Is the Catalog Industry Starting to Die?
Number of catalog shoppers. The DMA has used the services of Simmons Market Research, New York, for more than 10 years to measure the shopping habits of adult Americans in relation to both catalog shopping and direct shopping. Historically, the number of catalog shoppers has been slightly confusing from these statistics.
While relatively flat for more than six years, the estimated number of adult catalog shoppers in 1995 was 81.4 million, 81.8 million in 1996, 112.9 million in 1997 and 106.9 million in 1998. Some might think that because of the fluctuations, the data may be flawed. However, results from the SCIR support this.
Why should we be concerned, especially at the individual company level? Because decisions will be based on this. This information is published not only in the DMA's Statistical Fact Book but also by those in the business media who use the DMA as an information resource.
When it was revealed that the number of people shopping from catalogs declined, it fueled the myth that the Internet is going to cannibalize catalogs. It's easy to leap to the conclusion that cataloging is a dying industry. This is especially true among those not knowledgeable about the industry, which includes more than 90 percent of all investors and lenders. We should all be concerned that there appears to be a decline in the number of catalog shoppers.
In addition, as we all know, last year's economy was one of the best in recent memory. So a decrease in catalog shopping will not be blamed on outside influences such as the economy, but rather it indicates a flawed industry. If there is any solace in a decreased number of shoppers, it's only when you couple the Simmons and WEFA data that the DMA uses.
According to WEFA, consumer catalog shopping in 1998 was $52.3 billion, with individual shoppers spending $489. This is a 17.2 percent increase per person. One might think this is contradictory - but in a strong consumer economy, the idea that catalog shoppers spend a great deal more than previous years is consistent with other spending patterns.
Twelve-month file decrease. When the facts were gathered for the 1999 edition of the SCIR, a disturbing fact arose: The number of companies reporting a decrease in their 12-month file was almost double that of prior years. In 1997, the number of companies reporting a decrease was only 9 percent; yet in 1998, 17 percent of the respondents stated their 12-month file had decreased. Moreover, the overall catalog circulation volume among the respondents increased 14 percent. While these reports are from individual companies, they point in the same direction as Simmons does that the number of people shopping from catalogs declined last year in spite of higher circulation.
Our concern is that this may be a trend. Maybe it's nothing more than a company's shift in sales to other media such as the Internet. Or maybe it's further proof that consumers are dropping catalog shopping as a source because it's not as convenient and easy as most catalogers like to think.
Concern or fluke. It would be easy to pass this off as a momentary aberration that will fade away this year. But the damage done to industry investors and lenders will not fade away that quickly. Remember that the 1998 holiday season surprised almost everyone with the amount of Internet sales. If the upcoming holiday is a repeat, and the general impression is that it's coming from catalogers, it will be more difficult for future financing.
This is a cause for concern but, unfortunately, the answer to fluke or trend cannot be answered until after the holidays. To prevent it from being a trend, every company should examine how it conducts business and make sure it's trying to solve this problem.
One suggestion is to truly give superior service this holiday season. Those outside the industry may perceive the problem as applying to the entire industry. For any solution to have industrywide impact, it should be effective and done by each and every company. So let's dedicate ourselves to showing the doubters that cataloging is here to stay and that it's healthy.
Bill Dean is president of W.A. Dean & Associates (www.dean-assoc.com), San Francisco.