Nordstrom phasing out catalogs

It’s no surprise that $7.1 billion Seattle-based cataloger/retailer Nordstrom wants to grow its retail business. What may be a surprise to some is that Nordstrom, which posted $375.3 million in direct sales last year, is ostensibly getting out of the catalog business, 12 years after entering it.

Nordstrom’s rental list, which consists of 1.3 million names according to industry list services provider NextMark, is scheduled to come off the rental market July 1. What’s more, Nordstrom is no longer prospecting and has pulled out of the cooperative databases. While the apparel merchant will continue to mail catalogs and solo pieces to drive store and Website traffic, it will only minimally maintain a call center.

The direct division accounts for only about 5% of Nordstrom’s overall business, and the online segment is clearly driving direct sales. According to its most recent annual report, Nordstrom’s direct-to-consumer sales increased 28% last year. The company attributed the gain to a 58% gain in Web sales. Catalog sales, however, fell 3% from the previous year, which the company says is consistent with its strategy of shifting customers to the Internet.

In a 2004 conference call with analysts, president Blake Nordstrom said that Nordstrom was trying to master its front-end multichannel synergies. “We’re starting to learn how to measure and use [the direct division] a little bit better to drive customers to the full-line stores and back and forth,” he said. “We think there’s a lot of work to do there, and we’re working on the functionality that’s needed to be able to fully leverage that asset.”

Whereas the Nordstrom stores sell moderate-priced and designer apparel and shoes for men, women, and children, the catalog sold moderate-priced women’s clothing and shoes exclusively. Efforts to realign the catalog’s merchandising with the more fashion-forward store offerings a few years back “didn’t work,” says an industry source who requested anonymity, “because retail relies heavily on entire collections of apparel, whereas the catalog is item-driven.”

Nordstrom’s decision to ease out of catalog sales didn’t catch Casey Carey, director of marketing, data solutions for Broomfield, CO-based DoubleClick, off-guard.“We see this a lot from the retailers: One day they are mailing 15 million books, and the next day it’s zero and they are putting the money into advertising,” he says. “They tend to go big with little testing when they do direct and have no problem shutting it down when the winds change direction. For many of these companies, the [size of their] direct business is [equal to that of] a rounding error.”

What’s more, “the fact that Nordstrom has a large customer database through proprietary cards and Nordstrom Bank, as well as a top retail brand, makes concentrating on retail a feasible strategy,” Carey says.

Some in the industry lament the pending loss of Nordstrom’s list. “It removes a large, heavily used list from the marketplace, and there will surely be a ripple effect from the names no longer being mailed, just as there was when Fingerhut and Spiegel had their death spirals,” says Geoff Batrouney, executive vice president of New Rochelle, NY-based list services firm Estee Marketing Group.

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