In the past, specialty stores lived on foot traffic. But today, that's not enough. Now, retailers need a leg up from things like brand advertising – such as the campaigns The Gap redefined itself with in the mid-1990s – and private label credit cards to get customers in the door.
At the Direct Marketing Association's Catalog on the Road Conference in Cambridge, MA on Thursday, Richard E. Jaffe, managing director, consumer group equity research, Legg Mason Wood Walker Inc., talked about how specialty retailers are using direct tools to connect with consumers.
Savvy retailers are presenting their catalog, Web and retail presences as one seamless entity. Jaffe cited Talbots as one of the best when it comes to this.
For many retailers, the bulk of their direct sales come from the Internet. Urban Outfitters, which targets teens, gets about 90% of its direct business from the Web. And even Talbots, whose typical customer is in her fifties, does 60% of its direct sales in cyberspace.
Victoria's Secret has been successful in its direct endeavors, despite keeping them almost completely separate from the retail business. Jaffe noted that the lingerie purveyor recently cited the fact that half of the catalog offerings could now be found at retail as a victory. That's great, he said, except for the fact it still leaves people looking for the other 50% of the catalog's offerings in store disappointed.
The Gap put a lot of attention into its direct offerings this year, eschewing television for a sharply targeted magalog promotion, which didn't perform as well as the clothing chain hoped.
Seventy-five percent of The Gap's shortfall was attributable to the product mix – "but good marketing could make a difference," Jaffe said, noting he doesn't expect the retailer to go back into TV advertising until it gets the clothing selection right.
Limited Too is also using a magalog or catazine approach to target its audience, tween girls age 7-12. The problem is that because the audience moves out of the target demographic so quickly, the 12-month file is good for only 14 months at best, he said. And since lists of 11-year-old girls aren't exactly available, the challenge is to capture moms' name at the point of sale.
