Despite sales predictions that were all over the map, many multichannel merchants gambled on increasing their catalog circulation this holiday season. And at least among those marketers who responded to calls from Multichannel Merchant, the gamble paid off with a healthy increase in sales.
Case in point: Plattsburgh, NY-based Home Bistro. The purveyor of upscale prepared frozen meals reported a 102% increase in holiday sales on a 100% jump in catalog circulation, says president/CEO David Thompson.
The surge in holiday circ, from 1 million catalogs in 2004 to 2 million, capped a year of nearly 40% sales growth. The strong growth the company had enjoyed in the months prior to the holiday season and throughout 2004 encouraged Home Bistro to “step on the gas,” as Thompson puts it. About 40% of the merchant’s holiday books were mailed to prospects.
Likewise, Madison, WI-based fine arts and jewelry purveyor Guild.com doubled its fourth-quarter catalog circulation, to about 1 million, says president Mike Baum. The result, he notes, was “the best fourth quarter the company every had.” Sales in December alone were up more than 80% from December 2004, with fourth-quarter sales up 67%.
In addition to the circulation boost, Baum credits the company’s stellar performance to the rebranding of its print catalog from Guild.com to The Artful Home, with more of an emphasis on home furnishings. The repositioning “has helped us drive average order value up,” Baum says, “as people buy more high-end furnishings and also place more orders for multiple complementary items together.” The average order, he says, exceeded $400, a solid increase from about $340 in 2004.
Merchants that had increased their circulation less dramatically say that other factors, from merchandising to promotions, also contributed to their rise in holiday revenue.
Fleetwood, PA-based Paul Fredrick MenStyle, for instance, credits most of its double-digit sales increase to an improved product assortment.
“Clearly we did a better job in dress shirts and neckwear, two of our core categories,” says executive vice president/chief operating officer Allen Abbott. “Additionally, we had great success with our business casual line, specifically in fine gauge knits and trousers.”
Abbott characterizes Paul Fredrick’s holiday season as “outstanding,” noting that it “exceeded both our expectations and last year significantly.” Catalog circulation, he says, was only “slightly higher” than it had been for holiday 2004.
Although its product line is quite different from that of Paul Fredrick, Minnetonka, MN-based general merchandise mailer Fingerhut also “performed significantly over expectations,” says chief marketing officer Bob Safford, on what he says was a slight increase in circulation. Holiday sales were up 15% from the previous year’s.
While the circulation numbers didn’t increase all that much (Safford would not disclose specifics), Fingerhut targeted its mailings better, he says. The company also dropped its holiday catalog a week earlier than it had the previous year and improved its cover creative.
Then, too, Fingerhut “had a much stronger merchandise assortment this year,” says vice president of merchandising John Damrow, “combined with a better page allocation by category, combined with an overall higher level of promotional offers, which includes gifts with purchase, ‘buy two and save,’ and price breaks.”
What products were winners?
“Electronics were strong,” Safford says, “with large gains in digital cameras, MP3 players, and portable DVD players.” Cold-weather products such as electric blankets and heaters sold well too.
Also crediting improved merchandising is John Bauman, president of multititle mailer Swiss Colony. In addition to its eponymous food catalog, the Monroe, WI-based Swiss Colony mails meats title The Tender Filet, general merchandise books Seventh Avenue and Ginny’s, women’s apparel catalog Monroe & Main, and women’s apparel and home decor books Midnight Velvet and Through the Country Door. All told, holiday sales rose 5% from 2004 on a comparable increase in catalog circulation.
“Most of fall lagged behind expectations, but we rallied in the post-Thanksgiving-December period to make the goal,” says Bauman. He notes that the company is doing a better job of merchandising the Swiss Colony catalog, relying on “lots of the tried-and-true pastries and cheeses that have been stellar sellers over the last few years.”
A new line of spa products helped Fullerton, CA-based Wine Country Gift Baskets meet its sales goals. The food and wine gifts merchant saw year-over-year holiday sales rise 2%-3% on a comparable circulation increase, says director of marketing Patrick Ahrendt. The company’s increased spending on search engine advertising helped too, he says.
The Web effect
In fact, for some merchants, search engine marketing (SEM) was as critical as circulation to their holiday performance.
Lake Bluff, IL-based Chelsea & Scott, which mails the One Step Ahead and Leaps & Bounds children’s products titles, reported a holiday sales increase of 9% on a 4% rise in catalog circulation. But Internet marketing manager Rachel Pendon says that holiday Web sales were up 24% from 2004’s.
In particular, the $70 million company was aggressive with search engine marketing, which accounted for 20% of its online sales, as compared with 15% the previous year. Holiday sales attributed to SEM rose 47%. Part of that resulted from the company’s launching its online campaigns earlier — in the beginning of November rather than in mid-November. Not only did the move gain Chelsea & Scott more early Web sales, Pendon says, but it also helped smooth out its sales curve.
Another factor, says Pendon, was refinements in the tools offered by Chelsea & Scott’s Web marketing agency, San Francisco-based NewGate. The company was better able to determine the ROI and ranking among key words on search engines, she says. Chelsea & Scott also provided more product information on the data feeds for favorable listings on comparison-shopping sites such as BizRate.
Toys merchant FAO Schwarz experimented with SEM for the first time this past holiday season, and CEO Ed Schmults believes it will yield the New York-based cataloger/retailer more sales in the future. “We’ll be better able to understand what customers are searching for and what names and brands they are searching under,” he says.
Holiday sales at FAO Schwarz met plan, says Schmults, even though the flagship Manhattan store was hurt by the New York City transit strike in late December. But direct-to-consumer sales rose by double digits — despite a double-digit circulation decrease. The company went to school on holiday 2004, during which it had relaunched the brand, following its purchase out of bankruptcy by investment firm D.E. Shaw Group in January 2004.
“In 2004 the FAO house list was not in very good shape,” Schmults says. In fact, between late 2003 and fall 2004 the catalog hadn’t mailed at all, and the Website and stores had been shut. So after some prospecting during holiday 2004, FAO reexamined its house file and circ strategy. “We were mailing smarter” in 2005, he says.
The cost of sales
December sales at Freeport, ME-based L.L. Bean were up 17% from 2004, says spokesperson Rich Donaldson, with e-commerce up 48% for the month: “We set records on a number of fronts, including 17 days that surpassed last December’s single busiest day at llbean.com and several new daily throughput records in distribution operations.” But Donaldson notes that “our holiday performance came at considerable cost.”
For one thing, the apparel, outdoor gear, and home goods merchant spent more money on integrated marketing efforts, including TV placements. For another, Bean waived all standard shipping and handling charges from late October until Dec. 22.
“Free shipping and increased marketing expenses in general will have an impact on profit,” Donaldson says, “so while 2005 will be a good year in terms of profitability, it may not be quite as stellar as 2004. But we’re satisfied with the demand results, and our customer file has never been stronger. Next year will be a tough act to follow.”
Holiday sales for Milwaukie, OR-based educational toys mailer Museum Tour were flat on flat catalog circulation. What’s more, the sales curve was later than usual, says Barbara Lund, merchandise and marketing manager for the $10 million company, making for what she describes as a “nerve-racking” season.
Lund thinks that “disaster fatigue” was a reason for the late surge in business. “Consumers felt guilty if they were spending on what they considered superfluous items” in the weeks immediately following hurricanes Katrina and Rita. “That sentiment didn’t die down until the last week of November, and until then holiday really didn’t kick in for us.”
This past November, Cyber Monday was the new Black Friday. The Monday after Thanksgiving has become to Web merchants what the Friday after the holiday has long been for brick-and-mortar stores: a shopping bonanza. But in 2005 every Monday from Thanksgiving until Christmas proved to be a Cyber Monday; a study by DoubleClick subsidiary Performics showed that each of the four Mondays between Thanksgiving and Christmas produced the week’s biggest sales spikes for e-tailers.
“E-commerce has become a buying channel as well as a browsing channel, and it appears consumers will browse on the weekends and buy when they return to work,” says Chris Henger, vice president/marketing at Performics. “E-commerce sales do actually spike on Mondays throughout the season and decline the rest of the week. This is a very real concept with major planning and budgeting implications for marketers and advertisers that are serious about capitalizing on the online channel.”