There are some hints that the high tide of consumer spending from which catalogers have benefited over the past few years could be ebbing. Nonetheless, most of the mailers contacted by Catalog Age report that early spring sales exceeded expectations.
“Because Easter came very late this year, it’s difficult to measure overall performance,” says analyst Todd Slater, of New York investment firm Lazard Freres & Co. “But once the weather warmed up, sales of all kinds of seasonal items just shot through the roof.”
At health and wellness products cataloger SelfCare, for instance, sales were 16% over plan, with both the average order size and the dollars per book up from last year.
“We refocused,” says SelfCare vice president of marketing John Kendig, “and are now presenting merchandise through specific product category groupings.” In the spring edition of the catalog, products are organized under headings such as “Beauty & Spa” and “Healthy Home.” “Customers are able to make their buying decisions more easily because the merchandise is grouped better,” Kendig says.
The Brooklyn, NY-based Macy’s By Mail catalog division of $18 billion Federated Department Stores also exceeded plan, by 12%. What’s more, it accomplished this feat while decreasing catalog mailings 15%-18%, according to vice president of direct marketing Gary Ostrager.
After a number of tests last year, Macy’s redesigned its catalog with a less cluttered look and better flow, Ostrager says. “Pages are actually down, because we cut out what customers don’t want. We’re editing the book for a more targeted selection.” Macy’s has had its greatest success with home products “across all categories, from textiles to furniture its private label offerings,” he says. “Our customers want the uniqueness of private label. At the same time, private label reinforces the Macy’s name, making a powerful statement.”
Private label products have also spurred spring sales at “reading accessories” cataloger Levenger. In fact, 80% of its products, including furniture and writing instruments, are private label. “We recognize that’s where we have to excel, and we’ve had great success with our private label products,” says president Steven Leveen.
The spring catalog, for example, has been supercharged by an Isaac Newton theme. Inspired by the motif that decorates a walking stick once owned by the English scientist and that is on display in the flagship Levenger store in Delray Beach, FL, Leveen and his team developed several related products, including a fountain pen, a paperweight, and a journal.
But while Leveen describes the recent catalog edition as “really successful,” Levenger’s early spring sales were only slightly ahead of plan. Although the average order size increased modestly, due to an increase in more expensive furniture offerings, response has waned slightly, he says.
Starting out with a whimper
Multititle $100 million gifts cataloger Potpourri Collection also found early spring sales just “slightly above” plan, following sluggish January sales. Jack Rosenfeld, president/CEO of the Medford, MA-based mailer, blames the slow start of the season to postal delivery problems.
But as of late March, overall sales for the company, which includes the Potpourri, Expressions, Stitchery, Back in the Saddle, and Nature’s Jewelry catalogs, were “back on track,” Rosenfeld notes. The Potpourri gifts catalog led the way with “low double-digit” increases over last year and a slight increase over plan. As for average order size, the Expressions title has seen the most significant increase, from $110 to $135, following the elimination of some lower priced merchandise.
Like Potpourri Collections, several horticultural mailers kicked off spring with a whimper rather than a bang.
“We’d planned for a much bigger January and February,” admits Will Raap, president of Burlington, VT-based Gardener’s Supply Co., a $40 million-$50 million gardening tools catalog. “But March carried us. We’re right on plan now and moving ahead.”
“In general the year started out slower than expected,” agrees Dave Grim, president of the Spring Hill horticulture group of multititle mailer Foster & Gallagher. “January and the first half of February, sales were soft. But it picked up.” By the end of March, Grim’s division, which includes the Breck’s, Stark Brothers, and Gurney’s Feed and Nursery Co. catalogs, was “right on budget.”
Consumer confidence sagging
The early sluggishness could be a reflection of declining consumer confidence. According to research group The Conference Board , the Consumer Confidence Index dropped from 144.7 in January to 141.8 in February and 136.7 in March. At the same time, the percentage of consumers who rated business conditions as “good” slipped from 47.3% in January to 46.2% in February. And if gas prices and interest rates continue to climb, confidence is likely to continue to fall.
Then again, the slipping consumer confidence doesn’t explain the pick-up in business that several mailers say they experienced in March. And it bears mentioning that January’s consumer confidence levels were an all time high, so an eventual drop was inevitable.
“I certainly think consumers are tightening up a little bit,” says Peter Howard, vice president of marketing for $250 million jewelry/gifts cataloger Ross-Simons. Early spring sales for the Cranston, RI-based company were 1% below an aggressive plan, though still 4% ahead of last year. “When demand hiccups a little like it has for us, you really never know whether it’s due to something macroeconomic or in your own product mix and targeting.”
But Howard is quick to point out that “we’re not having a bad year. We’re just concerned about consumer spending patterns and are watching them closely as they pertain to our categories. Jewelry is doing better for us than tableware and giftware, for instance. It still is looking like a big year ahead for us.”
Spring Hill’s Grim is also optimistic. “We think we will be over plan if the current momentum continues. We are very optimistic, but it’s too early to guarantee anything yet,” he adds. “We’re like farmers: We don’t celebrate until the corn is in the silo.”
When it comes to online sales, double and triple-digit growth is a given. So the fact that Internet sales for jewelry/gifts cataloger Ross-Simons are 400% ahead of last year isn’t big news. Ditto the fact that Web sales for reading accessories cataloger Levenger, Foster & Gallagher’s Spring Hill catalog division, and licensed sports gear cataloger Star Struck have at least doubled over the past year. And while Web sales at Gardener’s Supply Co. are only 1% over plan, “it was a very aggressive plan, so this is a positive,” says president Will Raap.
On the other hand, the 3,000% leap in SelfCare’s online revenue since its July relaunch of its Website is an attention grabber. “We’re offering a wider selection on our site,” says vice president of marketing John Kendig. The company has also struck alliances with healthcare Website Drkoop.com, online portal NBCi, and cable shopping network/online marketer ValueVision that expose SelfCare to new, diverse audiences.