Why catalogues have it in a recession

Here’s the scenario – you are trying to cut down on expenditure – no major trips to shopping centres, no cruising the web looking for things to buy… and a catalogue plops through your door. Maybe it is a brand you know and love or maybe it just has eye catching photography on the cover. You’re not in shopping mode, there is no harm in just flicking through it.. It looks interesting, you put it on the coffee table and pick it up later. You notice there is a free postage and packaging, there is a 20% discount… and before you know it, you’ve identified something you really need and are on the computer buying it. Or at the very least you might earmark something to look out for in the sale.

Like no other medium the catalogue catches you at home when you are relaxed and online ordering makes it so easy it is hard to resist. Catalogues themselves have improved in quality out of all recognition and delivery have improved from a typical 28 days when I was a child to next day. It is no wonder that this form of retailing is gaining market share in the current economic climate. Is the public gradually losing the habit of shopping on the high street?

How to manage online advertising spend?

I attended the Econsultancy Supplier Showcase on Search and Bid Management Tools yesterday. These tools help in house and agency web-marketeers make their way through the jungle that is created by all the various combinations and permutations of online advertising that are possible. For each campaign, once the keywords have been selected, there are options of using pay per click, organic search or affiliates, then these are combined with options for the ad text, the landing page, the match type. It can end up in thousands of options and the task of analysing which is most profitable is really daunting and is faced by every retailer with an online presence.

So what options were discussed at the event?

Systems to address this solution fell in two camps:

The black box algorithm. Set up a lot of options which will result in many competing combinations that can be tested against each other and also set your business goals. Sit back and let the algorithm optimise your spend for you. Of course you can’t actually sit back because you need to keep setting up new options for the system to analyse.

The rules based system. Use these types of systems to manage campaigns in bulk. Set up rules so that the system can change bids automatically or simply alert you, the manager, when certain events occur. This type of system may seem to rely on greater human skill but the black box system also needs feeding with likely combinations.

And finally there was the “humans are best” camp. There was certainly a view that the search engines provide a perfectly usable system for free with a range of reporting and that a skilled web marketeer using these tools can beat a system any time!

Has The Hut been reading my blog?

No sooner do I highlight what a great brand-building job Zavvi’s high street presence did but The Hut (who now owns the online Zavvi) announces that it is going to launch on the high street. Currently The Hut is pure play e-commerce operating its own site alongside white label sites for people like ASDA. The plan is to open banks of unmanned touchscreens with chip & pin machines in shopping centres. The aim being to build The Hut’s brand.

Kiosk vendors should take note…

The Ultimate Swing to Technology

It has been no secret over the last few months that the only retail channel where there is any growth is e-commerce. The credit crunch (now downright recession) has been hitting retailers hard and many are improving or launching websites to compete. The ultimate move to the web however, is when a brand built on the high street moves entirely online. This can be seen in a few examples, some more high profile than others.

Woolworths' blog

Woolworths’ fall into adminstration over Christmas is perhaps the best known example – and where is the Woolworths brand going to survive? Shop Direct Group has purchased it and plans to launch a Woolworths e-commerce site. See the Woolies Blog for updates on progress.

Zavvi e-commerce site

Zavvi, another high profile Christmas collapse, has also survived on line. The Hut has purchased the Zavvi e-commerce site and is already trading. This is particularly interesting as the Zavvi brand only had a year or so to get established on the high street after it was rebranded from the Virgin Megastore. The high street is still an extremely powerful method of establishing a brand.

ProCook e-commerce site

Finally, a lesser known example, ProCook (purveyor of saucepans and all things cullinary) is reported to be closing its 18 high street stores to concentrate on e-commerce. It will however be keeping 13 factory outlet stores. The website currently shows 13 stores.

The impact of the shopping centre

Westfield London

Shopping centre development is having mixed success at the moment. Highcross in Leicester has just opened and Westfield, London, due to open on October 30th, has been hitting the retail headlines with impressive brands signing up. In other areas, these straightened times are causing schemes such as the revamp of Westgate in Oxford to be put on hold.

While eCommerce is getting all the publicity, the impact of the shopping centre on the face of retail in the last 30 years should not be underestimated. In 1980, a retailer, who wanted a footfall of 50% of the UK population in a year, needed 175 stores. Today, that retailer only needs 50 stores to achieve this aim. Of course, all the stores would need to be in prime locations and would attract high rents.

Looking at the structure of Apple in the UK, it would seem that the company has been taking advantage of this fact. Apple has only 16 stores but all in prime shopping centres. Perhaps a strong brand, a relatively small number of high profile stores in prime locations and an efficient web operation to reach customers who are not walking past your door this week, is the modern retail business structure.

DSGi’s results tell a story

DSGis quarterly results, announced earlier this week, made familiar reading. Total sales down 7%, the computing category was down 12% but the eCommerce division was up 6%. Now DSGi operates in the sector which (in common with music and books) has seen the greatest consumer transition to internet shopping but I fell to wondering how British retailing will be structured when we emerge from the downturn which seems to be predicted to last longer by the day.

What does the British public want from the highstreet? Does the public want a highstreet? What can retailers do to make the public visit the highstreet and spend money there? In a multichannel world, can retailers justify the expenditure on rent and staff if the highstreet simply supports the brand?

From this uncertainty there will be winners and losers. Almost certainly, technology will play are part in deciding which companies those are.