Charting a New Marketing Map for Lands’ End

Direct merchant Lands’ End is well known for quality, service, prompt delivery and up-to-date technology that has its Web site counted among the best that apparel retailers have offered.

Now what the company would like to be known for is up-to-date fashion.

After a year of falling profit and clearance sales on clothes with out-of-style colors and designs, the company began 1999 with leaner ranks, new top management, a fresh ad campaign and plans for a reinvigorated catalog and Web site, which shoppers will see in coming months.

A new advertising campaign by Biederman, Kelly, Krimstein & Partners is aimed at driving customers to the Web site, at which they can store body shapes and “try on” clothes to see how they’d look, thus overcoming a major hurdle of both Web and catalog shopping.

Meanwhile, a redesigned catalog will have artwork and essays, conveying a tasteful image that Lands’ End hopes to carry into its clothes designs.

The company isn’t ditching its classic assortment of cotton interlock shirts and dresses. But it is adding a new focus on fashion and color, subscribing to services that predict hot color palettes and more closely following fashion shows and trends, so it doesn’t get stuck, as it did last winter, with unsold men’s crew shirts in purple plum. The changes, the company says, should be fully in place by spring 2000.

It also hired creative talent from fashion-forward companies such as Tommy Hilfiger and Gap to bring the 36-year-old company known for its relentlessly sensible clothing into the next decade.

Lands’ End is not the only catalog that had fallen out of fashion. Such competitors as L.L. Bean are likewise suffering from slow sales to customers who prefer the up-to-the-minute styles they see in stores.

The Internet plays an important role because it for the first time gives Lands’ End the ability to change styles and respond to trends quickly--new fashions can be posted as quickly as they’re created, while a catalog is often half a year or more behind.

And unlike its store-based competitors, Lands’ End is not worried about cannibalizing its mainstay operation. While brick-and-mortar apparel companies have to pay their stores’ costs regardless of their Web sales, direct merchants can easily cut costs from their main selling venue by trimming the number of catalog pages or mailings.

“I think once we get the merchandise right, the rebuilding part will come easy,” said Stephen A. “Chip” Orum, the company’s chief financial officer. “We have a very strong, loyal customer base, and I think they will immediately respond to color-right, style-right product.”

For the most part, Wall Street is optimistic about the company’s ability to polish its too-traditional image. Even amid last year’s slump, one analyst noted, Lands’ End had the kind of returns on investment that many retailers aspire to in a good year.

The numbers already are looking better for the Dodgeville, Wis., company.

First-quarter sales rose 7.8% to $290 million, and net income rose 25% to $6.5 million from $5.2 million the year before.

In 1998, profit fell 51% from the previous year to $31.2 million, as the company took steep markdowns on many goods. That posting was on sales of almost $1.4 billion, an increase of 8.5% compared with 13% from the previous year.

Kevin Silverman, an analyst with ABN Amro in Chicago, said he is bullish on the company. For one thing, he said, in a year the company itself called disappointing, it was still well in the black.

“Last year they picked some bad apples,” Silverman said. “I think it’s fair to allow companies like this the leeway to make a mistake once in a while. The good companies correct it quickly.”

Lands’ End is also trimming some of its marketing costs. On top of being able to take advantage of falling paper prices, the company also is experimenting with slimmer--and fewer--catalogs. Last year, an already large number of catalogs per customer swelled to as many as 55 for some as the company aggressively promoted its liquidation merchandise.

And to ensure that fewer catalogs are nonetheless more effective, the company in February hired magazine veteran Lee Eisenberg to oversee catalog design and advertising.

Eisenberg, a former editor of Esquire magazine, said customers should begin to see differences in the catalog beginning in July, though he characterized the changes as more evolutionary than revolutionary.

To appeal to its well-educated, affluent baby-boomer core customer, the catalog will incorporate a more magazine-like style, including vibrant pictures and art as well as contributions from popular writers, such as New Yorker contributor Bruce McCall.

“By paying attention to the spreads, customers will be much more motivated to browse what we’re offering and presumably be much more motivated to buy,” Eisenberg said.

But as the company saw last year, when the fashion is off, even Lands’ End’s classic styling and fine quality was not enough to grow sales.

“All that was fine when we baby boomers were spending with unbridled restraint, but now we’re beginning to age and our tastes are beginning to change,” said Kenneth M. Gassman, a direct-mail industry analyst with Davenport & Co. in Virginia. “Lands’ End did not change along with us, but I think they are doing the right thing now.”