ONCE UPON A time, retail catalogs were about getting customers into the store to buy product. Each and every customer received a catalog for each and every selling season. In August, it was back to school; in November, Christmas; and in January, cruise (or resort) wear.
That was then.
This is now.
Customer databases are segmented, if not massaged. Retailers as diverse as Radio Shack and Bloomingdale’s sell themselves as brands as much as they sell the products they stock. The retail catalog has become part of the integrated marketing mix, as likely to be build traffic to a Web site as it is to a store.
“There’s been a shift in my thinking,” says Charles Silver, vice president, marketing, DM Enterprises, and head of the Direct Marketing Association’s Catalog Council.
“I used to think retail was competitive with catalog shopping. Instead of losing sales, there are opportunities to build brands. It’s not either/or but a question of resource allocation,” he notes.
In building a brand, Silver says, a company is working within several different distribution methods to reach old and new customers. A mail-order catalog might be one distribution method; a Web site, a second; and the stores themselves, a third.
“They work in synergy, each one promoting the others as well as itself,” he says, drawing upon his experience at J.Crew and Disney, both of which have mixed retail operations, catalogs and Web sites.
Radio Shack’s annual catalog is one case in point. According to David Edmondson, executive vice president and chief operating officer of the consumer electronics retailer, Radio Shack’s annual catalog drives traffic to both its 7,000 stores and its Web site (www.radioshack.com).
Edmondson describes Radio Shack as a retailer with a catalog. But Radio Shack actually started out as a catalog operation close to 50 years ago. As late as 1963, there were only nine stores. Edmondson says the locations for 7,000 or so stores was selected based on catalog purchases.
“The lion’s share of our profits are generated at the store level,” he notes. “There’s a Radio Shack within five minutes of where nine million people live or work.”
Edmondson declines to say exactly how much traffic the catalog has build, but claims “Over the past three years 99% of all American households have purchases at least one thing from Radio Shack.”
The catalog goes “direct” each fall to what Edmondson describes as 10 million of Radio Shack’s best customers. It introduces new lines and pricing to three and half million consumers as well as Radio Shack employees.
“The kick off is at the end of August,” he says, adding that it’s timed for what he called the “Golden Quarter”-the Christmas season.
At 305 pages and growing,, the annual catalog is “an opportunity for the customer to come into the store smarter than if he or she didn’t have one,” he says.
Edmondson notes the catalog is also a traffic builder from an Internet standpoint. Radio Shack finds the print edition is more focused, more able to deliver better and more consistent answers about the products it offers.
The catalog is also a reference tool for Radio Shack’s sales staff. “It helps our sales people and supports our position of ‘You’ve got questions; we’ve got answers.'”
Flyers developed each month to key off of some promotional aspect supplement the annual catalog. Edmondson says the flyers are sent to 52 different segments. Customers are coded by categories of merchandise. For example, a “never E” is someone who has never bought an end product (like a telephone or a flashlight), but only buys parts and accessories.
Frequency, location, and method of shopping (ordering by toll-free number, say), and even kind of store-mall, strip or freestanding -are examples of the types of segmentation Radio Shack looks at.
“It’s when, where and what kind of things the customer shopped for,” he says.
The strategy behind Radio Shack’s marketing is POA, which stands for participatory opportunistic anchor.
“Think of a bull’s-eye,” Edmondson suggests. “The center represents the anchor. That’s accessories and parts. That represents 33% of our top line, 45% of our gross and 80% of our traffic.”
Anchor items are the same or similar for the Web site as for the stores.
“The next set is opportunistic,” Edmondson continues. “This includes items, opportunities that we try to make into anchors.”
Participatory are items unlikely to actually be stocked in any of the stores. Rather, the items can be ordered from the catalog or Web site and fulfillment is direct.
Radio Shack analyzes the history of what is ordered from the catalogs or Web site to guide it in selecting what might be stocked in the retail stores. That strategy helped the company change the demographics of its typical customer. The customer base is still more than 50% male, but five years ago it was 80%.
Edmondson credits the change to good planning and establishing what he calls a second anchor to draw customers in: cordless telephones. “Like a mall, the anchor store draw them in and then they migrate out to other parts of the mall or business,” he says. The greatest demand, Edmondson says, in any Radio Shack catalog is consumer electronics. And once a customer buys an end product, there is usually a “dramatic change in behavior” to buying other products. And, he points out, 60% of the time the decision to buy such an item is made by a woman.
As the company moves forward, he sees it “expanding in the physical world” as well as online. It addition to its own automated fulfillment centers, he sees the line carried in the stores and in the catalog expanding.
Edmondson doesn’t see a physical catalog going away. But, he adds, “The number of people who choose to get information that way may change as we become more used to answers on demand from the Web.”
Bloomingdale’s, the New York-based retail chain, also sees its catalogs, other mailings and Web site as brand building. Unlike Radio Shack, however, Bloomingdale’s offers more products in its stores than its mailings.
Susan Harvey, vice president of marketing, explains that Bloomingdale’s By Mail is a separate entity from the department store, although both are owned and operated by Federated Department Stores, Cincinnati. The store sends out 440 “unique” promotions a year, many of them catalogs.
The full database has some six million names, culled from retail shoppers at 23 stores and the bridal registry to Web shoppers and Bloomingdale’s By Mail. A typical mailing is about one million pieces. The 150-page holiday catalog would be an example.
But, Harvey says, mailings can range from 50 pieces to three million. The decision is based on the relevancy of the promotion to the customer. A 50-piece mailing might be for a trunk show where a designer like Michael Kors makes a personal appearance.
“It’s for devotees,” she says. “It doesn’t need to go to a large number of people.”
Almost all mailings, however targeted and specific, include the rewards programs.
Members of Bloomingdale’s loyalty programs receive more mailings. “They do not like to miss on notification even if it’s not something they’re likely to participate in,” Harvey says.
In addition to store promotions, there are such tailored mailings as special loyalty promotions and newsletters.
“Our customers prefer receiving direct mail,” Harvey notes. “But I’m not sure which came first, whether it’s the medium of choice, therefore they get direct mail, or because they get direct mail, they’ve grown accustomed to getting information that way.”
The typical customer is female and affluent. Better customers visit a store 26 times a year. Harvey claims all customers have a sense of fashion, for themselves, for their family, and for their home. Other characteristics include such interests as foreign travel and arts and other cultural events.
That typical customer overlaps with the Web site (www.bloomingdales.com), which was launched in the fall of 1996.Harvey refers to the Web visitor and customer as “self-fulfilling” since Bloomingdale’s doesn’t publicize the site to a broad audience.
She feels the Web site has an international component since it is more accessible than the “destination shop,” the flagship store on 59th Street in Manhattan.
“I see the Web site as an enhanced store,” Harvey says. “It’s the flagship store experience available to anyone anywhere.”
It is also “another part of the mix” to support brand and marketing efforts.
“The Web site is used to grow our brand to its full potential,” she says. “It’s one element in our overall brand strategy. It’s an alternative media distribution channel. We have high expectations for the Web and for it to enhance our relationships with our customers.”
She describes the site as a database site, not an HTML site. This means, she says, that a visitor could log on and ask to be shown everything in gray. The direct response approach is theme, not tonnage.
“It’s lifestyle marketing,” Harvey says. “And our brand is truly one of our greatest assets.”
