CHICAGO — Bonwit Tellers, J. Magnum, Montgomery Ward. Those are three of 96 department store brands that existed in 1985 but aren't around today.
In his keynote speech at yesterday's 21st Annual Catalog Conference, Pat Connolly, executive vice president and chief marketing officer at Williams-Sonoma Inc., used those companies to make a point about how catalogers can secure their future in a changing world.
“How do we keep that from happening to us?” he asked. “How do we make sure that we not only survive but thrive in the years ahead?”
Luckily for those assembled, the industry veteran had a few tips. First, “don't think of yourself as a cataloger, think of yourself as a brand,” he said. “Your brand is what people think of when they think of you.”
Successful consumer brands illustrate that point.
Porsche is viewed as the “legendary performance car.” In a recent ad showing the new Cayenne sports utility vehicle, it appears side by side with the other Porsche cars in the portfolio, implying the continuity in values. At no point is the car associated with soccer moms.
Wal-Mart Stores Inc. is the ultimate case in branding. The world's largest retailer simply positions itself on its “Everyday low prices. Always” promise.
“More people in the United States shop at Wal-Mart than attend church services,” Connolly said.
Part of building an effective brand is effective public relations. Pottery Barn was scripted into an episode of NBC's “Friends” in 2000. The brand at that time had only 79 stores and a catalog. Yet the brand looked larger than it was because of the ubiquity of the catalog. Thanks to syndication, that episode airs three to seven times a year, so not only did Pottery Barn benefit the first time it appeared but the call center telephones light up every time a rerun airs.
Connolly urged catalogers to use their books to further the brand.
Assortment matters, too. He cited the key difference between Williams-Sonoma and other multichannel retailers.
“It's not what we sell,” he said. “It's what we don't sell.”
Catalogers should not be tempted to sell items that are not core to the brand.
Connolly's second tip to catalogers was to quit whining and fix the goods.
“I think we, as an industry, have not focused on the merchandising,” he said. “There are no challenges we face today that good merchandising won't solve.”
Pottery Barn itself fell victim to poor merchandising. Comp-store sales dropped from $1 million to $800,000 five years after Williams-Sonoma bought Pottery Barn from The Gap. Even catalog sales were lackluster.
What did executives think? Some blamed the name. After all, Pottery Barn sold neither barns nor pottery.
Mickey Drexler, then chief of The Gap, got it right. He blamed Pottery Barn's merchandising. The book was selling items like a frog band — there was a discount for a double purchase — and the infamous leaning tower of cheesa, a tilted block of cheese modeled on Italy's Leaning Tower of Pisa. Unsurprisingly, list rental soon comprised 4 percent of Pottery Barn's total revenue. If consumers could buy Pottery Barn stuff, they could buy anything.
Today, after many fixes, Pottery Barn expects to reach $1.5 billion in sales, half of it from the direct channel.
Connolly's third pointer was simple.
“It's not about customer service,” he said. “It's about the customer experience.”
Catalogers must go beyond back-order rates, fill rates, time-to-ship and issues of that ilk. They must focus on the customer experience, such as easy-to-read type, easy-to-buy options at every step of the way, a good returns policy, courteous call centers and effective order shipment.
The goal is to increase customer loyalty and buy-in frequency.
Connolly gave an honorable mention for its customer experience initiatives to Hertz's #1 Club Gold loyalty program. The car rental company once was troubled by the success of rivals National Rent a Car and Avis' loyalty programs. But instead of following a cookie-cutter approach, Hertz did market research.
That research prompted an innovative loyalty program admired by many across industries. Those surveyed were not interested in another points-based system. Accordingly, a Hertz #1 Club Gold member today sees his name on a board at the airport, gets into a waiting car, shows his license and drives off.
Connolly's fourth tip was the Internet, saying the online channel was “not a threat, it's our future.” It took 100 years for catalog sales to account for 5 percent of total retail sales. But it took e-commerce only five years to equal 4 percent of total retail sales.
The Internet's growth is fueled by greater broadband availability and a younger generation growing up used to e-commerce transactions.
“This year, [Williams-Sonoma's] e-commerce sales will exceed catalog sales,” Connolly said.
No doubt the catalog drives Web sales. But catalogers should have a larger share of the e-commerce pie given their expertise in direct fulfillment, database marketing and customer service. They have to master online marketing, not just worry about, say, circulation issues.
“Search is where it's going,” Connolly said. “When Bill Gates is saying search is important, it is important.”
Google was the company to shoot at. Connolly gave an example of typing the keyword “pizza” on the search engine. It pulls up a general bunch of listings. But click on “More” at the bottom, enter an address and it pulls up listings of the pizzerias in that neighborhood.
“I don't see enough of our catalogers' names in natural search or paid search results,” Connolly said.
The final tip was on cooperation.
“We can't succeed by ourselves,” Connolly said, “we need to succeed as an industry.”
Catalogers should rent each other's names. Gap and Limited stores do not need each other, but catalogers do. And the effort to work together must come from within, not simply relying on the Direct Marketing Association.
Also, catalogers must demonstrate to their local, state and federal officials and politicians the jobs they create in communities nationwide.
“These politicians are listening to someone,” Connolly said. “They might as well be listening to us.”
Privacy is an easy issue for politicians. Little or no funds are required to pass privacy legislation, hence the populist nature of the issue. So catalogers must go public not only with how they create jobs, their use of marketing data and databases, but also the environment-friendly steps they take.
Connolly sees non-governmental organizations playing a bigger role in forcing the hand of catalogers to adopt better practices. Catalogers must disclose where the paper is sourced from, working conditions in the paper's country of origin and the wages. Companies are being held to higher standards of accountability and responsibility.
“Businesses are the ones that can effect change much faster than government or NGOs,” Connolly said.