Availability of fresh or unique merchandise was a primary concern of more than a third of the respondents to Catalog Age’s 2003 Benchmark Report on Critical Issues and Trends (December 2003 issue). And the results of our 2004 Benchmark Report on Merchandising bear this out. Among the respondents to this, our latest survey, new items accounted for only a mean 26.6% of the products featured in their catalogs during the past year. For about half of the respondents, new products accounted for no more than one-fifth of their merchandise mix.
At the same time, catalogers seem to be sourcing merchandise in the same way, relying heavily on manufacturers and trade shows. Eight percent haven’t even tried the Internet as a source of new products; 13% haven’t looked at vertical trade publications, and 11% don’t peruse consumer publications for potential products.
Sourcing
The favorite sources of new merchandise haven’t changed much during the past few years. Among this year’s respondents, internal brainstorming, manufacturers, and trade shows tied for top honors as the best source of new goods. Two years earlier, manufacturers and trade shows had shared first place, with internal brainstorming a close second.
But preferences varied among catalogers of different sizes and markets. For instance, b-to-b respondents rated customers as a top source alongside brainstorming. Consumer respondents, on the other hand, ranked customers as a source below manufacturers, trade shows, and brainstorming, in a tie with domestic sourcing trips. And while customers tied with brainstorming as the number-one source for both the smallest respondents (those with annual sales of less than $1 million) and the largest (those with sales of at least $50 million), midsize respondents rated them a less valuable source.
The number of people that catalogers have sourcing for their primary books has inched up during the past two years. The largest respondents, for instance, have a mean 6.4 employees sourcing, compared with 4.7 employees among those surveyed two years ago. The smallest catalogers, meanwhile, have a mean 2.3 people sourcing, up from 1.7.
The mean number of domestic sourcing trips declined, however, to 4.0 from 5.2 two years ago. Whereas the largest participants in the 2002 survey made a mean 7.6 domestic trips a year, this year they averaged 6.0 trips. B-to-b respondents made only a mean 2.9 domestic trips this year, compared with 5.9 two years ago. Consumer respondents held steady at 4.7 trips.
Nor do most respondents expect to increase their domestic travel during the coming year. Only 23% said they’ll be taking more domestic sourcing trips this year than last year; 11% expect to take fewer.
As for international sourcing trips, only half of the respondents venture abroad. That’s down somewhat from 55% two years ago. But international trips appear to be somewhat more productive: Whereas respondents find a mean 14.3 products during each domestic sourcing trip, an international trip turns up a mean 19.1 products.
Buying and manufacturing
B-to-b respondents buy a significantly smaller percentage of their projected volume initially than do their consumer counterparts. The consumer catalogers initially buy a mean 42.7% of their projected volume, compared with a mean 26.6% for the business catalogers.
Similarly, the larger catalogers initially buy a greater percentage of their projected volume. Respondents with sales of at least $50 million buy a mean 46.2%, compared with a mean 29.2% among those with sales of less than $1 million. Overall, respondents are buying slightly less initially than did those two years ago: The overall mean among this year’s participants was 37.3% of projected volume, compared with 41.6% among respondents two years ago.
The percentage of catalogers that receive various vendor discounts has barely changed during the past two years. Now as then, 88% receive volume discounts, and 24% get photo allowances. Sixty-three percent receive free freight or freight discounts (compared with 61% two years ago), and 52% receive advertising allowances (vs. 51% two years ago).
The mean percentage of products that are imported was statistically flat as well: 26.1% among this year’s participants compared with 27.1% among respondents two years ago. The percentage of sales dollars attributed to imports declined marginally; two years ago, imports accounted for a mean 31.3% of respondents’ sales in dollars, compared with 28.8% among this year’s participants. And whereas 15% of the consumer respondents did no importing, among b-to-b catalogers that number was 24%.
The percentage of respondents that manufacture their own goods or contract them for manufacture has declined significantly during the past two years. More than a third (34%) of this year’s survey participants do no manufacturing, compared with 24% in the previous survey. The greatest decline was among the b-to-b catalogers: Whereas two years ago only 13% didn’t manufacture products, this year 29% said they stay away from manufacturing.
Those that do manufacturer, however, are manufacturing more than they used to. The mean percentage of products manufactured by the respondents has increased slightly, to 30.1% from 28.5% two years ago. And those self-manufactured goods are bringing in more than their share of dollars. Among this year’s respondents, a mean 48.3% of their sales dollars came from items that the catalogers manufactured themselves or contracted for manufacture. That’s up from 32.1% two years ago. No wonder then among the catalogers that manufacture products, 42% plan to make even more of their own merchandise during the next 12 months. Only 2% intend to cut back on manufacturing.
Analysis
As mentioned earlier, a mean 26.6% of respondents’ products were new during the past year. Among consumer catalogers, new items accounted for a mean 30.4% of their product line, compared with 23.5% of the merchandise carried by the b-to-b participants. Two years ago, new merchandise had accounted for 28.3% of respondents’ product mix.
During the next 12 months, 27% of respondents plan to add more new products than usual. Another 29% expect to add the usual number of new items to their merchandise mix. Only 3% plan to decrease the number of new products they introduce.
Forty-six percent of those surveyed — including 48% of the consumer catalogers and 54% of the b-to-bers — expanded their merchandise niche during the past year. Another 7% of respondents expect to do so soon. Among those that already expanded, three-quarters added new product categories to their primary catalog. Twenty-six percent launched a spin-off book.
When it comes to analyzing merchandise winners and losers, category analysis is by far the most popular method: 73% of respondents use it. Sixty-one percent use page or spread analysis, while 55% use square-inch analysis, and 51% perform price range analysis. Seven percent of respondents, however, conduct no merch analysis at all.
Methodology
Between Jan. 13 and Feb. 2, Primedia Business e-mailed invitations to participate in an online survey to 2.013 Catalog Age subscribers. Respondents were offered a chance to be entered into a drawing for one of four $50 Amazon.com gift certificates. Two follow-up e-mails were sent to nonrespondents to encourage response. Of the 1,797 deliverable surveys, 156 usable surveys were received, for an effective response rate of 8.7%.
| Consumer respondents | 4.7 |
| B-to-b respondents | 2.9 |
| Sales less than $1 million | 2.8 |
| Sales $1 million-$9.9 million | 3.4 |
| Sales $10 million-$49.9 million | 4.5 |
| Sales at least $50 million | 6.0 |
| Consumer respondents | 16.9 |
| B-to-b respondents | 9.7 |
| Sales less than $1 million | 10.2 |
| Sales $1 million-$9.9 million | 15.1 |
| Sales $10 million-$49.9 million | 18.2 |
| Sales at least $50 million | 13.3 |
| CONSUMER | B-TO-B |
|---|---|
| 1) TIE: Manufacturers; trade shows | 1) TIE: Customers; internal brainstorming |
| 3) Internal brainstorming | 3) Manufacturers |
| 4) TIE: Customers; domestic sourcing trips | 4) TIE: Competitors; domestic sourcing trips |
| Consumer respondents | 45% |
| B-to-b respondents | 49% |
| Sales less than $1 million | 59% |
| Sales $1 million-$9.9 million | 55% |
| Sales $10 million-$49.9 million | 48% |
| Sales at least $50 million | 27% |
| Consumer respondents | 40.4% |
| B-to-b respondents | 43.1% |
| Sales less than $1 million | 38.7% |
| Sales $1 million-$9.9 million | 42.0% |
| Sales $10 million-$49.9 million | 44.0% |
| Sales at least $50 million | 33.8% |
| Consumer respondents | 42.7% |
| B-to-b respondents | 26.6% |
| Sales less than $1 million | 29.2% |
| Sales $1 million-$9.9 million | 34.9% |
| Sales $10 million-$49.9 million | 42.8% |
| Sales at least $50 million | 46.2% |
| Consumer respondents | 3.7 |
| B-to-b respondents | 5.0 |
| Sales less than $1 million | 3.4 |
| Sales $1 million-$9.9 million | 4.5 |
| Sales $10 million-$49.9 million | 4.1 |
| Sales at least $50 million | 3.6 |
| Consumer | 25.2% |
| B-to-b | 35.7% |
| Sales less than $1 million | 36.9% |
| Sales $1 million-$9.9 million | 33.8% |
| Sales $10 million-$49.9 million | 21.9% |
| Sales at least $50 million | 26.8% |
| U.S. | 87% |
| Far East | 37% |
| Canada | 15% |
| Mexico | 15% |
| Western Europe | 10% |
| Central America | 5% |
| Consumer | 8% |
| B-to-b | 5% |
| Sales less than $1.0 million | 19% |
| Sales $1 million-$9.9 million | 8% |
| Sales $10 million-$49.9 million | 2% |
| Sales at least $50 million | 0% |
| Consumer | 30.4% |
| B-to-b | 23.5% |
| Sales less than $1 million | 26.7% |
| Sales $1 million-$9.9 million | 24.5% |
| Sales $10 million-$49.9 million | 29.1% |
| Sales at least $50 million | 26.9% |
| Plan to begin importing | 2% |
| Plan to increase importing | 28% |
| Plan to decrease importing | 6% |
| No changes planned | 64% |
| Increase by more than the usual rate | 27% |
| Increase by the usual rate | 29% |
| Keep about the same number of new items | 41% |
| Modestly decrease | 3% |
| Significantly decrease | 1% |
| Total does not equal 100% due to rounding. | |