailer a boost, since it imports goods from Spain. It allowed La Tienda the margin to do some promotions that otherwise would have been unprofitable, Harris says. “We did a limited amount of free shipping promotions last fall, since a vast majority of our products are perishable and require coolers, gel packs and often air freight.”

Harris’s advice for thriving in a recession: If you have something authentic and of value, people will continue to buy. “Stay focused on your core competency,” he says. “That singular focus is what grew your business prior to the recession, and it is what will grow your business once things improve.”

BOUNDLESS GROWTH FOR ADVENTURE TRIPS MAILER

Extravagant vacations are often the first thing to go for families when money gets tight. But enthusiasts of adventure travel have different priorities: Cataloger Boundless Journeys, which specializes in adventure vacations, recorded a 50% rise in sales last year, compared to 2007.

“Adventurers continue to travel almost no matter what,” says Boundless Journeys president Matt Holmes. “Economic downturns, shoddy infrastructure, unrest — these can stop certain kinds of tourists from traveling. But adventure travelers have an itch that needs to be scratched yearly.”

It also helps that adventurers usually come from upper-income brackets. “That, combined with strategic planning of how best to use our marketing resources during these challenging times, has positioned us well in this difficult economy,” Holmes says.

And what are the hot trips now? “Funny enough, it’s some of our biggest-ticket items that are doing well for us,” Holmes says. “Safaris in Botswana and Tanzania, cruises in the Galapagos Islands, and private and customized itineraries have all shown strength in the marketplace.”

Collecting relevant and useful data on customers can be a challenge for any business. “We have met this challenge by having a customized CRM system designed specifically for Boundless Journeys,” Holmes adds.

The Access-based system allows Boundless Journeys to track even the most minute details of its customers’ habits, plans and interests, “so that we can respond with timely and personalized offers, making our marketing efforts more targeted and effective,” Holmes says.

Boundless Journeys’ annual catalog circulation has increased 40% during the past few years, but “we are now evaluating a shift to almost an exclusively online presence,” Holmes says.

He believes that a Website is the greatest resource for customers planning a trip with Boundless Journeys. “It is informative, offers a great visual aid, and can be changed and updated quickly — all at a fraction of the cost of traditional print materials.”

MURAD’S DIRECT BUSINESS GETS GORGEOUS

Vanity never gets old. That’s why “the beauty industry is known to weather recessions better than most industries,” says Casey Cochran, manager of print and retention for skin, hair and body care company Murad.

The company broke records this past March with sales higher than in any other month during the past 20 years. Year-to-date, Murad’s catalog sales are 14% above the first quarter of 2008. “For all of 2009, we are looking at a 7% decrease in circulation between 2008 and 2009,” Cochran says.

“We used to mail our catalog to a lot more people, but over the past couple of years we have been able to decrease circulation without seeing our sales suffer,” she says. That’s because the company is mailing smarter.

“Catalogs are an expensive way to communicate,” she says, “so we use RFM and behavior segmentation to home in on our most profitable customers and eliminate the unprofitable ones.”

This, coupled with new creative and better merchandising, has allowed Murad to do more with less, Cochran says. “Response rate is higher, ROI is higher, and total sales are higher. It’s a great position to be in.”

Murad’s direct-to-consumer strategy includes infomercials, Web, catalog and direct mail. It also sells to businesses — namely high-end salons and national beauty retailers such as Sephora and Ulta, and internationally.

Although Murad decreased catalog circulation, it has boosted its direct mail circulation. “Direct mail is relatively inexpensive, and it allows greater flexibility in creating targeted, personalized, relevant messages for our customers,” Cochran adds. “We’ve tripled our direct mail over the past couple of years and we’ve seen our sales do the same.”

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Murad is getting much better at “getting noticed” in its direct channels, Cochran notes. For one, last year it gave its catalog a complete makeover from merchandising to layout design and copy, she says.

This past January, Murad unveiled a new, more user-friendly Website. “And we are always working to keep our infomercials and commercials fresh, up-to-date and relevant to today’s audience,” Cochran says.

“You can’t ever rest, you’ve got to keep moving and evolving because the landscape in which we do business is transforming faster than ever.”

BANKING ON MONEY SUPPLIES

You might think a business-to-business merchant that deals with retailers, restaurants, casinos — pretty much any industry that handles money — would see its sales tumble with the recession. But BankSupplies, which sells products such as counterfeit bill detectors and coin counters, recorded a 20% increase in sales for 2008.

A key reason for BankSupplies’ growth is repeat business, says president Roy Shields. The company’s three-time buyer file grew 63% in 2008. “We’re hitting our customers right in the heart of the plate,” Shields says. “To be successful in sales, you have to satisfy your existing customers and give them a reason to come back.”

BankSupplies mails 1 million 72-page catalogs to prospects, with 12 drops a year to its 50,000-name house file. And it also keeps in touch with its customers via e-mail.

The $7 million company employs 18 people and carries about 2,000 SKUs. So it’s able to offer a more streamlined selection to its customers, and be more personable than some superstore suppliers, Shields says.

“We offer a real good value proposition, and that’s been the heart of our growth,” Shields says. What’s more, “we take outstanding care of customers.” That includes a liberal return policy of taking back personalized items.

Not that Shields isn’t worried about the recession: “You’d be a knucklehead to not look and say it’s getting dark out there,” he says. “But it’s cyclical, and we’re not at the edge of insanity. We may have to deal with 10% sales growth this year and not 20%.”

HE BLINDED THEM WITH SCIENCE

Selling science toys can be fun and lucrative — even in a down economy. Science toys merchant Steve Spangler Science says its monthly sales for this year are up 19% on average — while catalog circulation has remained steady.

“We’ve seen the greatest growth in online revenue, but our print catalog continues to generate sales that exceed our previous year’s expectations,” says Jeff Brooks, chief operating officer for Steve Spangler Science. “Our circulation has remained constant and we have really focused on our customers rather than prospecting.”

The company’s catalog strategy is targeting requesters and customers rather than prospecting. The marketer has found that prospecting “never measures up to excellent service and word-of-mouth advertising,” Brooks says.

One of the merchant’s biggest successes during the past four years came as a complete surprise: when founder and former science teacher Steve Spangler posted the first video of his now famous Mentos and Diet Coke reaction experiment online. (If you’ve never seen this, the reaction of the mint candies with the soda creates a geyser.)

The video was a hit. “We never knew what an impact this could have on our business,” Brooks says.

The idea of a “viral” video or marketing idea “was foreign to us five years ago,” he adds, “and now it’s an integral part of our business.”

Sweet Success for Candy Warehouse

One area in which consumers are not cutting back during the recession is candy. And that’s been great for 11-year-old Web-based retailer Candy Warehouse.

Candy “is a feel-good item that is inexpensive compared to other products,” says Candy Warehouse president Chris Pratt. As a result, his company’s sales have increased steadily during the past year.

Candy Warehouse sales for 2007 were $5.8 million; they jumped 33%, to $7.7 million in 2008. And first-quarter sales in 2009 rose 17%, compared to the first quarter of 2008.

“We focus on candy in general, not high-end chocolates,” Pratt says. Colorful and nostalgic candies are the biggest sellers right now. Although Pratt doesn’t consider Candy Warehouse a traditional cataloger, the company launched a print catalog last year that is shipped with every order.

The recession noth withstanding, why is the company doing so well right now? “Superior merchandising and decent photography, compared to our competitors,” Pratt says. And a wide demographic doesn’t hurt: “Our audience includes everyone from kindergarten kids for new items to nursing home elderly for nostalgic candy.” — JT

Scrapbook Mailer Gets Crafty with Video

With more consumers staying at home these days, you would expect to see hobbyist catalogers seeing a lift. And many are doing fine if not gangbusters. Craft products title Paper Wishes ended 2008 flat due to some fulfillment issues, but owner Paulette Jarvey says its year-to-date sales trended up through March.

The company has been selling product to chain stores for 28 years; it began selling its scrapbooks and scrapbooking designs direct-to-consumer six years ago. Paper Wishes drops three times a year, with about 400,000 catalogs in each drop.

“The rhetoric in the craft industry is that it’s recession-proof, but we actually were hit a year ago, more on the commercial side than consumer,” Jarvey says. “On the industry side, many mom-and-pop scrapbook stores closed.”

Jarvey says that the recession is inspiring more consumers to make things — maybe not scrapbooks, “but cards and jewelry are taking off,” she says.

Once the company started producing weekly how-to Webisode videos for the Paper Wishes Website, its sales of jewelry and cards doubled. The videos also show what is needed to complete the task at hand, and tells the viewer where she can find the items on the Website.

“We’re not Martha Stewart,” Jarvey points out. “We’ll say, ‘let me show you what Susan did to make this piece of jewelry,’” she says. “We want to come across as authentic.” — TP

WANT TO READ ABOUT MORE MULTICHANNEL COMPANIES SURVIVING AND THRIVING? GO TO www.multichannelmerchant.com/may09