Well-Schooled Catalogs

Oct 01, 2003 9:30 PM  By

Before sending their children back to school, consumers raided catalogs, Websites, and stores with renewed enthusiasm. The National Retail Federation estimates that families with school-age children will have spent an average of $450.70 on back-to-school items, 2% more than last year, though 1% less than the $456.70 families with school-age children spent in 2001.

Other analysts, however, think the amount spent by consumers could top the sums spent in 2001 and even earlier. Indeed, the 2003 back-to-school season “could be one of the best in years,” reports Dan Barry, senior retail analyst at New York-based Merrill Lynch.

The $13 billion in tax credits distributed in July to about 25 million U.S. families no doubt contributed to the increased consumer spending. “With a good sell through early in the season, at full markup, third-quarter profits should be above consensus estimates,” Barry says.

Increased sales despite flat circ

“Business is back,” exclaims Geoff Batrouney, executive vice president for New Rochelle, NY-based list firm Estee Marketing Group, who estimates that the number of list orders and total names being rented is up more than 25% from last year. “Mailers have hammered their house files long and hard and didn’t prospect as much because business conditions didn’t justify it,” he says. “However, this year is different. We haven’t seen these levels since the first quarter of 2001.”

Few of the mailers contacted by Catalog Age, though, had increased their back-to-school circulation. Portland, OR-based Hanna Andersson, for instance, opted for a conservative approach. Because consumers now buy fall clothes later in the season, says president Phil Iosca, the children’s apparel cataloger held back on prospecting, preferring to wait until late fall and the holidays.

Despite the flat circulation, however, sales are “a little bit ahead of last year,” Iosca says.

New York-based mailer Alloy also played it safe in terms of circulation. The teen apparel and sports gear cataloger, whose titles include Girlfriends L.A., Dan’s Comp, and CCS, kept circulation flat and prospected less than it had last year. Overall back-to-school performance, says chief financial officer Sam Gradess “has been roughly flat.”

Plano, TX-based cataloger/retailer J.C. Penney has been steadily cutting catalog circulation during the past few years. So while its comparable department store sales increased 7% in August, to $1.3 billion from $1.2 billion last year, combined catalog and Internet sales dipped 2%, to $183 million from $187 million. Penney had expected the decline, however, which it says resulted from fewer planned promotional events and less clearance merchandise. In fact, the company reports a “positive response” to its back-to-school apparel, and its online sales had actually soared 40% for the month.

White Marsh, VA-based Peace Frogs, a manufacturer/marketer of apparel and accessories for teens, also enjoyed a positive response to its back-to-school line — so much so that sales increased 15% on flat circulation. Founder/president Catesby Jones says that the company’s sales have been on the rise since June. Best-sellers include $49.95 hooded sweatshirts and $15 “cheer” shorts.

Polo shirts, however, haven’t performed so well for Peace Frogs, a fact Jones blames on “oversaturation” in the market. But any oversaturation hasn’t hurt L.L. Bean. In fact, one of the strongest back-to-school sellers for the Freeport, ME-based apparel, home, and outdoor gear mailer was its $19.50 short-sleeve polo shirt.

Bean spokesperson Rich Donaldson credits the success of the polo shirt — and of the cataloger’s overall back-to-school sales — in part to the company’s renewed emphasis on value. “Value propositions have been at the heart of our catalog marketing,” he says, “and customers, including prospects, are responding.” The online description of the children’s version of the polo, for instance, notes that it’s “piqué-knit from breathable cotton for year-round comfort at school or at play” and emphasizes the “rugged construction [that] ensures long wear.”

All told, August sales at $1.4 billion L.L. Bean were up “by a double-digit percentage increase over last year,” Donaldson says, exceeding expectations and despite flat circulation. Sales of back-to-school staples such as backpacks and organizers have been particularly strong.

Budgetary concerns

The budgetary constraints hobbling a number of states, such as New York and California, could end up benefiting some catalogers. Faced with cutbacks, an increasing number of school districts are no longer stocking basic school supplies such as glue, construction paper, and rulers. Instead, they’re requiring parents to buy these supplies.

Office supplies marketers such as Staples and Office Depot are capitalizing on the trend by bundling best-selling supplies. And Colchester, CT-based S&S Worldwide has partnered with corporations such as Alcoa to offer their employees discounted merchandise. Consumers who click on the Alcoa employee Intranet, for example, would be routed to an S&S Worldwide landing page where they then could take advantage of 10%-15% employee discounts.

To accommodate the influx of customers visiting the Website, S&S Worldwide spent the past 18 months tinkering with its e-commerce capabilities, such as enhancing its search optimization and making sure that every item it carried was available on its Website. The cataloger also promoted its offerings with an e-mail campaign.

The effort has paid off for S&S Worldwide, whose titles sell recreational and therapeutic supplies for childcare, nursing, and physical rehabilitation markets. Back-to-school sales rose 7% on flat circulation, says Hy Schwartz, vice president of business development.

S&S Worldwide is having a great back-to-school season,” Schwartz says. “Granted, the growth number of our sales is not spectacular, but it’s really profitable growth.”

For many consumer marketers, of course, back-to-school is a harbinger of the all-important holiday season. Given the solid sales that many have seen so far, catalogers have cause for guarded optimism.

As L.L. Bean’s Donaldson says, “What we’re seeing with overall retail activity makes us feel encouraged with what the future has in store for us.” — Additional reporting by Margery Weinstein

Mars Boosts Science Mailer’s Sales

Late-summer sales surged nearly 30% at Edmund Scientific’s Scientifics catalog — but demand for school supplies such as compasses and digital pens aren’t the sole reason. Catalog director Pat Ragan says that sales of telescopes were especially hot. In August the planet Mars was closer to Earth (a scant 34 million miles away!) than it had been in more than 60,000 years, a boon to amateur astronomers. Nonetheless, the boost in late summer sales is even more impressive, considering that the marketer — a division of Tonawanda, NY-based Science Kit & Boreal Laboratories — mailed only 8% more catalogs than it had the previous summer.
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Back-to-School Performance at a Glance

Alloy (teen apparel and accessories): flat sales on flat circ
French Toast (school uniforms): “ahead of last year” on flat circ
Hanna Andersson (kids’ clothing): “ahead of last year” on flat circ
L.L. Bean (apparel and accessories): sales up 7% on flat circ
Peace Frogs (teen apparel): sales up 15% on flat circ
S&S Worldwide (school supplies): sales up 7% on flat circ

PC Connection Scores with College Kids

While many marketers are targeting the parents of middle-school and high-school students, at least one cataloger is striving to be the BMOC — the big marketer on the college campus.

“College students are an important group of customers for us,” says Dale Kendall, senior director of e-commerce at Merrimack, NH-based PC Connection. And the computer reseller is making a concerted effort to reach them online.

Through its GovConnection subsidiary, which handles sales to the government and educational institutions, PC Connection has partnered with information technology departments at more than 70 colleges and universities, ranging from Ivy League schools such as Harvard to large state universities such as the University of Minnesota.

“In many cases, these partnerships include selling IT products directly to students on campus,” Kendall explains. “It’s a good opportunity for us because our relationships with major manufacturers allow us to offer students aggressive pricing on hot products such as notebook computers and digital cameras.”

The key, Kendall says, is making it easy for students to shop online. “To do that, many of our partnerships allow students to create their own personal accounts on our b-to-b Website,” he says. Using a “self-enrollment” feature, registered students at the affiliated schools sign on to the site and can buy items from a list of IT products preapproved by the school or from PC Connection’s complete online catalog. Discounts on the merchandise provide an additional incentive for the students.

“Last fall we upgraded our Website to include this self-enrollment feature, and it was a solid success,” Kendall says. And with this year’s general trend upward in IT purchases, and the continuing migration of PC Connection’s business to the Internet, “we have high hopes for the program again this year.”
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