San Francisco–At the Annual Catalog Conference’s Third Power Forum yesterday, there were no industry topics that the panel of catalog leaders–Gary DeMaine, president/CEO of Chinaberry; consultant George Ittner, formerly of Newport News; Steve Lightman, president/CEO of Crosstown Traders; and Dave Vander Zanden,president/CEO of School Specialty–didn’t tackle.
Moderated by CATALOG AGE editorial director Sherry Chiger and consultant Mark Swedlund, the Power Forum began with Ittner refuting research that suggests declining household penetration across the catalog industry. “We are not seeing a seismic change versus the other channels,” said Ittner, noting that depressed response was a result of the economy rather than a reflection of the industry. “The good news is that we don’t have a channel meltdown. The bad news is that we are in the toilet with everyone else,” Ittner said.
Lightman added that regardless of the economy, catalogers need to remember that their key asset is their 12-month buyer file. The importance of the buyer file resurfaced in a discussion of M&A activity. “The front end of the business is what people are looking for, not the back-end systems,” DeMaine said.
In discussing acquisitions, the attention turned to Vander Zanden, who is at the helm of a company that has grown largely via its 49 acquisitions. “The catalog industry lends itself to acquisition,” he said. But you need to have a focused plan before you acquire additional businesses, he continued. Issues surrounding consolidation and integration among the titles must be well thought out.
Competition was a hot topic as the executives noted that now, more than ever before, catalogers are fighting a competitive war with retailers. “After all, retailers can reprice any time and remerchandise at will,” said Ittner. But catalogers can counter this retail advantage with their ability to promote based on testing. “In the 2002 holiday season, retailers were promoting heavily,” said Lightman. “But the discounting methodology is the key to the promotion,” and companies need to inspire customers to buy without turning them into discount shoppers.
But what do you do when your competition comes from a couple of well-known Web marketers? “I’m between two 800-lb. gorillas named Amazon and Barnes & Noble,” declared DeMaine, whose Chinaberry title sells children’s books. Unable to win over buyers based on price as his category-killer competitors do, DeMaine decided to focus on excelling in customer service functions and delivering unbeatable copy.
When asked why spending on Web-related marketing and prospecting was not increasing, Lightman explained that many are now viewing their sites as they once did 800-numbers, “as a part of the cost of doing business.”
As for the future and the pressing issues facing the industry, the usual suspects made an appearance: privacy legislation, spam legislation, use tax, and of course, postal reform. But the session ended with a twist: talk about the opportunities abroad. Most agreed that the European market is not as promising as many would think: “Europe is well developed and sophisticated; they don’t need American catalogs,” said Ittner.
But the panel identified marketable areas such as Latin America (specifically Brazil) and Asia (especially China). Vander Zanden talked about the improvement in transportation and roadways that will result from the 2008 Olympic Games in Beijing as an opportunity for marketers. He said that companies should try to manufacture or source products in the countries themselves and establish a unique line of products, not simply translate their U.S. books