Retailers More Selective About Targets : Catalogue Sales Enjoy Rebound

The catalogue business has rebounded.

Two years ago, catalogue retailers found their profits were being eaten up as they competed for a bigger share of the growing shop-by-mail industry. Although their sales increased, too much money was being poured into the mass distribution of catalogues to people who weren’t interested.

Since then, the companies have become more choosy about the people they send their catalogues to. They target customers who have already ordered from them or seek new ones by renting lists from competitors, says Maxwell Sroge, a mail order industry analyst.

By being more selective, catalogue retailers have improved the rate of response and restored their profitability, he said.

“The primary reason (for the industry growth) is the increase in the number of women in the work force. In 70% of the homes in America, there’s no adult home during the day to do the shopping,” said Sroge.

“It’s easy to flip through a catalogue, order from an 800 number and have a package delivered to their office. Catalogues have become a necessary alternative for today’s busy American household.”

Some catalogue companies are turning the catalogue into a commodity itself, to be packaged and marketed in much the same way as other merchandise.

About five years ago, with production costs getting higher, some companies began to charge for catalogues, said Jay Walker, chairman of Catalog Retail Corp., a catalogue marketing concern. Most catalogues cost 40 cents to $1 per copy to produce.

Putting a price tag on catalogues has not hurt sales, he said, but actually serves as another screening process to separate serious shoppers from browsers and avoid the cost of mailing catalogues to uninterested consumers.

“If you buy a catalogue, it’s a fair shot that you will buy from it,” Walker said.

Walker’s company has begun selling catalogues through displays in Waldenbooks stores and by fall expects to be selling catalogues in 10,000 retail outlets.

Despite the industry’s problems, catalogue distribution has grown steadily, rising to 10 billion in 1985 from 4.1 billion catalogues sent out in 1978, according to the Direct Marketing Association.

Sroge puts the figure even higher: 20 billion to 25 billion catalogues now mailed each year by an estimated 10,000 companies.

It is big business for retailers, bringing them an estimated $35 billion in sales annually, he said.

Some of these companies, such as industry leader Spiegel Inc., exist as catalogue houses alone. Other companies have at least one retail store.

An example of the latter is L. L. Bean Inc., which had net sales of $308 million from its distribution of 75 million catalogues last year, company spokesman Kilton Andrew said. Catalogue sales account for more than 85 percent of Bean’s revenue, with $50 million in sales coming from the lone store in Freeport, Me.

Similar to Magazines

The catalogue metamorphosis is similar to the recent restructuring of the magazine industry, Walker said.

Magazine formats evolved over the years from general interest to highly specialized, with publications targeted at particular segments of the population: home computer users or gourmet cooks, for example.

Catalogues have changed in much the same way, Walker said, noting that Sears, J. C. Penney and Montgomery Ward once dominated the market.

In the past decade, catalogues have become “finely honed to a special interest” and are reaching more people, Walker said.

Catalogues sell items as diverse as music boxes, odd-sized clothing, hardware for people renovating their houses, sophisticated audio components and hunting and fishing equipment.

“As the industry has seen increased acceptance by consumers, they have increased the number of products, range and frequency of catalogues. It’s a snowball rolling down the hill. It’s gathered a lot of momentum,” said Sroge.

“You’ll be seeing more of them. People, by voting with their buying dollars, are saying, ‘Send me more,’ ” he said.

To grab their share of the market, catalogues have become sleeker and slicker, with flashy photography and graphics and high-quality paper.

With all these changes, the older, more established catalogues have had to either revamp their styles to keep up, as Spiegel did, or fold their operations, as Montgomery Ward did last year.

“Spiegel used to be a company that catered to the lower end of the marketplace,” said Sroge. “They have completely flipped that company to become a fashion and style leader.”

Spiegel says it went from a “mass retailer to a class” retailer 10 years ago after it was bought by the Otto Versand Group, a West German direct marketing firm.

Sroge predicts dramatic changes in Sears’ catalogue operations as well.