- Catalogs may seem like an outdated way to grab shoppers, but not if your target is millennials.
- Data & Marketing Association says the response rate for catalogs has increased during the past few years.
- The reasons include less mail being sent and because millennials happen to like catalogs more than other age groups do.
Catalogs may seem like an outdated way to grab shoppers.
But not if your target is millennials.
Studies from the Data & Marketing Association have shown that the response rate for catalogs has increased in recent years in part because less mail is being sent and millennials happen to like catalogs more than other age groups do.
"Millennials stand out a bit higher than other generations in terms of engaging with mail," said Neil O'Keefe, the association's senior vice president of marketing and content. "It's unique to the generation that hasn't experienced the amount of mail of past generations."
O'Keefe says that a higher level of interest in catalogs is better at driving sales than some other forms of digital marketing. "Millennials are very engaged by imagery, and the catalog really allows that to stand out. So the response rate there is very different than what you would experience with a display ad, even an email. The response rate for a printed piece has been on the rise as of late."
Millennials may be particularly interested in catalogs, but they're not alone.
Hamilton Davison, president of the American Catalog Mailers Association, said half of all Americans order from catalogs even if they don't immediately flip through the mailers. He said U.S. Postal Service studies had found that after periodicals and bills, catalogs attract the next most eyeballs, getting as much attention as personal correspondence. "Catalogs come uninvited in the home, and yet they're welcome" Davison said.
The Dingley Press prints catalogs for businesses from companies selling such things as seeds for gardening and home furnishings.
"Catalogs are a successful marketing tool because it forces consumers to make an active choice: 'Do I throw it away, or do I look at it?'" said Jim Gibbs, Dingley's vice president of sales.
He also said a catalog shopper is often more valuable: "Web shoppers are price-driven. A catalog consumer is generally an enthusiast of your brand and will spend more."
"While we use online sites to search for products, the typical consumer won't scroll past the first page of results," said Greg Portell, lead partner in A.T. Kearney's consumer and retail practice. "That creates an efficient shopping transaction but not necessarily a good experience. While not a perfect analog, catalogs get closer to an experience."
But grabbing that attention comes at a cost, and that's one reason catalog circulation is half what it was at its peak, estimated to be around 9 billion annually from more than 19 billion in 2007.
Catalogs are not inexpensive when ranked against other forms of marketing. Sending a marketing email is among the cheapest, which can be done for a couple cents, while mailed catalogs can cost 35 cents on the low end to $1 and up according to Davison.
But there's a tradeoff to consider, according to O'Keefe. "Email engagement is cheap, but very inefficient."
While printing technology has improved and the variety of paper sources and options have grown, postage is by far the biggest catalog cost component and has gotten bigger over time.
"Postage is half the cost of the catalog," said Tom Benedict, senior vice president of sales and marketing at Arandell, which has been printing catalogs since the 1920s.
In fact, Arandell bundles different, even competing retailers' catalogs together to mass ship in order to save money for the clients. While it may sound risky to be mailed alongside a competitor, Benedict said retailers understand that when the post office sorts the mail, catalogs end up side by side in mailboxes regardless, so you may as well reap postage cost savings where you can.
Beyond cost, better data allow retailers and marketers to more effectively target consumers who are most likely to buy. AlixPartners says retailers are using demographic and spending data to optimize when to send catalogs, focusing on key times such as holiday or life moments that spur spending like moving.
Data make the cost of distributing catalogs worth it, especially for a retailer or brand's best customers.
Williams-Sonoma Chief Marketing Officer Felix Carbullido said his companies brands, which include Pottery Barn, West Elm and Mark and Graham, are sending fewer catalogs than in the past. But Carbullido also said that "delivering inspiration to one's doorstep is still successful."
"We typically send a catalog every four to six weeks and then increase the frequency during the fall and holiday season," he said. "Some consumers will see the increase, and others won't because of the data science we use for who gets which book, when."
Retailers are improving catalog efficiency by 10 to 50 percent by limiting distribution to key customers during peak periods, according to AlixPartners. That targeted marketing generates an average return of $3 for every $1 spent and $9 for every $1 spent on top customers, putting catalogs above paid search, but below email and social media for marketing spending effectiveness.
A.T. Kearney's Portell says one factor in catalog resurgence is the more carefully curated product assortment within the pages. "Gone are the days of rambling collections of products page after page. Today's catalogs are more tightly focused offering better opportunity to catch consumer interest," he said.
In fact, Data & Marketing's O'Keefe says that Costco prints a catalog regularly and the content inside is different from consumer to consumer "so individual customers are receiving different catalogs than their neighbors."
Printers like Arandell and Dingley are seeing business grow, despite lower total catalog circulation as established catalog retailers send fewer mailers.
"Companies that have started off as e-commerce pure plays find increasingly that publishing gets them known, gets them trusted, allows them to get new product offerings out that they might not otherwise have been as visible for the consumer," Davison said.
Arandell prints catalogs for 240 retailers, including big traditional players like Nordstrom, Neiman Marcus, Saks and Patagonia, but senior vice president of sales and marketing Tom Benedict says business has grown 8 to 10 percent this year thanks to a new group of clients — e-commerce-only players, including high-end men's clothing brand Ledbury.
The catalog printing industry is dominated by a couple big players — Quad Graphics and LSC Communications — but midsize Dingley is growing, currently undergoing a $17 million expansion to service new customers. Among them is Onward Reserve, a native e-commerce brand selling men's clothing that has begun using catalogs to reach new shoppers.
Gibbs says Dingley is attractive for small but growing e-commerce players. "Quick changes are harder to make faster with big players," he said, but added that Dingley can turn around a new or altered catalog in just a few weeks if necessary.
The catalog industry may be seeing a resurgence due to new, smaller entrants, but many big, more traditional catalog retailers still see the value in catalogs, for now.
"I don't see [catalogs] going away. It's still a core anchor of our brands. We believe in beautiful imagery and a tactile experience of turning pages" Carbullido said. "But never say 'never,' I guess."
CORRECTION: This article has been updated to correct the spelling of printing company Arandell.