Sales gains for most, though some fall short of plan
Gadget cataloger TopiX Innovation Gallery enjoyed a 30% spike in holiday sales. At general merchant Spiegel and gifts title Eximious, holiday sales rose 20%. And Harry and David, The Popcorn Factory, and Lake Champlain Chocolates, among other mailers contacted by Catalog Age, all benefited from double-digit sales growth this past holiday season.
Sounds like the makings of a very merry holiday season for catalogers, no? Except that many mailers had already written huge sales increases into their plans. And so food cataloger Harry and David, for instance, despite a 15% jump in holiday sales, found itself just barely making plan.
There’s no doubt, however, that this season looked good from the outset. Economic indicators gave catalogers every reason to up their expectations. For instance, The Conference Board’s monthly consumer confidence index jumped from 130.5 in October to 135.8 in November and 141.4 in December, showing that consumers were in a “confident, free-spending mode,” according to Lynn Franco, director of the organization’s Consumer Research Center. And the University of Michigan’s Surveys of Consumers rated consumer confidence in 1999 the highest it’s been since the group began monitoring trends 50 years ago.
“A lot of people are feeling pretty good now with a lot of capital gains, realized and unrealized,” says Bill Williams, president/CEO of $425 million-plus Bear Creek, which produces the Harry and David, Jackson & Perkins, and Northwest Express catalogs.
When there’s this much confidence, people are more likely to spend on luxury goods, notes Peter Howard, vice president of marketing for Ross-Simons. Holiday sales at the $240 million gifts and jewelry cataloger/retailer ran almost 10% ahead of last year’s, leaving the company “slightly ahead” of plan, Howard says. And the Cranston, RI-based company’s sales gain came despite flat circulation.
“There are two issues at work here,” Howard says. “One is macroeconomic: Jewelry does well when the stock market and economy are doing well. At the same time, we like to believe we’re gaining market share due to strong merchandising and service.”
For Northfield, IL-based high-end gifts mailer Eximious, whose annual sales are less than $10 million, heavy prospecting and a 20% boost in circulation led to its 20% rise in holiday sales, says CEO Jeff Parnell. Likewise, aggressive prospecting and a quadrupling of circulation contributed to the 30% sales increase at $27 million TopiX Innovation Gallery, a Chatsworth, CA-based gifts and gadgets cataloger.
Both Eximious and TopiX noticed a surge in late sales in particular. According to TopiX president Alex Elnekaveh, orders placed in the final two weeks of the season made up 27% of his holiday business, compared to 14% last year.
Just a few years ago, many observers were giving up on struggling general merchant Spiegel. But this holiday season, the $587 million catalog division of The Spiegel Group proved them wrong. Overall holiday sales for the group’s Spiegel, Eddie Bauer, and Newport News catalogs rose 20%. As for circulation, pages circulated increased at both Spiegel (10%) and budget apparel book Newport News (5%). By contrast, however, apparel and home goods title Eddie Bauer reduced pages circulated 10%, says spokeswoman Debbie Koopman.
“Spiegel Catalog has intensified its customer acquisition and reactivation initiatives,” Koopman explains. “Newport News saw solid growth in its customer file due to improved retention and acquisition rates. And Eddie Bauer sharpened the focus of its merchandise and its presentation, launched a national advertising campaign, and successfully repositioned its home business. Also, Eddie Bauer reintroduced gadgets during the season and had strong response to them.”
Among smaller marketers, Burlington, VT-based Lake Champlain Chocolates enjoyed a 15% sales increase for the season, despite flat circulation. While director of marketing Allyson Brown attributes much of the rise to the economy, she says that the cataloger’s decision to run its lists against the U.S.P.S.’s National Change of Address file more frequently over the past year boosted response as well.
And though holiday sales at San Luis Obispo, CA-based Mo Hotta Mo Betta were flat, the food cataloger still came up a winner, since it had cut its circulation by one-third. “We chose to mail smarter this year,” saving 20%, says president Tim Eidson.
Feeling an online pinch
But while catalogers such as Sharper Image, Spiegel, and Ross-Simons boasted of triple-digit online sales growth, some catalogers blamed competition from online marketers for their disappointing results. Even Medford, OR-based Harry and David, which enjoyed nearly 400% growth in online sales, felt the pinch.
“We’re not as nimble in making quick price changes and other content changes on our sites as the start-up e-commerce competitors are,” president/CEO Williams admits. “We’re going to have to focus a lot more on the ‘Net to keep our market share for Web sales, at the very least.”
Online competition hurt other mailers as well. Though holiday sales at Foster & Gallagher’s HearthSong and Learn & Play toy catalogs rose slightly, “we came in a little below projections, due to extreme competition in the online toy sector,” says Sydney Klevatt, president of F&G’s $70 million-plus children’s division.
But Klevatt believes that if print catalogers can ride out the wave of loss-laden, price-slashing dot-coms, they can prevail. “At some point, the online companies have to make a dollar. And the weaker players will wake up this year and find they can’t make it.”
Then, too, the shipping snafus reported by Toysrus.com and other online-only merchants may work in the print catalogers’ favor. In fact, Klevatt says that during the holidays, his strategy was “not to try to fight the discount battle, but rather to stress that we can actually deliver the toys as promised.”