Executive Comments From Macy's, Urban Outfitters

Karen M. Hoguet, Macy's, on Internet Sales: "The truth is the dot-com business continues to grow faster than the comp store sales and do well. We are also moving towards more of a multi-channel strategy. Remember, when you buy on the Internet you can return to our stores. That negative gets deducted from store sales, not from the Internet sales. Hence it's getting very murky between the two definitions. Also we currently are testing, in Florida, the ability of being in the store and having the sales associate say, 'We don't have that in stock, let me go get it for you on macys.com', which so far seems to be working very well. We are encouraged by not only what dot-com can do on its own, but more importantly how it is being integrated into the marketing and merchandising for the stores as well.

Urban Outfitters achieves record sales and profit --- and runs opposite of vendor-suggested multichannel best practices by increasing direct sales by 41% on a circulation decrease of 9%.

• From Glen T. Senk, about circulation decreases: "We have not finalized the circulation plans for next year. However, the brands have done a spectacular job marketing the websites and there's a paradigm shift and this is a major shift in the way people are buying particularly for Urban Outfitters and Anthropologie where we have a very developed brick and mortar business. The customer shops between the catalog, brick and mortar and the web absolutely seamlessly. In fact, we've had a lot of internal discussion about combining our direct sales and our retail comp sales going forward. We're thinking now about starting to report two ways because really the two businesses have become interchangeable. If you look at the third quarter for example, our comp increase would have gone up by a whole four points as a company. Instead of being 10 comp we would have been 14 comp and of course the biggest increase would be at Free People where if you combine the direct business and the comp base we actually would have been 28 comp. We're able to do this because of the way we're marketing the website and we have a myriad of initiatives. All of the brands have new sites; we launched the new web platform about a year and a half ago. The blog activity is tremendous. The viral marketing is tremendous. The penetration of direct-to-consumer business in total is up roughly 150 basis points and we don't know how high that is but we believe it can be significantly higher and we're more profitable in our direct-to-consumer business than we are in our brick and mortar business."

• And this from Mr. Senk, about the percentage of the total business coming from the direct channel: "We're going to let the customer decide. We wouldn't be surprised if it ended up long term in the 20% to 30% range in terms of total penetration. It's so exciting to be part of this and when you look at the changes, the speed with which things are happening is exponential. The speed of information, the functionality on websites, people's ability to deliver merchandise quickly, access to information, networking, product review, shopping with friends, getting the sites more tacked up; this is all happening so quickly it is fantastic."

Executive Comments From Leading Brands

Williams Sonoma:

• "We froze our merit increases for the year for our associates, while at the same time we reviewed every associate's compensation with the market and if they were not in line with the market, we did correct that." KH: Try being an employee with no salary increase and fuel costs rocketing skyward. Long-term, employees nationwide will have to find a way to organize or to gain leverage.
  

• "What we are always doing is looking at the productivity of the last catalog mailed versus the next dollar that we can spend on paid search, and over the past couple of years, we have been able to intensify the efforts in search and reduce some of the marginal catalog mailings."

• "We have eighteen million customers who have opted-in and given us their e-mail address". KH: To the e-mail community --- how do you craft an e-mail program, individualized for eighteen million customers? Any ideas?
  

Costco

• "We and Sams continue to be fiercely competitive ... and we are both in each other's warehouses more than once a week shopping key items."

Ann Taylor

• "Internet is a very profitable business segment for us. Within the Ann Taylor division it represents about 10% of the total division’s sales and something less than that for Loft."

Limited Brands

• "Although the Direct business is $1.5 billion, it is the fastest growing channel. We will continue to see growth out of that channel. What you are going to see is within the catalog business. We will not mail as many catalogs or pages. It will still be a heavily integrated web-based business. The community piece is continuing to build and how do you play within the community, which is a new marketing target for us. I think also how do you think about step size, like VS - you know we have VSPink.com and how we are linking that back to the mother ship, and there is some exciting things there. We started to test mobile commerce, and it is just beginning touching in the water so, it may not be a great experience but you get on your mobile phone and you can place orders and through Catalog Quick Orders. It is amazing how many people have already responded to that test. You are starting to see a lot of that in Japan. As our technology and zones continue to upgrade in the United States, I still think that there is some interesting opportunities there."

Urban Outfitters

• "Direct to consumer sales surged by 34% with just 3% additional catalog circulation, with all three brands contributing meaningfully to the result."

• "All three brands continue to innovate in direct to consumer business. For example, Anthropologie began shipping internationally last quarter, Free People introduced product reviews and Urban Outfitters expanded its use of video, generating more than 17,000 YouTube views on its most successful clip."

Macy's

• "The key there is that Bloomingdales.com has a huge potential and we think that that is where we should be investing our resources as opposed to the catalog, and it will have a minor impact on sales and no impact on profit as we discontinue that in 2009. ... We are expecting to do $1 billion this year in volume in our direct businesses and we expect it to continue to grow significantly from there."

Hillstrom's Multichannel Secrets At Lulu.com:

Retailers Using Social Technology, Community, And RSS

In addition to the Saks Video Catalog, many retailers are using social technology, community, and RSS feeds in interesting ways. Many in our catalog audience are looking for new ways to have a relationship with customers. Let's review a small sample of brands using social technology in one way or another.

Urban Outfitters has an interesting site that features articles, videos, an RSS feed and a MySpace page.

Neiman Marcus communicates fashion via their InSite Blog.

Ice.com's Just Ask Leslie Blog combines customer questions and short features.

eBags uses bookmarks to tag items you are interested in.

Mac Cosmetics, a $274 million division of Estee Lauder, has customers who are literally inventing products for the brand, sharing the ideas on YouTube. Their product development folks should take a peek at this! My wife found the video when searching for ideas on how to store Mac products. Take a peek at YouTube to see how other folks are doing marketing and product demonstrations for you ... heck, this young lady has almost 14,000 views.

Nordstrom has a MySpace page for their BP division.

Paperspine, an online book rental brand, hosts a blog about books.

Zappos is using Twitter to allow folks to communicate about the venerable online shoe brand.

Patagonia hosts The Cleanest Line, a blog for employees, friends, and customers.

Overstock.com offers a diverse array of community-based options.

Crutchfield has a community section on their website.

Burpee Seeds features their RSS feed on the homepage.

Hallmark has an interesting blog for their Shoebox division.

Here's the Shutterfly community.

Use the comments section to share other ways that retailers are using social technology, community and RSS feeds to partner with consumers.

February Good News

We read an awful lot about the economy heading into a deep slumber. So let's start February with good news! Urban Outfitters increased direct-to-consumer sales by 39% during the holiday season.

Regardless of economic conditions, compelling merchandise always drives sales increases.

Honor Roll For May 3, 2007

A few articles worthy of MineThatData Honor Roll consideration.

• Valeria Maltoni has a smart discussion about Urban Outfitters and Anthropologie retail marketing strategies.
  

• Spike at the Brains on Fire Blog makes an interesting observation at the end of this post about spreading good news. How often do we, as e-mail, online and catalog marketers view our craft as "spreading good news"?
  

• One of the most popular topics on this blog is the "square root rule". Born out of the old catalog advertising rule that a ten percent increase in pages circulated yields a five percent increase in demand, Alan Rimm-Kaufman further developed the concept. Today, I read this discussion from John Hagel about how power laws are changing business.
  

Positive News: Multichannel Marketer Innovation

I'm going to start each month with good stories in the world of multichannel retailing. The good news could be about people, marketing activities, or strategies.

Here's a few things I noticed this evening on various multichannel marketer websites.

Ann Taylor has a nice "Trends" landing page. What I like is that Ann Taylor has a point of view about their merchandise. Ann Taylor competes in a very challenging market, with numerous direct competitors, and pressure from the high-end and low-end of the market. I like that they are trying to differentiate themselves from their competition.

L.L. Bean's homepage prominently features catalog requests and e-mail signup above the fold. When you have the type of traffic that L.L. Bean has, it is important to try to build a relationship with visitors. Bean is not shy about encouraging the random visitor to engage.

Visit the homepage of Urban Outfitters. Check out the upper right hand corner of the screen. If you don't have anything in your shopping cart, Urban Outfitters scribbles out the View Basket tab, circles the word "empty" on your shopping cart, and points an arrow to the cart. I visited the homepage, and noticed this immediately. Clever! Move your mouse along the links across the top of the page, and see what happens.

Gymboree has a survey on the homepage. Using the phrase "We Listen", they offer you the opportunity to answer four questions about what you think about their Easter line of merchandise. It would be fun to segment those who fill out the survey, and understand if the commenters are high-value customers, and then link that data to actual visitation, shopping cart, and purchase metrics.

At the top of Lane Bryant's homepage, you see two flags. If you are a Canadian visitor, you can click your flag, in order to see merchandise denominated in Canadian currency. It's always good to make your site friendly to our friends living north of the border.

Patagonia has the courage to publish a voluntary recall on their homepage.

Are there any multichannel retailers you would like to praise, multichannel retailers who are doing unique and innovative things?

Urban Outfitters, Swiss Colony / Durdy Looks, and Other Tidbits

The Motely Fool shares information about Urban Outfitters and their most recent quarterly results. Direct-to-consumer sales increased seventeen percent, not a huge number, given the evolution of e-commerce. A seven percent increase in sales was offset by a seven percent decrease in profit, largely caused by significantly lower gross margins. Another Motley Fool article illustrates a ten percent drop in comp store sales, on top of last year's thirteen percent increase. Yikes. Comp inventories were down, suggesting better times ahead.



A colleague forwarded me information about a new brand from Swiss Colony called Durdy Looks. Will the Monroe, Wisconsin purveyor of cheeses and meats leverage its customer file for prospecting of this trendy brand?



In other news:

Need rough demographic information about a competitor? Try Quantcast. They have a mathematical algorithm that estimates metrics like age, income, ethnicity, and education of your visitors. The tool seems to work for larger companies.

Sara Holoubek, of Marketing Profs and DMNews fame, writes about Google potentially rendering traditional advertising and media obsolete. In my opinion, Sara is a very good writer who has her finger on the pulse of many different topics.

Black Friday, Cyber Monday and eDay are all coming. Anybody else tired of the labels?

Uber-blogger John Battelle has a neat graph depicting internet advertising revenue. I love looking at the internet bubble, from mid 1999 to early 2001. Take that bubble out of the graph, and you have a reasonable and almost linear increase.

Interested in blogging? Pronet Advertising has 50 blogging resources for you.