The Editor’s Take

Overall retail sales are down, and the catalog/multichannel sector is no exception. The housing market stinks. And while in the past you could often find promising trends in sales of home furnishings when housing sales were down and consumers reverted to nesting, that’s not the case now.

That’s reality, and I’m afraid we can’t mask all this bad news with a runaway success story on the cover this month. But there are plenty of things you can learn from Frederick’s of Hollywood about weathering tough times.

Although there are bigger success stories out there, Frederick’s has been trying to dig itself out of a hole for several years and is finally seeing the light. The racy lingerie multichannel merchant is, in fact, finding its way back. But it needed to latch on to one of its top product vendors for the cash to do so, having merged with that vendor, Movie Star Inc., late last year. Sales are hardly going through the roof, but Frederick’s is on solid footing.

Frederick’s could see a nice sales gain this year, despite flat catalog circulation. In a year when so many catalogers are cutting back on circ, flat circ makes Frederick’s look like the tortoise leading a bunch of worn-out hares. Frederick’s is mailing the same number of catalogs this year as last — which was a 25 percent decrease from 2006 — while investing more in new stores and its e-commerce efforts.

Last year, Frederick’s was able to increase the size of its housefile 7 percent even though it cut circ 25 percent. It achieved this by making improvements in merchandising, creative and list hygiene.

Blue Over BlueSky
While I’m encouraged by Frederick’s approach to 2008, like many in the business, I was stunned, saddened and downright appalled by the collapse of BlueSky Brands. The North Kingstown, R.I.-based cataloger abruptly closed down in March, effectively shuttering the Paragon Gifts and Bits and Pieces catalogs, as well as books it produced for the nonprofit National Wildlife Federation and the Winterthur Museum. It also boarded up its AB&C Group catalog fulfillment business in Virginia, leaving many catalog clients scrambling for alternative ways to fulfill orders.

A number of ex-BlueSky employees were present in March at the NEMOA Spring Conference in Cambridge, Mass. — networking, no doubt. It was a sad sight at what’s typically an upbeat affair. BlueSky’s backer, Chicago-based Reliant Equity Investors, has been hush about why it let BlueSky run out of cash, leading to the demise of these long-standing businesses and employees.

Being the one responsible for ensuring that all posts to the CatalogSuccess.com Web site are clean, I can tell you that we’ve been receiving several posts a day in response to a Valuations & Acquisitions column our former columnist Larry West of West Cos. wrote back in November 2006 (go to www.catalogsuccess.com/story/story.bsp?var=story&sid=41026). This article shows up among the top three when you Google “BlueSky Brands.” Another one in the top three was a Q-and-A we ran online that same month with the company’s former President/CEO Richard Hebert (www.catalogsuccess.com/story/story.bsp?var=story&sid=41363), who jumped ship last January before the company crash-landed.

You’ll find some very sad posts under the first article, and it’s unfortunate what a black eye this company left on the industry during such a tough time.

The best we can do right now is offer this big May issue chock-full of ideas to help get you through a tough year. Beyond the Frederick’s story, we have a star-studded lineup of usable and practical stories on multichannel data, product sourcing, B-to-B marketing investments, creative makeovers, abandoned property laws (aka “escheat”), the value of gross margins, copywriting, spin-offs and, naturally, cost cutting.

In each issue, we strive to bring you a mix of business-building and cost-cutting ideas. Naturally, this year lends itself to more cost cutting. As you put together your holiday 2008 plans, however, I personally hope you take a more bullish approach.

Why? Perhaps history will repeat itself. You may recall that the early 1990s were also tough on this industry, as well as the country’s economy. But following the 1992 presidential election, the economy got jump-started, beginning with holiday ’92, and surged for the next few years. So while you’re retrenching throughout the year, that gives you a little something to think about.

Paul Miller
Editor-in-Chief
(914) 669-8391, pmiller@napco.com