Merchandise by Medium

Jun 01, 2003 9:30 PM  By

J&R Music and Computer World offers its entire product line in its catalog, on its Website, and in its store to give customers the same view of its goods regardless of which channel they choose to shop. The Macys.com Website shows less than half of the department store’s product line, because its customers have said they prefer to see an edited-down assortment online. And Patagonia, which features about two-thirds of its products in its catalogs and virtually its entire assortment online, carries anywhere from 10%-70% of its line in its stores, due to a lack of space.

As these examples show, there’s no one single approach to deciding what portion of your product line you should carry in each of your marketing channels.

What’s good for the gander…

For some mailers, being all-inclusive in all channels dovetails with their goal of tying all three channels together tightly. They want their customers to assume that they can get the same merchandise and the same service regardless of shopping medium.

“We try very hard not to compete with our own sources of distribution and want to make sure the same opportunities exist for customers in all three channels,” says Abe Brown, director of advertising and marketing for New York-based J&R Music and Computer World, a $292 million marketer of consumer electronics.

J&R sees offering its complete product line of more than 100,000 SKUs in all three channels as a competitive advantage. “We want to make sure customers are treated equally well, and that’s what makes us unique,” Brown says.

High-tech gadgets cataloger/retailer The Sharper Image takes a similar approach. While all of its 800-plus SKUs are always available on its Website, the “vast majority” of its products are also available in its 128 stores and its monthly catalogs, which have an annual circulation of 75 million. “Customers can use the catalog and/or the Website to research products and check out what’s new and then go into a Sharper Image store to see, touch, and feel the products and to ask questions in person,” says Tracy Wan, president/chief operating officer for the $421.1 million San Francisco-based company. Returns can be made in all channels as well, regardless of where the purchase was made.

Livonia, MI-based J&L Industrial Supply offers its entire line of metalworking tools — all 140,000 SKUs — through its 2,068-page catalog, its Website, and its field sales and telemarketing sales forces, says Chuck Moyer, vice president of marketing and supply chain management. J&L also sells its products wholesale to distributors in certain areas, such as Tennessee, Arkansas, and Louisiana, that aren’t large enough markets for J&L to send field sales reps.

Although different kinds of customers have different needs in terms of the products they’ll buy and how they’ll apply the merchandise to their businesses, Moyer says that it still makes sense to keep the entire line available through all channels. “Our Website isn’t really managed as a separate channel,” he says, noting that the Internet accounts for less than 5% of the company’s sales. “Rather, our Website supports the other channels.”

Then again, J&L hopes the ratio will drastically change once it unveils its revamped Website this month. The site is designed to be more customer-friendly and to encourage more online ordering. This way “more orders will be moved through the Web to reduce our operating costs,” Moyer says.

Real estate realities

While some multichannel marketers like the theory of selling their complete product line in each of their channels, in practice they can’t make it work. Often, the realities of real estate get in the way. Most cataloger/retailers don’t have the luxury of huge stand-alone stores, such as J&R Music & Computer World’s 300,000-sq.-ft. emporium in lower Manhattan. For companies such as Ventura, CA-based Patagonia, space restrictions dictate how much of the company’s merchandise line its 14 stores (plus its five outlet stores) will carry. “Our stores aren’t cookie-cutter,” says Kevin Churchill, merchandising director for the manufacturer/marketer of outdoor sporting apparel and gear. The size of Patagonia’s stores varies from 2,000 sq. ft. to 9,000 sq. ft.

Space, or the lack thereof, has also led Patagonia to offer less than 70% of its merchandise in its print catalogs. “As our line has grown, we’re carrying less of it in the catalog,” Churchill says. “We’ve gotten into more areas, such as rock-climbing clothing and women’s bodywear such as sports bras, and it became less efficient for us to carry everything in the catalog.” Whereas five years ago Patagonia sold approximately 400 styles, today it sells 450 styles, amounting to 1,400 SKUs. Including its two major seasonal catalogs, the company distributes 8-11 catalogs a year.

Beyond mere space issues, other factors, such as relevance to specific markets or locales, can determine marketers’ channel distribution. For example, there are two reasons that Patagonia doesn’t sell surfboards in all of its stores: because it doesn’t have the space to house them — and because some Patagonia stores are located inland, where there’s minimal demand for surfboards, Churchill says.

Then there’s the matter of distribution. Because they’re drop-shipped by the vendors, many of the gifts that 1-800-Flowers.com sells through its catalog and Website, such as baked goods, aren’t carried in the Westbury, NY-based marketer’s roughly 120 stores (about 85 of which are franchised, with the remainder owned by the company).

The stores, says Ken Young, spokesperson for the $497.2 million company, also sell only those items “that make the most sense” to carry in a brick-and-mortar environment — the kinds of gifts “you might naturally expect to find at a florist shop,” he says, such as some gift baskets and stuffed animals, candy, and candles.

The Web: limitless or limiting?

Patagonia and 1-800-Flowers are among those marketers that view the Web as the ideal channel for showing off their entire line of goods. After all, the limitless space of the Web gives them the ability to describe infinite products in detail.

At Broomfield, CO-based Corporate Express, a $5 billion marketer of office supplies, “we have a more limited offering in our catalog than on the Website because you can only print a catalog so big, and it’s cheaper to put the less popular items online,” says vice president of marketing Ian Heller.

Despite that unique advantage of the Internet, however, some prefer to limit their online offerings.

“I don’t think customers have the patience to go through every item online,” says catalog merchandising consultant Joan Burden Litle, president of Lowell, MA-based The Catalog Connection. “Besides, customers often use the Web only to place orders rather than to shop it completely.”

Many customers, Litle says, count on catalogers to edit an array of products and offer only “the best” in their catalogs and Websites. When shopping for electronics, for instance, “customers want to look at the three best PDAs, not 10. Tell me which the best ones are, because catalogers are supposed to be the experts,” Litle says.

Helaine Suval, senior vice president/general merchandise manager for department store retailer Macy’s, has found that thinking to be the case among her company’s customers. Macy’s carries less than half of its retail product line on its Website.

Macy’s, the New York-based unit of Cincinnati-based conglomerate Federated Department Stores solicited customer feedback via e-mail, and “customers told us that they want us to edit assortments for them online,” Suval says. “A customer shopping online will view only so many Web pages, because it can be very overwhelming to come in and sort through everything.”

That said, Macy’s has added product lines to its original online assortment per customer feedback. Last fall, for instance, the company began selling baby apparel on the site; this past spring, Macy’s added women’s plus-size apparel, also per customers’ wishes.

But Robin Lebo, president of the Earlysville, VA-based consultancy Lebo Direct, believes that catalogers can cater to consumers seeking specific goods while still carrying their entire product line on their sites. That doesn’t mean listing scores of items haphazardly on page after page accompanied by minute thumbnails, however.

“The key is having a useful table of contents that allows the consumer to find what he is looking for, quickly and easily,” Lebo says. “Certainly, one of the advantages of being online is that you can offer customers a variety of ways to shop: by keyword, product category, brand, price, best-seller, etc. And look at the opportunity to cross-sell and upsell! You can’t do that if you limit the product offering.”

For Macy’s sister department store chain Bloomingdale’s, carrying its entire merchandise line in the print catalog would create a new set of problems. As with many others retailers, Bloomingdale’s offers in-store markdowns almost daily. If, for instance, Bloomingdale’s marks down a Liz Claiborne blouse 40% for a store sale, the company wouldn’t be able to adjust the price in an already-printed catalog. So the Bloomingdale’s by Mail catalog carries just 30% of the items that the Bloomingdale’s store chain carries, says Franz Weiglein, president of Bloomingdale’s Direct. In fact, most of the catalog items are private-label exclusives.

“The biggest problem we face is that while the life of the catalog is fairly long, the stores don’t have any item priced one way for very long,” Weiglein says. “So if we had increased merchandise crossover between the channels, something that cost $90 in the catalog would have two sales in the stores before the life of the catalog is up.”

Because Bloomingdale’s by Mail develops private-label products exclusively for the catalog, “we control the pricing,” Weiglein says. The catalog does carry some of the same name-brand items sold in the stores, such as Ellen Tracy and Polo Ralph Lauren apparel, “that we feel are important,” he adds, noting that such brands aren’t marked down as frequently as other brands.

As for its other store product crossovers, the Bloomingdale’s by Mail catalog carries many of the same bed and bath products. “There’s no sense in the catalog developing its own sheets and towels,” Weiglein says, because there’s less price slashing in the stores in those categories.

Merchandising by audience

For some multichannel marketers, the target audience, rather than the marketing medium, determines the breadth of the merchandise offering. For instance, while Corporate Express features more of its SKUs online than in its print books, it doesn’t feature all of its more than 200,000 SKUs on any one site. Rather it has several market-specific Websites and customer Intranet sites with offerings that are edited for the customer segments or individual clients in question, Heller says. The number of SKUs offered range from as few as several hundred to several thousand — the latter being tailored to larger customer bases, such as office furniture buyers or facilities managers.

“In some cases, we limit the online offering for an account because the customer is trying to control office supplies expenses,” Heller says. A corporate client might specify 2,000 items that its employees can access through a custom Corporate Express Intranet site. In the case of writing instruments, “many individuals are fussy about which pens they write with,” Heller continues. “But large companies like to limit these costs, so they specify a dozen choices and remove all other options on the Intranet site.”

Heller says that custom-tailoring Intranet sites for customer companies is “very easy for us to do.” But in many cases, companies don’t control Intranet usage very tightly — the purchasing departments “feel like they have bigger fish to fry than policing pen selection,” he says. “So employees will buy their own preferred pens from local providers like contract stationers or retailers and expense them.”

Regardless of your market or approach, the most important thing across all channels is “maintaining a consistent brand image,” consultant Litle says. “If you’re known for gadgets, don’t throw in a pair of khakis or a canoe on your Website.”

Channel Crossings

Macy’s, which started as a department store in 1858, launched a print catalog in 1998 — at about the same time it made its two-year-old Website commerce-enabled. But less than four years later, in early 2002, Macy’s and its parent company, Cincinnati-based Federated Department Stores, eliminated the print book.

The Macy’s catalog emulated sister catalog Bloomingdale’s by Mail in selling mostly merchandise that wasn’t also sold in the stores, says Macy’s senior vice president/general merchandise manager Helaine Suval. But as sales from Macys.com took off, “we made the decision to align our online assortment more with the store assortment to be able to say to customers that they could buy either way,” she says.

As a result, the print catalog business weakened. “For us to have tried to completely change the catalog really meant we’d have had to start over again in terms of appealing to the right customer,” Suval says. “We chose to spend our resources on building the online business, which was our strength.”
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