NEMOA Speaker: Catalogers Must Address Privacy, Multichannel Convergence

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GROTON, CT -- There was just one data privacy bill introduced into Congress in 2002 but 95 in 2005, according to Chris McDonald, executive vice president/general manager at Abacus North America. So when McDonald predicted that personal information will be one of the five issues DMers need to confront in the future, it might have been an understatement.


McDonald set the stage yesterday for his state-of-the-industry report at the New England Mail Order Association's fall conference by noting that the top five catalogs 20 years ago were all general merchandise, big-book catalogs: Sears, J.C. Penney, Montgomery Ward, Spiegel and Federated Department Stores. Today, specialty catalogs dominate the top spots: J.C. Penney, Sears (Lands' End), Redcats USA, Williams-Sonoma and Limited Brands. So far this year, catalog sales are up 10 percent overall, McDonald said.


Also two decades ago, 80 percent of orders were placed through the mail via checks. Today, call centers account for 42 percent of sales, Web sites 38 percent and retail 20 percent.


During this period, there also has been a dramatic shift toward co-op databases, with 40 percent of the circulation of catalogs today being sourced out of co-ops.


Looking ahead, McDonald said the catalog industry needs to deal with five issues:


* Rising costs and low inflation. The rising costs of healthcare, fuel, postage and paper coupled with disposable income starting to decline means that something has to give.


* A large shift in consumer value drivers. The aging baby boomers and growth in the Hispanic population are just two of the factors driving this. Also, the Internet is increasing consumer expectations.


* The information paradox. Consumers increasingly want personalization yet they want data security at the same time, which is a paradox.


* The market is increasingly competitive, and it's coming from everywhere. There are Brookstone kiosks in airports and Target seasonal stores opening in markets like New York City and Cape Cod.


* Multichannel convergence. "We've really only touched the tip of the iceberg," McDonald said about this. In 2004, 80 percent of shoppers were tri-channel shoppers, up from 57 percent the year before. Also, 44.7 percent of retailers now operate in three channels.


What keeps McDonald awake at night, however, is that many marketers still don't understand this convergence. One of his company's customers -- and a sophisticated one at that -- told Abacus that it is cutting the majority of its direct marketing budget and shifting the money online because that's where the sales are coming from. This client doesn't understand that mail drives a significant portion of those online sales, he said.


Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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