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Catalogs are thriving in the e-commerce age

In what’s known as a multi-channel retailing world, catalogs are an important marketing tool for driving shoppers to other channels. Big retailers like L.L. Bean are active in at least three channels: stores, e-commerce and catalogs.
/ Source: The Associated Press

L.L. Bean projects that its online sales will overtake its catalog business within two years, but don’t expect any trees to be spared in the process.

The company has no plans to scale back its mailings of 200 million catalogs a year. Nor do many other mail-order companies that are flooding customers’ mail boxes this holiday season — the number of catalogs shipped to homes and businesses has held steady despite online competition, and actually grew last year.

“People who were caught up in Web mania thought it would supplant the catalog,” said Madison Riley of Kurt Salmon Associates, a retail consulting firm. “That has not come true, and I don’t think it will ever come true.”

In what’s known as a multi-channel retailing world, catalogs are an important marketing tool for driving shoppers to other channels. Big retailers like L.L. Bean are active in at least three channels: stores, e-commerce and catalogs.

It was just five or six years ago that some analysts were predicting the Internet would render catalogs obsolete.

But catalogs survived even as Internet sales have grown at a faster pace. Internet sales are projected to rise 27 percent to $52 billion this year while catalog sales will grow 6.7 percent to $143 billion, said Amy Blankenship of the Direct Marketing Association, a New York-based trade group.

Online sales, catalogs intertwined
L.L. Bean once shared the view that online sales would lessen its reliance on printed catalogs. But the company found that the two were intertwined, with catalogs giving a significant boost to Web site traffic and shoppers freely switching between the channels, said Steve Fuller, Bean’s marketing chief.

“One of the mistakes people made was in thinking of the channels as discrete, but it’s the same households. Some days they call, some days they order from the Web site, some days they drive to the store,” he said.

Sales dropped when Lands’ End cut back on the catalogs it sent out in 1999, and the company then decided to boost mailings the following year, according to the Print E-business Report published by the Printing Industries of America.

A Lands’ End spokesman declined to release catalog numbers. The E-Business Report says Lands’ End distributed 270 million last year.

Catalog companies generally shipped out the same number of catalogs from 2000-02 despite three postal increases; the numbers bumped upward last year to 17.5 billion. A similar number is expected to be sent this year, Blankenship said.

Shoppers motivated to go online
Retailers have become smarter about the way they use catalogs, which are expensive to produce and mail. Companies including Lands’ End and L.L. Bean have discovered that their catalogs motivate shoppers to go to Web sites or visit stores — or pick up the phone, said Riley, who is based in Boston.

And if a catalog’s job is to provide inspiration instead of a comprehensive listing of goods, then the catalogs can be smaller, offering a cost savings to retailers, he said.

At L.L. Bean, even the best customers receive 30 percent to 40 percent fewer catalogs than a few years ago, and the company is saving money by sending some customers smaller catalogs, Fuller said.

The savings is being used for prospecting for new customers, he said. L.L. Bean expects this to be a good year for attracting new customers and projects sales of $1.3 billion.

But Bean has not been able to cut back on support professionals who answer phones, said spokesman Rich Donaldson. Many people check out items on the Internet and then call the company’s toll-free number to ask questions.

Consumers still using catalogs
Then there are people who don’t like to fool around with computers and choose to call a live person instead of clicking with a mouse.

Leanne Payeur of Gorham buys virtually everything from catalogs and places her orders using toll-free numbers or by mailing in order forms. “I’m not a fan of the Internet and putting my plastic on the Web,” she said.

She has used catalogs to purchase kites, toys, pet products, clothes, cookware, hot sauces, steaks, a telescope, furniture, a drum set, a bird feeder, a lamp, even artwork for her walls.

All of those purchases beget more catalogs. Her mailbox is stuffed — about eight or 10 catalogs a day, she said.

Howard Davidowitz of Davidowitz & Associates Inc. in New York said the Internet can’t replace catalogs as a marketing tool. And he said there’s room for even more growth in catalog sales down the road.

With such a variety of catalogers, individual companies will have to adjust their channels differently to maximize sales.

“To survive, all of these three channels are going to have to remain at different levels of re-invention. That’s the constant. The constant in all three channels is change,” he said.