Monday, April 13, 2009

Williams Sonoma: A Cautionary Tale

"In the realm of "what did they think would happen?" Direct Magazine reports that William-Sonoma experienced a direct revenue drop of $264.7 million, or 15.9% in 2008, the same year it dropped its catalog circulation by more than 20%, from 393.2 million in 2007 to 313.7 million, and cut catalog page counts by more than 30%.

Catalog revenue itself fell to $356.6 million in 2008 from $560 million in 2007 (that's $203.4 million dollars in lost revenue!) while the catalog cutback reduced direct-to-consumer costs by just $45 million. The company circulated just under 314 million catalogs in 2008 and direct-to-consumer sales represented approximately 42% of its business.

Although Internet revenues represent a higher portion of company sales, they also slipped, from $1.1 billion to 1.03 billion, a fact in part attributable to the cut back in catalog mailings, according to the Direct report, which notes "The company is aware that decreasing its catalog circulation will have a negative effect on other channels. In a note within its filing, the company acknowledged 'approximately 40% of our company-wide non-gift registry Internet revenues are incremental to the direct-to-consumer channel and approximately 60% are driven by customers who recently received a catalog.' "

WOW! As an experienced shopper, I can personally attest, a majority (90-95%) of my online purchases are a direct result of a recent catalog mailing.

This is a perfect example of the need to focus on multi-channel marketing (see earlier post titled "Interactive Marketing Emerging at AGC"). Direct Mail feeds Website Traffic and hence revenues (period). There is far too many business' vying for our attention for marketers to think we will always just remember their business exists, however, when prompted with direct mail, we usually pay them a visit.

This is a tale worth considering when developing the strategy for your next marketing campaign.