The Sweet Smell of Sales

Ah, the scents of spring — freshly mown grass, budding flowers, the economy picking up.

What was that last one again?

“I can just smell the economy turning around,” says Daryl Bunn, president/founder of Winright’s, a Jacksonville, FL-based cataloger/Web marketer of fine art.

Bunn describes the fourth quarter of 2001 and most of the first quarter of this year as “miserable” for Winright’s before adding that business started picking up in March. Based on the strong start to spring, now Bunn declares that he has “a positive outlook” for the months ahead.

So do many other catalogers, buoyed by early spring sales that for the most part are just slightly better than last year’s sales.

While such modest gains would not have been cause for rejoicing a year or so ago, the world — and the economy — has changed a lot during the past 12-18 months. Mike Wilson, general manager of Bart’s Water Sports, sums up the sentiment of many mailers: “We are maintaining an even keel with last year. We feel pretty good about this, all things considered. We wanted growth, but the reality is that we are just lucky to be maintaining the level of sales that we are in this economy.”

With annual sales of $400 million, multititle mailer The Swiss Colony is appreciably larger than Bart’s Water Sports. But the Monroe, WI-based cataloger, whose titles include gifts books Seventh Avenue, Midnight Velvet, and Ginny’s, is also seeing flat sales on flat circulation. And like Wilson, Swiss Colony president John Baumann is satisfied.

“In light of the difficulties of last fall, to hold our numbers intact is a pretty good situation to be in,” Baumann says. “At least economically things aren’t in decline mode anymore. It’s maybe more of a maintenance mode, and that gives us reason for optimism that the economy will really turn around.”

On the rise

If the catalogers with flat sales are content, those who are seeing sales increases are gleeful. Spring sales for the Lenox Collections catalog, which sells tabletop items and collectibles, are 10% above plan, “which is wonderful after what we saw this fall,” says director of catalog Maria Youth. The Langhorne, PA-based marketer has seen a steady increase in response since January, she adds.

Early spring sales for Portsmouth, VA-based food cataloger The Smithfield Cos. were also better than expected, “up close to double digits from last year,” says director of marketing Steve Jordan. That the increase came despite flat circulation was all the more impressive. In addition to baked hams catalog Smithfield Collection, the company mails The Peanut Shop of Williamsburg catalog.

Stu Zirin, president of Rolling Meadows, IL-based Silvo Home, which sells home improvement products, credits the continuing “nesting” trend for his catalog’s solid sales — 4% or so above plan.

“People still want comfort stuff,” Zirin says. “Even though people are watching their money, they’ll spend to make themselves feel good.” And with the renewed emphasis on hearth and home, he suggests, products that help people spruce up their surroundings perk up their spirits too.

It’s not just the smaller mailers that are having a good season. Dodgeville, WI-based apparel catalog giant Lands’ End exceeded plan, with revenue for February and March up 10% from last year. And March catalog sales for San Francisco-based high-tech gadgets marketer Sharper Image climbed 35%, to $8.5 million from last March’s $6.3 million.

The catalog and Internet business of Los Angeles-based women’s apparel marketer Frederick’s of Hollywood is up about 30% for the fiscal year, which ends July 31, says vice president of marketing Danielle Savin. And that’s on flat circulation. “Since February, all depressed response has disappeared,” says Savin, attributing the increase to improved merchandise.

Only one marketer contacted, Los Angeles-based ceramics cataloger/retailer Cottura, reported a sales shortfall. Although the company increased circulation 15%, “we’re down about 10% in catalog sales compared to last year,” says president Jim Zimmerman.

Not that Zimmerman is overly concerned about the soft spring. “I know that in some areas retail luxury is down 60%, so why shouldn’t catalogs be taking a hit?” he asks.

Seizing the reins

While external forces such as the economic recovery and the renewed focus on the home are helping to boost some catalogers’ sales, other marketers have tweaked their creative, modified their merchandising mix, and revamped their mailing plans to goose sales. Outdoor gear manufacturer/marketer Patagonia, for instance, picked up sales by mailing a book in late January — something it had never done before.

Spring Sales at a Glance
CATALOG SALES VS. LAST YEAR COMMENTS
Bart’s Water Sports (boating supplies) flat circulation flat
Bas Bleu (books) flat on budget, with slight increase in average order size
Cottura (Italian ceramics) down 10% circulation up 15%
Frederick’s of Hollywood (lingerie) up 30% circulation flat; includes Web sales
French Country Living (home decor) up 10% “a hair below plan”
Hanna Andersson (children’s apparel) on budget slightly above last year
Into the Wind (kites) up 3% had expected flat sales
Lands’ End (apparel) up 10% first eight weeks of fiscal year
Lenox Collection (collectibles) 10% over plan average order size down slightly, but response rates are up
Patagonia (outdoor gear) on budget circulation down 15%
Potpourri Collection (crafts, gifts) on budget “somewhat over last year”
Sharper Image (gifts/gadgets) up 35% catalog sales for March
Silvo Home (home maintenance products) 4% above plan projecting annual sales rise of 4%-5%
Smithfield Cos. (food) “up close to double digits” circulation flat
Swiss Colony (food, gifts) flat on budget, with circulation flat
Tuttle Golf Collection (golf apparel) “better than last year”
Wine Country Gift Baskets (food gifts) on plan plan was “fairly aggressive”

At 68 pages, the January book was “smaller and more focused” than Patagonia’s typical 80- to 100-page catalogs, says Morlee Griswold, director of direct marketing for Ventura, CA-based Patagonia. Mailed mostly to customers, the book sold Alpine jackets and other winter gear at full price — “which we were concerned about,” Griswold admits. But because winter weather arrived late in the season throughout most of the country, “it was a very good book for us,” she says.

Overall, Griswold says that Patagonia is back on plan in terms of sales: “We have recovered from Sept. 11 and are doing well.”

Multititle gifts and needlecrafts cataloger Potpourri Collection mailed several of its books a week earlier in the season, says president Jack Rosenfeld, which may have helped boost sales somewhat over last year’s levels. The Medfield, MA-based company also expanded the product line of its Catalog Favorites title. The book had launched in 1998 as a collection of merchandise from Potpourri’s other catalogs, which include The Stitchery, Serengeti, and In the Company of Dogs. “But we started introducing some brand-new items in the catalog that are unique to Favorites,” Rosenfeld says, “and those have done very well for us.”

Rosenfeld also believes that “value pricing” may be strengthening Potpourri’s business. “We have attempted to make sure that we have a fair offering of all price points within the range of what we ordinarily offer,” he explains, “and we’re seeing some strength in the value-priced items.” So that it can sell lower-priced goods while retaining its profit margins, the $125 million Potpourri is doing more direct importing.

In fact, lower-priced products are doing so well for the company, Rosenfeld says Potpourri is considering launching a spin-off gifts book next year. The next catalog would have an average price point of $14.95-$29.00, which is $5-$10 lower than the average price point of most of Potpourri’s current catalogs.

Wine Country Gift Baskets launched an e-mail campaign to spur Easter sales, says director of marketing Patrick Ahrendt. Because Easter fell earlier than usual, the Fullerton, CA-based gifts mailer sent out e-mails shortly before St. Patrick’s Day. Although Ahrendt couldn’t specify the results of the campaign, overall he says that Wine Country Gift Baskets’ spring sales have been on plan — and that the plan was a “fairly aggressive” one.

“We were affected by the economy certainly,” Ahrendt says, “but our price point really helped us, since we are not that high end. And people always buy gifts.” Most of the cataloger’s offerings cost less than $50.

While Wine Country Gift Baskets’ e-mail campaign may have boosted sales, the e-mail campaign of The Smithfield Collection “didn’t have the desired effect,” admits director of marketing Jordan. The cataloger sent out e-mails promoting a $15 discount on smoked turkeys. But consumers didn’t bite. “As a matter of fact,” Jordan says, “we sold more hams.”

Word of the day: ‘conservative’

While the mailers interviewed by Catalog Age profess to be optimistic that the economy is picking up, they’re nonetheless taking a cautious approach to their marketing plans. Although many consultants advise catalogers to step up prospecting during economic downturns, to ensure that they’re ready to capitalize on the eventual uptick, nobody seems to be following that advice.

Whereas prospects used to make up about 60% of Patagonia’s circulation in the past, this year they account for just 50%, Griswold says. But for its next fiscal year, which starts this month, Patagonia plans to increase circulation 18%. “We’re just instituting the plan we had for this year next year,” she says.

Home decor cataloger French Country Living also continues to prospect, but “we are being a tad bit more conservative and not as risky,” says CEO Bringier McConnell. “We won’t go out on a limb with lists. We’re sticking to the tried and true [lists and databases] that have worked in the past.” Spring sales for the Great Falls, VA-based mailer are up 10% over last year’s and “just a hair” below plan, he says.

Like McConnell, Silvo Home’s Zirin uses the word “conservative” to describe his circulation strategy for the rest of the year. As a smaller catalog — its 12-month buyers file has 80,000 names — Silvo can’t afford to cut back on prospecting. And in fact, it will probably continue to mail 80% of its catalogs to prospects this year.

“We’re still testing new lists,” Zirin says. “But we’re being conservative in that we’re mailing fewer tests that might not work.”

Prospecting to prosper

Prospecting is also a “heavy component of our circulation,” says Phil Iosca, president/CEO of Hanna Andersson. The Portland, OR-based cataloger/retailer sells children’s apparel, so it continually needs to cultivate new customers to replace those who outgrow its merchandise offerings.

Hanna Andersson hasn’t changed its proportion of prospects to customers, and though “we looked at circulation to eliminate weak segments,” Iosca says, he adds that the company does so on an ongoing basis, regardless of the economy.

All told, Hanna Andersson’s spring sales were in line with plan, which called for a “modest” increase over last spring, Iosca says. “Barring any disasters, we are expecting to see better sales gains rather than keeping even with plan.”

But Iosca won’t allow himself to be too optimistic about the future. “Trouble in the Middle East may be affecting customers a bit,” he notes. “We have to wait and see how that plays out. You can’t look at anything in terms of sales this year without looking to external forces too.”

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