By Barbara Thau
NEW YORK–Retail catalogs may be glossy and glitzy, but their revenue-driving power is diminishing.
The catalog arms of retailers such as Williams-Sonoma and J.C. Penney are steadily being dwarfed by their online businesses. And merchants are adjusting their strategies to shoppers to increasingly migrate customer purchases from catalogs to the Web.
“More and more, catalogs are viewed as a marketing vehicle used by retailers to make sure that their brand is top of mind to consumers,” Mary Brett Whitfield, senior vice president and director of the Retail Forward Intelligence System of consulting firm TNS Retail Forward, told HFN.
These days, the catalog is viewed as a contributor to revenues as opposed to a sales driver in and of itself, Brett Whitfield said.
E-commerce is Williams-Sonoma’s fastest-growing business. It grew 20 percent this holiday season alone, Pat Connolly, executive vice president and chief merchandising officer, said during an investment conference this year.
The specialty retailer has earmarked e-commerce as a major growth opportunity based on strong early results from its Project 360 marketing platform.
Project 360 works to leverage Williams-Sonoma’s database of consumers and gain insight into their idiosyncratic shopping behavior.
The program’s targeted e-mail marketing campaign to its database of 43 million customers has generated five times the revenue of equivalent catalog mailings “at zero cost,” said Sharon McCollam, Williams-Sonoma’s executive vice president and chief financial officer, during the conference.
“We’re mailing 390 million catalogs a year,” McCollam said. With the e-mail marketing platform, “We can cut pages and add sales, and touch the customer without having to mail the customer, per se.”
Indeed, merchants are exploring ways to get the most bang out of their buck from catalogs in a Web-oriented retail world.
Retail catalogs are “including more ties back to the Web site,” such as directing shoppers to more expanded assortments, colors and styles, Brett Whitfield said.
They’re evaluating the most “intelligent way to use that [catalog] real estate and ideally drive shoppers to their Web site, which is a more cost-effective order-taking process than a call center,” Brett Whitfield said. “No human has to be involved.”
Williams-Sonoma has also revamped the Web sites of its multiple brands.
An upgraded Williams-Sonoma kitchenware site features specialty shops, cooking techniques and new videos of product demonstrations.
J.C. Penney’s online business is now bigger than its catalog arm and is the midmarket chain’s fastest-growing channel.
“We’re planning the catalog business down; we anticipate continued erosion in the big book,” Mike Ullman, chairman and chief executive officer of J.C. Penney, said during a conference call. However, the specialty books, such as the Cooks kitchenware catalog, are offsetting some of that shortfall, he said.
J.C. Penney is in the process of consolidating its merchandising functions for the three channels: retail stores, catalog and online. The process has been completed in its home buying ranks.
Macy’s discontinued its Macy’s By Mail catalog years ago. While the retailer still operates the Bloomingdale’s By Mail book, it represents only a small portion of the business, Jim Sluzewski, a Macy’s spokesman, told HFN.
Macy’s direct-to-consumer business includes macys.com, bloomingdales.com, Bloomingdale’s By Mail as well as national online wedding gift registries.
“Although Bloomingdale’s By Mail has a loyal following, it can’t, by definition, have the kind of distribution opportunity that online does,” he said.
A year ago, Macy’s earmarked $100 million to grow its direct-to-consumer arm. The division will swell to become a billion dollar business this year, ”and online is the vast majority of that,” Sluzewski said.