List Watch: Making Retail Names Work

Apr 01, 2001 9:30 PM  By

Consumers and marketers are becoming multichannel — leading to interest in retail lists

When renting names, catalogers used to shy away from retail lists. The reasoning was that people who shopped in stores weren’t necessarily likely to shop via mail. But with the rise in multichannel marketing, some believe that retail lists are now more productive for mailers. Or as Kathy Duggan-Josephs, president/CEO of Ridgefield, CT-based list firm D-J Associates, puts it, consumers are “becoming multichannel as well.”

Marketers can thank the Web for expanding shopping horizons. “The Internet has brought about a fundamental change in consumer attitudes,” says Paul Ritter, director of online retail strategies for Boston-based research firm The Yankee Group. “Our data show that consumers are becoming far more comfortable purchasing more via channels that are new to them, including catalogs as well as the Web.”

Several years ago, Ritter notes, online shoppers were by and large wealthier and more technologically savvy than retail customers. As Web penetration has increased, though, the profile of the typical online shopper has come to resemble that of the typical store customer. And as the Internet has made remote buying more acceptable, it has introduced many brick-and-mortar buyers to the joys of catalog shopping. The increasing trend of dot-com pure-plays now mailing print catalogs further reinforces this concept.

Therefore, the value of renting retail lists, Ritter says, “has increased substantially because even if those customers have strong brand loyalty to the store, they’re more inclined now to purchase via additional channels than they may have been, say, two years ago.”

Distrusting the theoretical

At least that’s the theory. But a number of catalogers remain wary. “Whenever we’ve tested retail lists in the past, they’ve never worked,” says Jules Silbert, executive vice president of New York-based multititle mailer Brylane, whose catalog stable includes apparel books Chadwick’s of Boston and Roaman’s and home decor catalog Brylane Home. Testing retail lists “might be worthy of further consideration,” he concedes, “but we haven’t planned to do so yet.”

Paul Fredrick Menstyle, a Fleetwood, PA-based men’s apparel cataloger, may begin testing lists from men’s clothing stores soon, says vice president of marketing Allan Abbott. “But I think there’s kind of a social element to retail shopping, and retail shoppers want to touch and feel the apparel. If all you know is that somebody walked into a particular store and bought something, that doesn’t really give you any indication that he might buy through your catalog.”

In fact, some cataloger/retailers have difficulty converting their own retail customers into catalog buyers. “We’ve never been able to marry our catalog and retail lists even though we maintain a significant retail database,” says Gary Rovansek, president/CEO of Aurora, IL-based motivational products manufacturer/marketer Successories. “Still, [prospecting among retail customers] is something we’d consider again, because I don’t see why if customers shop online they wouldn’t shop by catalog.”

A model solution

For Macys.com, the New York-based apparel and accessories catalog/Internet unit of department-store chain Macy’s, modeling has been key to making retail names work. When parent company Federated Department Stores launched the Macy’s catalog in August 1998, it gave the fledgling mailer access to its entire retail database of more than 60 million customers, which includes buyers from the Bloomingdale’s, Bon Marché, Rich’s, and Burdine’s retail chains.

“We have to be very precise in selecting the right names to prospect,” says Gary Ostrager, vice president of marketing for Macys.com. “We have to build models based on mailings to people who’ve placed mail orders with us. And it’s not until then that we can go in and do our analytical work on all these retail buyers. A lot of catalogers with access to large lists like ours cut corners, but that doesn’t mean they’re getting the right results.”

The Macy’s catalog group worked with Federated’s Fingerhut Cos. catalog division and cooperative database provider Abacus Direct “to create regression models that ‘unlocked the code’ to retail names,” Ostrager says. “We strived toward building the proper algorithm that would define the key discriminators within the retail files to find the best prospects. And we figured this out through a lot of testing.”

Macy’s by Mail built four models in all, which it then tested against segments of the Federated retail file. But in January, the division’s focus shifted to using the print catalog largely as a vehicle to drive traffic to its Website. So it is building new models, again using Federated retail names as well as its house file.

More retail files on the market

But even catalogers convinced about the value of retail prospecting lists have traditionally hit a roadblock when looking to prospect to these lists — limited availability. While there have always been some prominent retail lists available, most of them, culled from store credit-card databases, “have gone on and off the market for years, because most retailers have never considered themselves as direct marketers,” D-J Associates’ Duggan-Josephs says.

But this mindset is beginning to change. Duggan-Josephs says a number of retailers have inquired with list firms during the past few years about marketing their lists for the first time. “These are companies that haven’t been involved in direct marketing but plan to be soon,” she says. “Some want to start catalogs and put their lists on the market, recognizing that they’re multichannel marketers now.”

And as more lists become available, marketers such as Pottery Barn may be willing to experiment — particularly when it comes to online ventures. “We’re changing our ideas on e-commerce and retail,” says Pottery Barn director of marketing Susan Quintana. “Retail lists might open the door for our e-commerce efforts.”