While the past few months have been punishing for consumer catalogs, business-to-business catalogs are faring better by comparison, a trend one analyst says has held true in past economic crises.
Williams-Sonoma Inc. recently reported that net revenues for the eight-week period ended December 28 dropped 22.6% while comparable store sales decreased 24.2%. The company, which publishes the well-known Williams-Sonoma and Pottery Barn catalogs is not alone in this malaise. With consumer confidence at record lows, many consumer catalogers are posting dramatic sales declines, making cutbacks and even exiting ancillary businesses.
While b-to-b catalogs, like most today, haven’t been untouched by the current economic downturn, the picture from them is slightly different, however.
Thermo Fisher Scientific puts out a hefty annual catalog featuring hundreds of pages of scientific instruments and laboratory equipment. The company recently reported that revenues increased 1% for a total of $2.65 billion in the fourth quarter of 2008, compared with $2.62 billion in the 2007 quarter.
“Over the past 15 years, whenever there’s been an economic downturn or a recession, b-to-b mailers have consistently held up better,” said George Hague, senior marketing strategist at J. Schmid & Associates. “They often will get hit eventually, but not to the same level as consumer catalogs. On the other hand, they don’t enjoy the same robust growth that consumer catalogs can.”
The good news isn’t across the board for b-to-b catalogers, however. “It’s somewhat of a mixed bag, with some down and some posting solid results,” said Hague.
Dell, for example, last week said revenue for the fourth quarter ended January 30 was $13.4 billion, a decline of 16%. In a statement, the company said that US demand was down significantly among all customers, particularly small and medium businesses and largest corporate customers
“I think b-to-b is somewhat more fortunate than consumer, because the stuff that we’re selling is stuff that businesses need,” said Mary Ann Kleinfelter, VP, marketing at L-com, a cataloger of cable assemblies and connectivity devices.
After purchasing a wireless direct marketing company last year, L-com will mail its largest master catalog ever next month, with 240 pages. “The more choice we can offer, the more likely customers are going to come to us,” said Kleinfelter.
Still, in deference to the times, L-com is paying particularly close attention to its mailing strategy. It has found that customers take their time when it comes to making purchases and only buying when they need something, instead of stockpiling items. As a result, L-com is being extra careful about who it is mailing to, making sure the addresses are clean.
Because the business world is so volatile right now, people are leaving their jobs in significant numbers. This makes it important for b-to-b mailers to make sure they have the right person at the right address to insure “that what you are mailing is getting there,” said Kleinfelter.
The company also uses e-mail actively to complement its print efforts. Typically, it uses e-mail more to add value than for sales, by providing tips and tutorials.
“We find this strategy improves customer loyalty,” Kleinfelter noted.
Hague reported that several b-to-b catalogers are even looking at expanding their circulation rates going into the second quarter of 2009.
“As we entered the new year, many b-to-b catalogers projected lower sales based on the lower quantities that they were mailing,” said Hague. “Now that they see response rates holding, they are realizing they can mail more robustly than they were projecting.”