By John Lenser, November 2009
Recently, I was interviewed by a firm hired by the USPS to explore the role and future of the catalog in America. This was a tough question since I’ve heard such extreme opinions on the issue. On the one hand, there are those who predict the wholesale demise of cataloging: “Gen X should keep catalogs afloat as an effective medium for a while longer, but Gen Y, because they only read electronic media, will make catalogs obsolete.”
However, others maintain that catalogs continue to play a unique role that will ensure a strong and vibrant industry. While I suspect that either position is somewhat unrealistic, I personally believe that catalogs will remain an important component of multichannel marketing. Catalogs and other forms of direct mail will continue to be the most effective form of “push” marketing because they are targeted and accountable.
By push, I mean that it is proactive, intrusive, educates the consumer about products, and creates desire. In contrast, retail stores and websites are “pull” marketing and passive. The consumer must travel to the store or log on to the website already knowing what they want to purchase. This contrast was recently pointed out to me by a client who instructed that it was critical to his business to continue to mail a catalog irrespective of response rates.
As a cataloger, he received substantial discounts from his suppliers based on the fact that his catalog served to expose consumers to new products that suppliers were marketing. Suppliers were dependent on his catalog to drive not only his company’s sales but the sales of many “pull” retailers—both websites and retail stores. Without his catalog being widely distributed, the consumer would not even know what was new and exciting in his niche marketplace.
As an entrepreneur, I operated a multichannel business with retail stores and a catalog. Every time I opened a retail store, the response rate to my catalog dropped by 50% in the store trade area. While it was tempting to simply not mail the catalog in store trade areas—like many other brick and mortar retailers—I viewed the catalog as effective store advertising. If I could get the catalog to break even in the trade area, I deemed it highly successful—it was free advertising that drove traffic to the stores where I made my profit. It reached consumers in the trade area who otherwise would never have gone to the mall and seen The San Francisco Music Box Company.
I like to look at e-commerce as just another retail store. It is open 24/7. If you need something, you “go to the store.” If you do not know where the store is, you “go to the yellow pages”—Google. The retailer reaches out to you via email and banner ads not unlike newspaper ads and billboards. Just as I used a catalog to drive traffic to my stores, the catalog is today an effective driver of traffic to websites.
The lessons from this analogy are important: First, the catalog should be constructed with the express purpose of driving web traffic—lots of “bells and whistles” to encourage shopping on the web, as well as presentations of new products. Simply pick up a Costco monthly mailer to witness a brand builder and store/web driver! Second, expect lower response rates from your catalog—in effect; they are all mailed into “store” trade areas. Most spontaneous sales from existing customers on your website or those from emails are cannibalized from what would have previously occurred when you mailed a catalog. So attribute a portion of the catalogs’ expense to brand building and general advertising. Many store retailers have cut back on their catalog programs only to find that over time, sales diminished significantly in their stores.
So, will catalogs be viable in the future? While much of Generation X and Y may prefer pure electronic media, there is a portion that will respond to a catalog—a highly targeted “push” mailing that has a physical presence with a shelf life. Keep in mind, only 20% of the baby boomer generation drives 80% of catalog sales (the others prefer brick and mortar stores).
I suspect that 20% of Gen X and Gen Y will still read something on paper. However, be prepared to appreciate the highly synergistic relationship that will exist between catalogs and the internet that defies strict attribution of sales and cost accounting. Also, stop thinking of your company as a “catalog company.” A truer description is that you are an e-commerce company that uses a catalog as an important advertising medium to drive traffic to your “store.”
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