In response to the cooling economy, some small mailers are tweaking their holiday-season merchandising mix.
Not surprisingly, many catalogers are responding to lower consumer demand by offering more products at lower price points. For holiday 2001, Lakewood Ranch, FL-based gift-basket mailer Sundara is adding more items in the $20-$30 range, says owner Angela Grieco. Traditionally, most of the catalog’s gift arrangements cost $35-$145.
Grieco also plans to eliminate two of her most expensive items. “You have your own idea of what you want to offer in your catalog” she says, “but ultimately you have to bend to meet the demands of the economy” — and, of course, of customers.
Marietta, OH-based pasta marketer Rossi Pasta will also eliminate some of its more expensive gift arrangements — those that sell for more than $100 — this holiday, says president Marty Moore. The company sells pasta gifts with prices ranging from $19.95 to $149.95; the average price point is $29.95.
But it’s not just high product prices that may deter budget-conscious consumers. Hefty shipping costs may dissuade shoppers as well. Since Rossi Pasta charges for S&H by weight, the catalog will include items such as biscotti and cooking accessories that do not weigh as much as, say, jars of pasta sauce.
Taking a slightly different approach, Bozeman, MT-based footwear cataloger Schnee’s will be getting rid of some products that sell for less than $50 in order to boost its profit margins, says operations manager Jim Winjum.
Schnee’s isn’t eliminating all its lower-price, lower-margin goods, however. For instance, the cataloger will still sell accessories such as leather cleaner and foot warmers because “they are support items and help increase average orders,” Winjum says.
But Russ Gaitskill, of Lexington, KY-based direct marketing consultancy Gaitskill and Associates, does suggest that catalogers trying to improve margins consider dropping low-price items that customers order individually, rather than as part of a larger order. Once you factor what it costs you to ship a single low-price item to a customer, you may find “you cannot justify the expense of having the product on the page,” Gaitskill says.
Disregarding the economy
Despite the drop in consumer confidence and other disheartening economic trends, some mailers say it’s business as usual as far as selecting merchandise. In fact, Ontario-based household gifts mailer The Added Touch is actually expanding its product line of 750 items by 15%-20% and adding more products in the $100-$300 price range, says vice president Rudy Jilderda. The company hopes the new, higher-price merchandise will boost its average order size of $80.
Middlebury, VT-based Beau Ties also plans to expand its assortment for holiday, says president/co-owner Bill Kenerson. Every year the cataloger of bow ties expands the number of patterns it offers by 25%, and it will do so this year as well. It will also add more accessories to add on to gift purchases and boost the average order. Offering more choices will help drive business, especially during a difficult economy, Kenerson contends.
Caribbean Kite Co., a Timonium, MD-based business-to-business catalog, isn’t planning any changes to its merchandise assortment, says president/co-owner Jarrod Cronin. In fact, Cronin thinks the economic downturn may benefit his company: Because more people will likely opt for domestic vacations at destinations they can drive to, they are more likely to give kite-flying a go.
If you’re merchandising your book to appeal to price-sensitive consumers, Lexington, KY-based consultant Russ Gaitskill offers a few suggestions:
- Don’t underwhelm customers by reducing the quantity of items in your assortment too much. If customers have much less to choose from, they’ll buy less, and this will drive down your average order size.
- Negotiate with vendors the size of minimum orders. Suppliers, too, are feeling the economic crunch and therefore may be inclined to compromise as a means of retaining your business.
- Consider offering customers value “package deals,” such as a discount if they buy at least three sweaters or if they purchase the coordinating earrings with a necklace.