Lessons From Spiegel

Misfortune and miscalculations led to the bankruptcy filing last month of the Spiegel Group, parent company of the Spiegel and Newport News catalogs and Eddie Bauer. It’s hard to watch the unraveling of such a venerable company as Spiegel. What lessons can other catalogers take away from this story?

Understand that private-label credit cards are a risky business. Analysts estimated customers’ recent default rates at 17 to 20 percent of all Spiegel credit card receivables, noted a report in the New York Times. In all, 41 percent of purchases companywide and 73 percent from the Spiegel catalog were made with the private-label credit cards issued through a Spiegel-owned bank, according to the Times. Take-away tip: Think carefully before becoming a sub-prime lender to your customers who don’t qualify for Visa, MasterCard or other mainstream credit cards.

Keep evolving. A long-time shopper of the Spiegel catalog told the Chicago Tribune that the company had stopped offering current fashions. “The colors are wrong, and there’s embroidery on everything,” she noted. Take-away tip: Your catalog’s merchants must stay current with customers’ preferences. You’d think this would be obvious, but as you can see, even merchants at big companies such as Spiegel periodically require this refresher course.

Stay true to your brand image. Spiegel’s Eddie Bauer division, once known for its sturdy outdoor apparel, in recent years turned to business casual clothing in garish colors. Take-away tip: While it’s smart to expand your SKU breadth, new offerings shouldn’t replace proven product lines — especially when those proven products are part of your brand’s image.

Embrace new perspectives. Spiegel, which is owned by the Otto Versand conglomerate in Germany, has a governing structure that consists of board members who are company executives, officers or retirees. Take-away tip: The same small group of people sitting around the same table for many years undoubtedly will begin to self-edit what ideas they’ll offer up, knowing from experience what will and won’t be acceptable to that group. Get out of your comfort zone! Go the extra step to bring in a fresh perspective.

To the people trying to turn around Spiegel, I wish you all the best.