Debunking An Article/Study: Catalogs Still Rule?

Multichannel Merchant published an article titled "Print Catalogs Still Rule, Survey Shows". The first sentence says "If you think the print catalog is a dying channel, you better think again." Sounds like an agenda will be shared. Let's explore this article, which is an advertisement for the DMA's State Of The Catalog Industry Report, 2008 Ed, a $245 article for members, $445 article for non-members.

Quotation #1 = "Of 106 merchants polled by the Direct Marketing Association". Who was polled? Is the polling representative of all catalogers? We don't get to know in this article.

Quotation #2 = "And our data suggests a consensus among successful marketers that there are consistent and integrated standards across all channels". Could we get a definition of a "successful marketer"? Bloomingdales just killed their catalog division. Nordstrom killed their catalog division, and enjoyed the most profitable years in the history of the company. Is that success?

Quotation #3 = "And despite buzz to the contrary, the number of print catalogs in circulation has actually increased since 2003." Ok, let's assume you are right. Tell me what has happened since 2006? In the past two years, you have a postage increase averaging about 30% that wreaked havoc, an economic downturn that is shredding circulation, and the implosion of catalog customer acquisition. None of those points are mentioned in the article. From 2003 to 2006, we enjoyed the buoyancy of the home equity piggy bank.

Quotation #4 = "The survey estimates that total annual housefile circulation reached about 15,463,891 while total annual prospect circulation reached about 5,536,424. That's up significantly from the total annual housefile circulation of about 5,169,011, and total annual prospect circulation of 3,423,389, recorded in 2003." What does this mean? Are these total numbers in the survey, or are they averages per survey respondent? And how about the word "about", bantered around in the quote? What does "about" mean? Does it mean that 5,536,424 is really 5,536,429? Or does it mean that 5,536,424 really means 2,536,424? Help us understand!! Finally, let's assume these numbers are accurate, representing an average cataloger. Let's ask a question. Have you tripled your housefile circulation in the past five years? Have you nearly doubled your customer acquisition circulation in the past five years? Ask Talbots, or J. Jill, or Nordstrom, or Lands' End, or L.L. Bean, or Eddie Bauer, or Bloomingdales, or Lillian Vernon, or Hanna Andersson if they tripled their housefile circulation in the past five years. If the numbers are accurate, this suggests that the sample of respondents are small catalogers that are growing rapidly. Heck, I know of several small catalogers that are growing rapidly --- that's the nature of a young, growing brand. These businesses rent/exchange names with big companies, growing from the hard work of the larger brands that preceeded them, while big companies already have all the names available. Catalogs are wonderful for small, growing catalog brands.

Quotation #5 = "The findings are also based on a detailed analysis of billions of transactional records from 100 million households in the Abacus Alliance database, maintained by marketing firm Abacus, a division of Epsilon, which helped underwrite the report." Ah! So the DMA did a survey, Abacus kicked in a few bucks to complete the study, and results were merged together so that the reader does not know in this article which statistics are from the study and which statistics were paid for by Abacus. Why doesn't the mystery author honestly tell us which stats are from the study, and which stats are from Abacus? And how come the information in the article is so glowingly positive? How come there is no discussion about the true hardships facing catalogers, including but not limited to declining response rates across housefile and especially customer acquisition segments? And why isn't the fact that Abacus contributed metrics and underwrote the study not mentioned in the title of the article --- the title of the article says this is a survey?

Why do our industry leaders continue to offer us misleading information? This style of writing/selling is exasperating to me, a sales pitch to continue to execute the practices that make sure the DMA and Abacus stay in business.

Or am I way off base? If I'm off base, please use the comments section to defend the article ... I'll even publish your responses as a complete post if you wish. What do you think?

ACCM 2008: Catalog Choice

As best I can tell, Catalog Choice was not in the exhibit hall.

Attendees overwhelmingly shared with me that they were willing to speak with or work with Catalog Choice --- only a few individuals expressed frustration with constant calls from Catalog Choice to accept opt-outs.

There may be folks from Catalog Choice who are in attendance, and I simply haven't run across them. I'd have loved to have seen the DMA have the courage to invite Chuck Teller of Catalog Choice to speak at this conference, allowing their message to be heard along with the message of self-regulation offered prior to the keynote address.

Overwhelmingly, attendees told me they wanted to do "what is right" for their customers.

Williams Sonoma / Pottery Barn And Multichannel Growth

The DMA is selling a research report suggesting that "Retailers Have Multichannel Skills But Need Help Integrating Channels". The conclusions are based on questions brands answered in a recent survey.

Is there any place we can verify the claims outlined in the report?

Let's look at long-term sales trends from a respected and profitable multi-brand retailer, Williams Sonoma (WSM), owner of the flagship Williams Sonoma brand and the popular Pottery Barn brand.

One can go back to at least 1991 to understand how Williams Sonoma grew sales in the direct-to-consumer (catalog + website) channel and in the retail channel (here are results from the past five fiscal years).

Williams Sonoma introduced the e-commerce channel in 1999. In the table below, annual results are listed, as well as pre-internet and post-internet results:

Williams Sonoma: Comp Store And Direct Channel Growth
Year	Direct Growth	Retail Comps
2007 (Nine Months)	2.9%	0.5%
2006	4.5%	0.3%
2005	13.6%	4.9%
2004	17.1%	3.5%
2003	20.8%	4.0%
2002	10.2%	2.7%
2001	8.4%	1.7%
2000	33.1%	5.5%
1999	34.2%	6.4%
1998	15.7%	5.0%
1997	11.2%	2.8%
1996	11.9%	4.6%
1995	16.2%	3.4%
1994	55.0%	16.5%
1993	23.9%	13.8%
1992	-0.2%	2.1%
1991	-3.8%	0.5%
Results: 2000 - 2007	13.5%	2.9%
Results: 1991 - 1999	17.1%	6.0%

It isn't a stretch to suggest that Williams Sonoma and Pottery Barn do an above-average job of integrating channels, per the recommendations offered in the DMA research report.

And yet, during this era of multichannel goodness, direct-to-consumer sales are growing slower post-internet than pre-internet. Retail comp store sales are growing slower post-internet than pre-internet.

Some of this is due to scale --- as a business grows, it becomes harder to grow sales as a percentage of prior year sales.

Could some of this be due to a failure of perceived multichannel best practices? Adding an e-commerce channel to an established catalog channel should result in new customers, a new audience, and much improved growth, right?

Instead, we see slower growth rates.

We're also told that catalogs and e-commerce drive comp store sales increases. Pages circulated increased a total of 36% in the past four years, but comp store sales increases are, at best, tepid.

Williams Sonoma is a respected brand with increasing sales and robust profit, profit levels that any company would be proud of. Williams Sonoma exhibits most of the multichannel marketing behaviors and cross-channel integration that we're told we must employ to be successful.

To date, multichannel best practices at Williams Sonoma have not translated to incremental increases in direct-to-consumer sales or retail comps.

Why do you think this is the case? Are the multichannel experts missing something? Is Williams Sonoma an anomaly? Is there a multichannel brand that executes multichannel marketing well, demonstrated via publicly reported sales and profit increases?

Survey Results: What Purpose Does Catalog Choice Serve?

Please visit the homepage for the latest survey, asking why you read The MineThatData Blog.

You were given a chance to speak out about Catalog Choice, the customer-friendly and eco-friendly organization that protects customers from the misery of receiving unsolicited catalogs.

Here is how you responded:

• 43% = Catalog Choice simply gives customers a way to opt-out of unwanted and unsolicited catalog mailings.

• 14% = Catalog Choice uses this service to promote an eco-friendly agenda.

• 29% = Catalog Choice wants to dictate a new business model to catalogers.

• 14% = We cannot possibly know or understand what Catalog Choice wants to accomplish.

As you can clearly see, our readers are split in their perception of what Catalog Choice wishes to accomplish.

I truly believe catalogers want to honor opt-out requests. I have yet to hear information contrary to this.

Catalogers want to trust one or both organizations (Catalog Choice and the Direct Marketing Organization, contrasting organizations promoting common objectives). Catalogers are reading your press releases and blog discussions, scrutinizing your words and actions. Use your platforms to do good!

Cutting The Stack Of Catalogs

The DMA is forwarding an article from Business Week entitled "Cutting The Stack Of Catalogs", featuring an organization called "Catalog Choice" that allows consumers to easily opt-out of catalog mailings.

By the way, Catalog Choice has a blog. This organization "appears" to have an open conversation with consumers. Who "appears" more open, honest and transparent --- this organization, or the DMA, an organization that used a one-way communication to paying members earlier this year urging them to not honor Catalog Choice requests?

But that's neither "here nor there". Let's assume that Catalog Choice is acting with honesty and integrity. Let's assume that your customer is truly requesting to be removed from your mailing list. Let's assume that the DMA has your best interests at heart (which they do).

If you respect your customer's wishes, and you operate your business with honesty and integrity, what should you do when your customer opts out of your catalog mailings via a third party like Catalog Choice?

This isn't 1988. If the customer wants to purchase from you, she can use your website.

Simply remove the customer from your list.

Better yet, for every request you get from Catalog Choice, call the customer, and ask the customer if it was her intention to opt out of your catalog strategy.

Direct Marketing Association, Dues, And ROI

An open-ended question for you.

During my time at Nordstrom, I paid the Direct Marketing Association more than $200,000 in annual membership dues from my operating budget. That's money that I could have spent doing things that benefited Nordstrom, or more importantly, benefited my staff. Think about this ... we had to generate between $600,000 and $1,200,000 in sales to cover the profit lost by paying these dues. We had to sell an additional 6,000 to 12,000 pairs of shoes to cover the profit lost by this expense!

If you belong to an association, what do you believe is a valid return on investment for your annual dues? Whether you belong to a stamp club that charges $10 annual dues, or you are an $8 billion dollar business paying a huge organization $200,000+ over five years, what is an acceptable ROI? How would you measure ROI?