Live from ACCM: “Power” Rangers Tell All

Boston–Monday’s Power Forum here at ACCM tackled several provocative topics, including how multichannel merchants can compete with the Wal-Marts and Targets of the world. One way not to compete, according to panelist Bart Sichel, principal of consulting firm McKinsey & Co.: by trying to sell commodity products at higher price points.

“You are going to fail with that strategy,” Sichel said, unless you focus on market segmentation, providing the right assortment, and working on how you position that assortment.

Moderated by Multichannel Merchant editorial director Sherry Chiger, the panel also included Love Goel, chairman/CEO of investment firm Growth Ventures Group and chairman of the board of ASAP, parent company of J.C. Whitney and Stylin’ Concepts; and Mike Muoio, president/CEO of Lillian Vernon Corp. Commoditization is indeed driven by the big-box retailers, Goel said, but the Web is not the cause; rather “it’s the prism that we see commoditization through.”

You can make money selling what Wal-Mart sells, however, if you find the right audience segment and market the merchandise appropriately. For instance, Goel said, “You can sell the same Wrangler jeans as Wal-Mart at a higher price point if you make them part of a Western lifestyle.”

Perhaps even more important than segmenting and differentiation is branding, said Muoio. “We call it ‘fool’s gold’: You can be differentiated to the nines, but if it’s not relevant to the customer, it’s not going to go.”

A brand is a promise, Muoio continued: “What do you promise to the customer?” He used the example of Pledge furniture polish that “cleans and shines–every time the promise is the same.” For Lillian Vernon, that means asking, “Can this product be personalized,” he noted. “As a merchant, you shouldn’t be putting products into your offer or your brand that aren’t differentiated.”

The Web effect on the catalog business is “the growing element of transparency,” Sichel said, thanks to features such as customer reviews, blogging, and comparison-shopping engines. Because of that transparency, Muoio added, “value proposition is a big deal.” You have to assume your customers have access to information about the type of products you sell. Companies such as Google and Netflix are reaping the benefits of the Web, Goel said, “while other companies blame the Web for everything that’s wrong with their lives today.”

The discussion turned to postal rates, which Goel pointed out were not catalogers’ biggest problem. More-pressing issues are allocating customers to the proper source, prospecting, and growing your file: “I think catalogers have bigger fish to fry than postal.”

The rate hike will make it even more important to look at everything in your business, Muoio said, including list hygiene, product density, and trim size. Mailers must analyze these factors and then analyze them again. But he urged catalogers to think hard before cutting circulation, which could lead to another rate hike soon if mail volume goes down and the U.S. Postal Service needs a way to make up the shortfall. Lillian Vernon, he added, is increasing its circ next year rather than decreasing it.

For his part, Sichel noted that after any postal rate hike, mail volumes tend to plummet, then rise again. There could be a competitive advantage, he said, “if you mail when other [catalogers] are cutting back.”-

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