Demand for merchandise from catalog marketers was up 1.6% in the second quarter, spurred by a 2.5% rise in catalog circulation, according to Stuart Rose, a managing director at Tully & Holland.
Much of the growth was from marketers offering higher-priced goods, indicating that perhaps upscale consumers either hadn’t been affected as significantly as others by the economic downturn, or have yet to adjust their spending, according to the Wellesley, MA-based investment banking firm.
Rose notes the difference between increased catalog spending and demand is to be expected. "When you increase [catalog] circulation, you end up going to less efficient segments, and there is typically more prospecting," he says. "Response rates tend to be less than those from your core customer database."
During the first quarter, every percentage point increase in catalog circulation yielded a half-point increase in demand, a ratio which held up during the second quarter, Rose adds.
Some of that prospecting activity was front-loaded toward the beginning of the quarter, when marketers—and consumers—were more optimistic about the U.S. economic picture. But some of it was going to be inevitable, regardless of recent economic conditions.
The second quarter did see greater efficiency in catalog distribution, if its relation to sales is a gage. During the first quarter marketers surveyed bumped up their circ by 5.3% over the previous year, while demand only grew by 1.4%.
Prospecting levels are better than last year, says Rose. "You can only not prospect for so long. If you don't, you shrink and die."
Demand appears to have been tapering off, however. While the third quarter results won't be in until after Sept. 30, recent weeks have seen drops from their year-previous levels. For the week ending July 30, demand was up only 1.5%. By Aug. 6 it was 5.7% below the corresponding week in 2010, and as of Aug. 13 it was down 4.5%, Rose said.
The Tully & Holland report focuses primarily on print catalog circulation information, although Rose is looking to expand its email coverage in coming months. "[Catalogs are] more of a proxy of the profitability of the channel," he says. "A typical catalog drives more volume than a typical email."
The study currently includes companies with annual sales in the $5 million to $400 million range. While the current study focuses on consumer firms, business-to-business marketers will be evaluated once enough contribute to the research. Companies wishing to add their data to the study can contact rose at [email protected].
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