One of the first rules you learn in Cataloging 101 is that economic good times are about growth, and economic bad times are about holding your own. In terms of circulation, that means prospecting more heavily during boom times and relying more on your house file when the economy takes a downturn.
And, in fact, many of the catalogers contacted about their mailing plans for the second half of this year are keeping their prospecting levels, if not their overall circulation, flat. But nearly as many are flouting the conventional wisdom — or are convinced that their audience isn’t affected by the slowing economy — and are planning to increase prospecting.
Pulling back on prospects
Lois Boyle, senior vice president of Shawnee Mission, KS-based catalog consulting firm J. Schmid & Associates, says that most of her clients base their mailing plans on consumer confidence levels. And unfortunately for them, between November 2000 and January 2001, consumer confidence fell 12%, according to the University of Michigan’s Index of Consumer Sentiment.
“In a suspect market you can expect response to be lower — especially for prospect lists,” Boyle says. “So catalogers should concentrate on mailing smarter to their own customer base.”
That’s the plan at Exposures, a $30 million cataloger of picture frames and home decor. “We’re in a mentality of not exceeding last year’s levels, because we’re wary of a lack of consumer demand combined with increased costs,” says president Randy Bourne. The South Norwalk, CT-based company’s prospecting levels will be the same as last year’s.
“When we went through the planning process last fall,” Bourne says, “we already had a conservative hat on, because our take was that consumers will stay pretty tight-fisted with their money this year until the holiday season. At holiday, it’s my hope that [their buying habits] will be a little more robust. But when we make our final decisions for each book, we may mail even more conservatively.”
Prospecting will also remain flat at J&R Music World, a New York-based consumer electronics cataloger/retailer. “We are going back to previous customers more, because we think that will be more rewarding,” says advertising marketing coordinator Abe Brown. “List rentals, however, don’t warrant increases now.”
Liz Plotnick, chief operating officer of Delaware, OH-based Gooseberry Patch, agrees. The $16 million kitchen goods cataloger is “going to be a little more conservative in prospecting later this year,” preferring to mail more deeply into its house file, she says.
“When I first did our projections for this spring, we were in the heat of the holiday season and on a great sales increase,” Plotnick notes. In fact, Gooseberry enjoyed record double-digit sales growth throughout fall and the holidays. “But now we’re trending more along with the [downward] national economic pattern, and we’re a little behind plan for spring, so I have to be more conservative,” although she couldn’t specify how many books the company will mail compared to its initial plan.
Even catalogers that are planning to increase prospecting are doing so more conservatively than they have during the past few years. Upscale bedding cataloger Cuddledown of Maine, for one, will increase both its prospecting and its house file mailings in the high single digits. But in previous years it had implemented double-digit prospecting increases, says Christopher Bradley, president/CEO of the $20 million, Portland, ME-based mailer.
“We’ve actually seen softness in our market for nearly two years,” Bradley says. “So we built a plan for this year that anticipated further softness.”
And Cuddledown has already felt the effects of the soft market this year. “We started out in January looking pretty good but came in 10% below plan — although we may have overforecasted with a double-digit sales increase,” Bradley admits, noting that winter 2000 was the company’s best period last year, due in part to a Y2K-related change in its mailing pattern.
Some list companies are preparing themselves for client belt-tightening. “My guess is that catalogers will cut back 20%-30% on new list selections for the rest of the year,” says Joy Contreras, vice president of consumer list management for Pearl River, NY-based list manager/broker Edith Roman & Associates. “I see a lot of catalog clients being very careful in what they select.
Bucking the trend
Despite a marked increase in layoffs nationwide, consumer pessimism, and the general economic slowdown, some catalogers see no reason to cut back on prospecting.
“We’re feeling pretty bullish,” says Skip Hartzell, executive vice president for Boca Raton, FL-based The Mark Group. It helps that the women’s apparel and gifts cataloger’s core customers — women over 40 — “continue to buy apparel even in tough times,” he says.
Much as it did last year, the $109 million cataloger, which mails the Mark, Fore & Strike, Boston Proper, and Charles Keath books, plans on single-digit prospecting increases for the second half of the year overall, but double-digit sales gains.
Another multititle mailer, Boston-based Cornerstone Brands, is planning for “modest growth through next fall,” says Mark Fasold, executive vice president of brands. “We’re looking for low double-digit prospecting growth on average for all our brands. We’ll mail more with some of our books for summer, and more for others in fall.” The company’s titles include upscale home decor catalog Ballard Design, high-end home improvements book Frontgate, and travel apparel and accessories catalog TravelSmith.
Then again, some catalogers believe that their markets are unaffected by economic slowdowns. For instance, among the doctors, nurses, and medical institutions targeted by Skokie, IL-based Anatomical Chart Co., “there’s no difference this year” in customer demand, says executive vice president/general manager Bill Demas. “We were very successful with response last year and will continue what we did.” Anatomical Chart Co. sells medical charts, models, and related materials.
Last year, with lists supplied by its new owner, medical book publisher Lippincott, Williams and Wilkins, Anatomical Chart Co. was able to double its annual circulation, to 2 million catalogs. This year, with those lists fully in place, Anatomical Chart intends to increase its prospecting another 8%-10%.
Which is not to say that any of these catalogers won’t modify their prospecting or circulation plans later this year. New York-based multititle mailer Brylane, for instance, is keeping its circulation plans wide open for the second half of the year.
“We’re trying to stay very flexible, because we’re finding the market has become volatile,” says Jules Silbert, Brylane executive vice president. “So we won’t make our early fall mailing plans until the middle or end of April, and we will continue to look at the market.”
During the first quarter of the year, the $1.41 billion Brylane, whose titles include apparel books Lerner New York, Roaman’s, and Chadwick’s of Boston, kept its prospecting flat. “As the business became soft last fall, that colored our thinking, and we didn’t increase our prospecting,” Silbert says. But as far as the rest of the year is concerned, “we’re finding that things are changing back and forth. So who knows what the next week might bring?”
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