A Broad Palette
Say an artist wants to paint a field of blue flowers — Sapphire Blue flowers, that is. Or maybe he or she would prefer Prussian Hue Blue, or Cobalt Blue, or even a nice Violet Blue. Then again, if they’re at a school on a tight budget, good old primary blue might be the only option.
Dick Blick Holdings Inc. has to keep up with all these whims and many more. The cataloger and retailer caters to an audience of artists of varied ages, abilities, spending limits and needs.
Bob Buchsbaum joined Dick Blick in 1996 as CEO. The company is a private business held by the descendants of Robert Metzenberg, Buchsbaum’s grandfather, who took over the enterprise from its founders, Mr. and Mrs. Dick Blick, in 1948. Blick’s first direct response offering was in 1911: a small pamphlet selling a patented lettering pen for the sign-painting industry. In true start-up tradition, the warehouse was in their kitchen and shipping was done through the local post office.
Buchsbaum previously worked as an associate at consulting firm McKinsey & Co. He admittedly isn’t a big user of his company’s wares. “We have artists in our family and I love art, but I’m too left-brained to be good at it,” he says.
Dick Blick distributes millions of catalogs each year — Buchsbaum won’t share specifics and the mailing list is not for rent. The company also has an Internet business and 34 stores, what he calls the “second phase” of Dick Blick’s retail development. “We’re trying again at retail with the acquisition of The Art Store chain last summer and our own new prototype store,” he says. “The first one in the early 1980s wasn’t entirely successful and we had to close or move most of the original 40 stores.”
Those stores were either newly opened or acquired from independent dealers. “They were all small stores and often in small markets, [like] Decatur, IL, which proved to be far too small to support a full fine-art supply store,” said Buchsbaum. “The stores we had in larger markets tended to be too small to compete effectively. And there was very little standardization in merchandising, which made the chain difficult to manage.”
Selling to schools and other educational institutions is a primary business for Blick, as is marketing to individual artists. The company — which has corporate offices split between Highland Park and Galesburg, IL — publishes a full-color 624-page catalog every year for the education market, along with two sales fliers. For consumers, it issues an annual 400-page catalog supported by four 60- to 100-page sales fliers.
“We look at the business in terms of schools vs. other entities, primarily because the product lines schools buy and the product lines artists and businesses buy tend to be very different,” he says.
Direct talked with Buchsbaum about the challenges of those different audiences and how the company would like to further integrate its multichannel efforts.
DIRECT: Do you have a typical customer profile?
BUCHSBAUM: Art supplies are a really unique business. We used to run a [garden supply] company called Alsto’s, which we recently sold to Home Shopping Network. That business had a pretty clear demographic — you could show that its customer had a certain education level, a certain income level. But with art supplies, if you think about it, anybody can be an artist. So we have prisoners — who probably haven’t earned an honest dollar in their life but have taken art up as part of their rehabilitation — all the way to very wealthy actors in Hollywood who use our products. Our range of customers is very broad and you can’t really define it as a demographic.
DIRECT: Do you have certain items you consider your core product lines?
BUCHSBAUM: As you might suspect, we sell an awful lot of paint and brushes, canvas, pads of paper, pens — the obvious stuff. The challenge is that artists get very attached to things. They might really like a particular orange that’s in a particular paint line. Therefore, we probably have 30 or 40 different paint lines. Our number of stock-keeping units is high for a relatively small business — we have about 50,000 in our distribution center. And that doesn’t include all the things we drop ship or custom order, which would push that number even higher.
DIRECT: Who do you see as your main competition?
BUCHSBAUM: We have different competitors depending on the channel. In the school business, [there’s] Sax Arts & Crafts, a division of School Specialty, which is sort of the 800-pound gorilla in the educational market if you’re selling hard goods, and increasingly, services. And there’s Nasco, another soup-to-nuts academic distributor. In the catalog/Internet direct-to-consumer market, we see Jerry’s Artarama an awful lot, along with Daniel Smith Artists’ Materials and Cheap Joe’s Art Stuff. In the retail area, it’s Pearl Paint and Utrecht Art Supplies.
DIRECT: Are there many differences between who your customer is at retail and direct?
BUCHSBAUM: Yes. It’s still more of a purchasing behavior. I think the Internet has opened up a broader base of people willing to do remote transactions. But what we’ve found is that a person ordering online or through a catalog still [has to accept that] they’re not going to see the product before they get it. They have to have a little bit of flexibility to order that way, and [understand] there’s going to be the occasional mistake. We think we’re about 99-1/2% right in our [fulfillment] but even [then], that means if you’re a large customer you’re still getting a certain percentage of orders that have one or more errors in either quantity or picking. And with 50,000 SKUs we do a great job of keeping [items] in stock, but we don’t have absolutely everything. I think it’s not so much [about] demographics or age — I’m sure there are some differences, but primarily I think it’s a willingness to wait a little bit for the product and an ability to plan. Plus, our average direct order is $75 to $100. If you’re going to order on the Web or through the catalog, for it to make sense you have to order a few more dollars’ [worth] because of shipping costs.
DIRECT: How large is your customer base?
BUCHSBAUM: We don’t circulate our file for business reasons, but I think our 12-month file is between 200,000 and 300,000. Catalog circulation is in the millions. Considering our business has grown tremendously and our catalog circulation has stayed flat speaks, I think, to the Internet’s increasing importance.
DIRECT: Do you see a lot of crossover between retail and direct customers?
BUCHSBAUM: [For us,] the old adage that your retail file is your worst mail order file is still largely true. We’re pretty careful to not circulate our catalogs to our retail buyers, because they’re buying from retail for a reason. That’s what they do. We market to them by mail but we haven’t found a big benefit to mailing them a full-blown catalog.
DIRECT: As a cataloger, what do you see as your greatest challenges?
BUCHSBAUM: We have been strong in the direct business for years. We’re still developing commensurate retail skills. A related challenge caused by our retail efforts is the coherent integration of direct and retail marketing plans. This is especially problematic in our product lines, where the price on the Internet tends to be significantly lower than the price retailers can afford to charge. We’re not a company that can afford to have one segment of the business — retail, consumer or institutional — going out and losing tons of money. We need to make sure each does what it needs to do in its respective channel to be competitive, and at the same time still be Dick Blick to the consumer, no matter where they’re buying.
DIRECT: Is it a goal to have one integrated database for all the systems?
BUCHSBAUM: It is, but we’re currently in the unenviable position of running three transactional databases. CommmercialWare’s RDC product runs our direct business, GERS Retail Systems’ Enterprise 1 runs the old Dick Blick chain and JDA Software Group’s Merchandise Management System runs the acquired Art Store chain. We will move to one retail system in a relatively short time. However, combining the data from the two remaining transactional systems in anything beyond an ad-hoc manner will require some work.
DIRECT: Who handles your creative? The Web site’s design in particular seems pretty straightforward, without a lot of bells and whistles.
BUCHSBAUM: We do all of our own creative. A lot of what we’ve done online is try to make it easy for customers to find the product. There’s a lot of different ways to look up items, depending on how customers feel the most comfortable. Our site has 5,000 or 6,000 product pages, each of which is custom built. We don’t believe in cluttering up our site — we want to be professional, not kitschy. We feel artists have been underserved for years. It’s sort of expected that if you’re an artist you’re going to get crummy, nonprofessional service out of your supply company. We don’t mind telling our customers, ‘Hey, if we look a little more corporate than some of our competition, it’s because we don’t want you to think we’ll mess around with your order.’
DIRECT: Are you doing e-mail marketing?
BUCHSBAUM: We send out an e-mail [blast] once a month. You also can sign up for our retail e-mails, which will get you another one per month, for a maximum of 24 per month, with the exception of December, when we send two. We’ve set up our policies to match what we think consumers reasonably want from us. The e-mails are primarily sales oriented. We work with our vendors if there’s something they’d really like to see in an e-mail. We also link to promotions for that period, so there will be a consistent message with the home page.
DIRECT: Are there any CRM or loyalty programs in place?
BUCHSBAUM: We have a preferred customer discount program in our retail stores, but we haven’t linked that with our catalog and Internet business. We expect to do it within the next 24 months.