Flax Bids Farewell to Direct Business

Thanks in large part to last year’s huge postal rate hike, Flax Art & Design is a direct merchant no more. The San Francisco-based retailer quietly folded its print catalog last April and suspended its e-commerce business in October.

Founded by Herman Flax as an art supplies store in 1938, Flax Art & Design had mailed its first catalog in 1984 and launched a Website nine years ago. So what happened?

“Fundamentally, the catalog side of the business wasn’t profitable for us,” says CEO Howard Flax, who is the founder’s grandson. “We made some changes, and the book came out with a new design in 2005. That did provide us with expected successful results and certainly improved things, but didn’t improve things enough.”

Last year’s significant postal rate hike for Standard Mail flats – the category affecting most catalogers – proved to be the “final straw,” Howard says. “It would’ve increased our postal costs by 30%, or a net increase of 10 cents per book. That made our decision much more clear-cut. We had reduced circulation slightly. It may have survived, but family dynamics went in another direction.”

At around the same time, Howard’s brother and vice president of marketing Craig Flax, who handled the catalog production, left the company for another business venture.

Howard Flax is also bowing out of the family business, after working there 20 years. He’s now working in an interim capacity and plans to leave the company and take a new executive leadership position by the spring.

Store manager Ron Ansley will assume the president’s title after Howard Flax departs the company. (Their father, Philip Flax, is staying on as chairman.)

“My brother and I were itching to move on,” Howard Flax notes, but closing the direct business was largely about not being able to make the numbers work after postage went up in May.

Why didn’t Flax keep its e-commerce site and try to drum up online sales?

Matchback software had proved that “99% of our Web business was the direct result of a catalog solicitation,” he says. “So we knew upon abandoning the distribution of the catalog, there would be a significant drop-off in Web business.”

The merchant made an effort to create new partnerships to see if the Web component could be self-sustaining, he notes. “We were pretty darn close, but not quite there. The numbers didn’t work out.”

What does the future hold for Flax Art & Design? “We will focus on the store,” Howard Flax says. “We’re returning to our roots, probably expanding the arts and crafts assortments, becoming more adaptable. We’re getting a bit more dialed in with the community.”

Is there any hope of either direct channel returning? “I never say no chance,” he says. “But there is nothing on the drawing board short term.” A lot of customers were sad to see the catalog go, he adds. “We haven’t mailed a catalog in nine months. There was a lot of disappointment, particularly during the holidays.”