Live from Catalog on the Road Day; Challenges A-Plenty

Feb 13, 2004 10:30 PM  By

(Direct Newsline) Cambridge, MA–No matter what the channel, catalogers face challenges. Marketers from REI, Brookstone, and Potpourri Group shared some of their businesses’ experi

ences at the DMA Catalog-on-the-Road Day here Feb. 12. Outdoor gear and apparel marketer REI has 70 stores and distributes 35 million mailing pieces annually, said Mike Bowcut, director of direct marketing and analysis. Members of the consumer co-op pay a $15 lifetime membership fee, which entitles them to discounts and an annual dividend from the Seattle-based company’s profits. Members are encouraged to redeem the dividend money for merchandise, although they can get a check instead if they prefer.

Of course, not all members redeem their dividend dollars, said Bowcut. At one time, the company saw this as an easy way to fatten the bottom line. But, he said, they changed their thinking when they realized that members who redeemed their dividends had better retention rates.

The dividend check mailing in March comes with a catalog to encourage impulse buys. That is followed up by a percentage off coupon reminder, and then another postcard reminder in the summer.

About 85% of REI’s sales come from members. Member acquisition is very important to the company, said Bowcut, who noted the $800 million company has done better in that area at retail than in direct channels.

More than 75% of REI’s direct sales are online, a figure Bowcut is happy with, even though it is harder to collect source codes from Web buyers.

About 40% of Brookstone’s direct sales are generated online, said Gregory B. Sweeney, vice president/general manager, direct marketing for the cataloger and retailer. The brand’s site gets about 7 million visitors annually.

Brookstone has 272 stores, and 85% of the company’s overall sales come from retail. Catalog circulation currently falls at 15 million books annually, with two drops each of four individual catalogs. That is more than double the 2002 circulation of 6.5 million, and Sweeney said the company expects to nearly double the circ again this year, to 25 million.

The company’s Gardener’s Eden brand circulates 10 million catalogs annually and has three stores in New England. Sweeney said the company’s goal with the brand was to balance out the seasonal nature of the Brookstone business. Brookstone has shown 11% annual growth since 1996, posting annual sales of $434 million in 2003. The company has invested heavily in product development, and the majority of the items sold by the company are now the house brand. In contrast to REI and Brookstone, the Potpourri Group has 10 catalog titles –including Potpourri, In the Company of Dogs, Nature’s Jewelry, and Back in the Saddle — and no retail presence.Potpourri consolidated its operations in 2003 to its Chelmsford, MA ,location and is in the process of adding 100,000 square feet to its warehouse in Whitinsville, MA.

But, noted Bob Webb, senior vice president of marketing, an even bigger challenge has been consolidating systems. This initiative included moving five of the company’s titles to an order enterprise system and a consolidated database, installing inventory systems for all titles, changing the photo studio to a digital workflow, and linking all the catalog titles to an enterprise system.