The Spiegel Group was braced for a difficult fall even before Sept. 11. Sales for the fourth quarter, which normally produces 35% of the firm’s annual revenue, were expected to end up 6% to 9% lower than they did last year.
Things were particularly rocky for its Eddie Bauer division, which suffered a $40 million sales decline from 1999 to 2000. The unit was in the middle of a drive to reposition itself as a marketer of separates instead of ensembles.
Bauer, which accounts for 57% of Spiegel Group’s sales, sent a multimillion-piece postcard mailing to store customers on Sept. 5, touting its new look. The incentive was a 15% discount on most items.
“The strategy was reactivation,” said spokeswoman Debbie Koopman. “We wanted to say to customers, ‘There’s a change occurring and we want to encourage you to come back to our stores.’”
The Web site, retail outlets and catalogs were already promoting the notion of easy-to-coordinate clothing that can “go from work to weekend.”
Unfortunately, the mailing tanked. There was a bit of a spike the weekend after the pieces were delivered, but on Sept. 11, all commerce ceased, according to Koopman. Because the discount was about to expire Sept. 17, “there was a little bit of a lift” the weekend after the attack, but that was it, she added.
To overcome this, the division added more postcard promotions in October and November.
Where does that leave Bauer? In at least slightly worse shape than it was in. The unit, which mailed 100 million catalogs last year, reduced its fourth quarter circulation by 3%. Sales during the period are expected to dip by 2%.
“While we’re looking for some improvement, we don’t have big double-digit expectations,” Koopman said. She added, “I don’t think that September sales are going to be the key measurement guide because of the unusual event in there.”
At press time, Eddie Bauer’s direct channel was performing better than the stores.
But Bauer’s changes weren’t the only ones to occur at Spiegel Group. Worried about offending customers with marketing messages during a national tragedy, all three catalogs held off on a number of e-mail promotions scheduled for mid-September.
In addition, the Spiegel division delayed the mailing of two catalogs — Spiegel on View, and a general fall acquisition catalog. The unit, which normally mails 149 million catalogs a year, reduced its circulation for the quarter by 2%.
Newport News, which mails 238 books a year, is keeping its circulation flat.
“At this point, we’re not pulling back anymore on our marketing programs,” said Koopman. Each division “has already made their commitments on holiday inventory.”
“But,” she continued, “we had already readjusted reorders. On average, we’re being extremely conservative in our inventory commitments.”
She added that the Spiegel and Newport News units are less skewed to the fourth quarter than Eddie Bauer, and have the added advantage of heading into the holiday season with strong growth behind them. Between 1999 and 2000, Spiegel’s sales grew from $716 million to $833 million. And Newport News saw its sales rise from $3.9 million to $4.2 million.
Spiegel Group will head into the fourth quarter as previously planned. Possibilities on the drawing board include quick-to-get-out e-mail and postcard efforts to nudge catalog recipients with special promotions if the need arises.
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