Target Corp. is determined to get out of the catalog industry. It has retained Philadephia-based investment banking firm Libey-Concordia to find a buyer for its Marshall Field’s Direct, Signals, and ILoveaDeal.com titles. But the Minneapolis-based retailer has also announced that it will shut the catalogs this spring.
Target declined to comment, citing a policy of not cooperating with trade publications. But the company did tell the Minneapolis Star Tribune that the most popular products from the catalogs will still be available online. The final catalogs will mail in the spring, with orders fulfilled until June.
Target’s run in the catalog business has been brief. In March 1998, when it was still named Dayton Hudson Corp., it bought $190 million Rivertown Trading Co. from Minnesota Communications Group for $120 million. Rivertown had more than a half-dozen titles at the time, including Seasons and Wireless as well as Signals. The company folded Seasons and Wireless into Marshall Field’s Direct when it relaunched the department store’s catalog in August 2002. Marshall Field’s had closed its original direct division in the early 1990s.
In speculating as to why Target is exiting the catalog business, Kevin Silverman, an analyst with Chicago-based investment bank ABN-AMRO, says, “Prospecting generally is not working for them.” And if the company is not able to grow the house file, he reasons, “why would Target continually throw away variable paper and postage costs that might represent 15% of total revenue?”
If it can successfully migrate its catalog customers online, Target could save money, Silverman notes: “As the Internet gains momentum and credibility, it serves a lower-cost channel to reach customers as compared to the paper and postage costs associated with catalogs.” He suggests that Target set up kiosks in its stores to capture online sales from retail customers. “The Internet could be a good way for Target to maximize profitability,” he says.