Catalogue Firms Are Narrowing Their Focus to Remain Afloat
Office workers who zip through the bustling Time & Life Building in downtown Chicago find it difficult to ignore a colorful kiosk that keeps flashing familiar catalogue names like Land’s End and J.C. Penney.
Consumers quickly discover it isn’t an advertisement but an elaborate electronic catalogue that’s hungry for their business. By simply touching the kiosk’s screen, consumers can scan abbreviated editions of big-name catalogues, pick out anything from seat cushions to camcorders, and slip in their credit cards to purchase the goodies. These high-tech catalogues from Des Moines, Iowa-based MicroMall Inc. are also ringing up sales at several Holiday Inns.
Such electronic wizardry is among several efforts by the $50-billion-a-year catalogue industry to reinvent itself and reverse a slump that has seen its double-digit growth of the 1980s generally slow to a crawl in the 1990s.
Looking for any growth avenues, the big catalogue firms are also targeting more specialized groups of consumers. Catalogue firms such as J.C Penney and Spiegel are increasingly relying on niche marketing, to everyone from African-Americans to large-sized women.
Some say the electronic kiosk--now being tested at a dozen locations in Chicago--is the future of catalogue shopping. Others say the future will be even more convenient.
“Catalogues will soon be on your TV screen instead of on your table,” said Michael Solomon, chairman of the marketing department at Rutgers University.
Instead of trying to go along with the new trends, Sears, Roebuck & Co.--which was losing in excess of $100 million annually from its catalogue--announced earlier this year that its Spring, 1993, edition would be its last.
While the Sears catalogue may be the most familiar to bite the dust, there are plenty of others struggling for survival. Some have been hurt by the long economic downturn. Home shopping stations have siphoned off business. Others lost their rural customers to retailers like Wal-Mart. Yet others failed to quickly deliver quality products to customers. And a growing number of environmentally oriented consumers refuse to buy anything from catalogues.
“Consumer sentiment is running strongly against catalogues,” said Solomon of Rutgers. “More people are asking, ‘How many trees were killed so that I could receive this junk?’ ”
Other factors are also at work. “The majority of consumers still want to touch and see what they buy,” said Arnold Fishman, a mail-order industry consultant at Highland Park, Ill.-based Marketing Logistics. “And most people want to buy things that they can have immediately. Catalogue orders still take two days to two weeks.”
But J.C. Penney is reacting. Two years ago, the company needed at least two days to inventory incoming goods before it was able to ship them. But new laser-reading equipment at its six distribution centers allows for shipment within two hours of the time products arrive, said William E. McCarthy, president of Penney’s catalogue division.
Penney became the top catalogue seller in 1992, shortly after Sears said it was abandoning the business. But it wasn’t Penney’s 1,400-page catalogue that took it to the top. It was the dozens of Penney specialty catalogues.
“We’ve got catalogues for large women, tall men and mothers with newborns,” said McCarthy. The company just began distribution of a catalogue that targets African-Americans.
Penney didn’t even offer a catalogue until 30 years ago. Now it prints more than 100 specialty catalogues annually that helped it notch mail-order sales of nearly $3 billion last year, according to Catalog Age, a Stamford, Conn.-based trade publication.
“Niche marketing is completely taking over,” said Laura M. Christiana, editorial director at Catalog Age.
Today’s fast-growing niche is computer product catalogues. That segment didn’t even exist a decade ago, and its growth has been primarily fueled by business-to-business catalogue purchases. Many have trained technicians available who offer better advice over the phone than many consumers believe they can get at retail stores. Last year, five of the nation’s 20 largest catalogues in total mail-order sales were for computer product firms. Two of them--DEC Direct and Dell Computer--ranked among the top five.
“In a few years, they could dominate the market,” said Christiana.
Dell Computer was among the first to introduce catalogue sales to the computer products market. But DEC surpassed Dell last year with catalogue sales of more than $1.8 billion. “For years we had to remind our customers, ‘Oh yes, we have catalogues, too,’ ” said Marilyn Rutland, direct marketing manager at Digital Equipment Corp. Now, she estimates, about 80% of Digital’s orders in the United States are generated from its 30 catalogues.
Catalogue Kings
With Sears announcing plans to drop out of the mail order catalogue business, J.C. Penney became the nation’s top catalogue sales company in 1992. But computer product catalogue firms are moving up the list fast.
‘92 sales ’91 sales Rank Company Market segment (millions) (millions) 1 J.C. Penney Gen. merchandise $2,992 $2,841 2 Sears, Roebuck* Gen. merchandise 2,135 2,345 3 DEC Direct Computer products 1,800 1,000 4 Dell Computers Computer products 1,610 800 5 Fingerhut Gen. merchandise 1,394 1,287 6 Spiegel Apparel 1,322 1,213 7 Gateway 2000 Computer products 1,100 626 8 Lands’ End Apparel 697 677 9 L.L. Bean Apparel 662 556 10 The Limited Apparel 600 600
*Sears’ Spring, 1993, catalogue was its last, but customers can order until the end of 1993.
Source: Catalog Age
