Anthropologie: Listen to Your Customers
The chart for 0-12 month file buyers did not look good, either. Performance per catalog dropped from about $6 in the spring to slightly above $5 in the summer, holding at $4.80 for the essentials, fall, autumn and gift books.
"It was not a pretty picture," Amy Steel, senior manager of marketing at Anthropologie, Philadelphia, told attendees at yesterday's Catalog Survival Techniques 2004 session at the Annual Catalog Conference here.
Last year's 0-12 month file showed a wobbly recovery. Performance rose to $5.40 for the spring, nudged $6 in the summer but dropped to $5 for the essentials sales catalog. It increased to $5.40 for the fall book, then hit $6.40 in the autumn book before falling back to $5.80 for the gift book.
Dollars per book in 2003 was $2.64 in the spring and $2.79 in the summer, reaching $2.97 in the fall and stabilizing at $3.18 for autumn and $2.99 for the gift catalog.
What about 0-12 month file performance for 2004? It's roughly $8.50 for the spring. Dollars per book stands around $2.80 for spring 2004.
The clue to this turnaround was to focus on the customer.
"You've got to talk to her or him or the businesses you're dealing with," Steel said.
Founded 10 years ago, Anthropologie has 52 stores and this year will add another 14. It spends its entire ad budget on circulation and catalog drops. The store experience is multi-sensory, with sight and smell key in selling its women's apparel, accessories and home products.
The Anthropologie catalog launched in fall 1998. The site at www.anthropologie.com debuted the next year. Last year's catalog circulation was 13 million, with an increase to 18 million this year. The house file has 440,000 buyers.
As for sales, direct revenue last year was $40 million and is expected to reach $53 million this year. Nearly half of its sales are online, though 80 percent of the Web traffic is purchases linked to people receiving the catalog. The average order is $182.
Anthropologie's recovery results from a series of steps to extract value from those conversations alluded to by Steel.
Consider the fit sessions. Several customers were asked to visit the company's home office. These were aspirational customers, particularly in the targeted ages 26-45. Executives ranging from president to strategic buyers and those in charge of product marketing talked with them about the fit of items and marketing.
Exit interviews yielded more insight. Held yearly, store customers are handed cards with 10 questions at checkout. This helps compare key demographics.
Focus groups aided in understanding consumer motivations. Anthropologie gave $300 to select customers to buy from their brand. The customers had only to send photographs of how the Anthropologie products were incorporated into their lifestyles. The focus groups are held at Anthropologie facilities.
"We needed to start feeling more comfortable about who we are," Steel said. "Each focus group costs us $5,000. We're not a company that hires consultants. We're not a company that spends a ton of money doing these things. We do these things internally."
Insights gained from such customer interaction were useful. The company learned that customers were frustrated with how the merchandise looked. In the past six months, Anthropologie catalog layouts were simplified to showcase merchandise better. The brand moved from ethnic outfits to a more modern look. This spring, the merchandising mix was expanded to include petites.
Another key in the turnaround was controlling expenses and maximizing investments. In particular, Steel suggested an efficient use of resources.
"We use our vendors as a resource every day ... talk to them as partners," she said.
Anthropologie holds a vendor summit, including R.R. Donnelley, Mokrynski & Associates and DoubleClick, to discuss the cataloger's strategies and objectives.
Anthropologie undertakes strategic audits of its warehouse, call center and Web site. Company executives dial the call center, use aliases to check the order-taking process and see whether representatives ask for customers' e-mail addresses.
In other tips, Steel said catalogers should renegotiate timelines with printers and list service providers to squeeze more out of them. Pay vendors on time. Stay true to the brand. Stick with things that work. Use the Add a Name option to get a postal break. Strike deals with paper vendors and make the best use of files of companies or competitors going out of business. Use interns.
Also, run co-mailings with other catalogers sharing the same mailing schedules and book trim size to get postal discounts. This has been used to great effect by magazines, and catalogers are catching on.