Live from the ACC: When the Going Gets Tough…

Chicago–Sure, the economy ain’t great. But direct mailers are well positioned to ride out the tough times, according to Donn Rappaport, president of Princeton, NJ-based American List Counsel (ALC). And during yesterday’s opening general session of the 19th Annual Catalog Conference, he referred to statistics and a panel of catalogers to support his theory.

A packed luncheon crowd attended the session, entitled Tough Tactics for Turbulent Times. Rappaport cited a study that ALC conducted last year with New York-based research firm Winterberry Group that pointed out that direct marketing is the only medium that has posted consecutive gains for the past 50 years, regardless of the economic climate. Statistics from the study showed that as an advertising vehicle, direct marketing was more recession-proof than media such as broadcast, radio, and print advertising.

In fact, during the last recession of 1990-1991, direct mail grew at a rate of 1.5%, outpacing the 1.3% growth registered by the gross domestic product. And marketers have another reason to smile: according to the Winterberry/ALC study, direct mail will grow 7% between 2003 and 2005.

After presenting the results of the study, Rappaport moderated a panel consisting of Rebecca Jewett, president of Hillsborough, OR-based multititle mailer Norm Thompson Outfitters; Michael Sherman, president/CEO of another multititle cataloger, Fingerhut Cos.; Tim Litle of Litle & Co., a provider of payment processing services. Addressing how to refine merchandising strategies during economic downturns, Jewett stressed the importance of updating best-sellers while being sure to introduce new products into the mix. That’s not an easy task, she noted, especially now that the lines of marketing are becoming blurred. “For the first time, high-end consumers are shopping at [discount retailers, such as] Target. So there’s a lot more competition,” she said.

What’s more, during economic slowdowns, “there’s an inclination among marketers to pull back on inventory,” Jewett said, “but catalogers should not scale down inventory at the expense of ruining service levels.” Though it’s natural to fear having to liquidate inventory at a loss, Jewett emphasized the importance of understanding that the cost of a markdown could be less than that of a backorder, cancellation, or even customer abandonment resulting from insufficient stock.

Fingerhut’s Sherman urged attendees not to allow their house files to shrink during a lean year. Rather than eliminating prospecting and reactivation altogether, “spend your ad dollars in known profitable segments,” he said. “Analyze your page counts: Are you selling enough to justify the amount of pages in your catalog?” He also stressed the importance of using e-commerce to reduce the costs of taking an order.

Speaking of technology, Litle noted that “all systems are meant to support your business. There are no marketers that win on systems alone.” But encouraging systems development within your organization can increase sales, Litle said. For example, Quincy, MA-based apparel/cataloger J. Jill grew sales 8% simply by integrated back-end systems so that customers could place orders at store kiosks for merchandise not carried in its shops.

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