Spiegel Takes Fashion Forward

Melissa Payner is a risk-taker. The 43-year-old retail industry veteran has been president and CEO of Spiegel Catalog for only 10 months and already has turned the place on its head with new merchandising, catalog creative, advertising and promotions.

It doesn’t matter that the economy remains in a slump and catalog industry sales are down: Payner is excited to be breathing new life into Spiegel Catalog by refocusing on its customers and strengthening its brand image.

There’s no arguing that Spiegel needed a change when Payner took the reins. Looking back five or six years, one might describe the catalog’s branding as “neither here nor there.”

Its positioning wasn’t decidedly upscale nor downscale, not sophisticated or trendy, but somewhere in the middle. And for a cataloger today, that’s not a good place to be. To survive and thrive in the current marketplace, catalogers must have a strong brand identity.

Payner started to impact the business in 1997 as vice president, merchandise. By the time she was promoted to president and CEO of Spiegel Catalog in December 2000, the company was doing a healthy $833 million in business, up 16 percent from the prior year, and had been through a recent turnaround.

Although sales were good, Payner knew Spiegel needed a stronger brand foundation to continue to be successful. While Spiegel had a wealth of customers on its file and substantial revenues, what it desperately needed was a brand makeover.

1997: The Beginning of a Turnaround

Four years ago, Payner was hired to be a part of the turnaround team charged with breathing new life into Spiegel Catalog Inc.

Recalls Payner: “What I believe had happened over a decade or so was we had been very forward-thinking in terms of identifying working women as a segment to target. But then we became very inward-looking and failed to see the next trend—where our customers were going.”

As a result, says Payner, “We became less relevant to our customers. We were in kind of this disconnect phase with our customers.”

The turnaround team set out to try to reduce the time it took to implement new styles in the various catalogs. In addition, the company learned it had two main issues to tackle: product quality and improving audience perception through its advertising presentations.

Explains Payner, “We set out to improve our quality in order to then reduce returns. And then our next goal was to have that quality and our renewed sense of style represented in our advertising and promotion.”

Survey Says: Listen to Customers

But before Spiegel could refresh its marketing and advertising strategies, it needed to discern first-hand what consumers thought of the Spiegel brand. So, last fall Spiegel Catalog started a major consumer research project.

“It was a somewhat painful exercise to go through, because we wanted to know the good and the bad,” says Payner.

By surveying a portion of the 3.3 million customers on its housefile, Spiegel could better understand who its primary customer is today. In a nutshell, says Payner, “She is a 43-year-old working woman who loves to shop.” In addition, she notes, “Our customers shop at every level. People who shop through Spiegel are just as likely to shop at Target as they are at Neiman Marcus. And I think that’s a general trend in shopping today.”

Not only did Spiegel gain a lot of valuable customer information through the research process, but, “We learned that brand is very important. Customers love our Big Book for all it has to offer, but they told us we didn’t have a differentiated style point of view, and we had to be more relevant to her life,” Payner says.

Once it had all of this new insight, the Spiegel team needed to come up with a plan of action for itself. However, the time for a brand makeover just then wasn’t great: When Payner took the top spot in late 2000, the catalog industry was beginning to feel the pinch of the economic downturn, and Spiegel was no exception.

Payner had a more opportunistic view of the market: “In the current economic downturn, there’s been a lot of expense-cutting across the catalog and retail industries, and that generally means less risk-taking,” she explains.

“I have completely the opposite opinion, having been through similar downturns before. Now is precisely the time that, if we’re aggressive and take some risks, we can take some market share [from the competition],” she asserts.

Of course, Payner admits, “It forces you to assume some risk when you try something new. But we learned before you can’t just rest when you have a formula that works, because your customers will change, and we need to change along with them.”

Merchandising’s New Strategy

With Payner at the helm, Spiegel began creating a new brand style for itself. First up: the merchandise. In addition to the renewed emphasis on quality control, the merchandise had to be refined to meet customers’ needs.

“Our customers said they want to be comfortable and look good, and we translated that to mean they want versatility in their clothing options,” Payner says. In addition, she notes that the research taught them, “Our customer is expressive, and she wants clothes to help her express her personality.”

In terms of value, Spiegel shoppers don’t necessarily want the least expensive clothes, adds Payner. “What value means to our customer is more than the traditional price/quality relationship. What she wants is ‘wear-ability,’ or something she can wear over and over again, which makes it a better value for the money,” she explains.

“The great thing about this from a merchandising point of view is we don’t have to worry about selling $99 blazers to make our customers happy. We can sell a great jacket that costs a little more but that women can wear with almost anything, so it’s well worth it to them.”

Spiegel’s merchandisers focused a lot on finding the right balance in the company’s product lines: a balance of daily needs vs. aspiration. As Payner explains it, Spiegel learned that, to entice people to buy, the clothing and home furnishings have to be stylish and a little trendy, but not “over the top.”

Creative: A Fresh New Look in the Mail

Once Spiegel had the right product mix, its next challenge was to showcase the merchandise in a way that would convey its new brand image—and motivate purchases. For the Spring 2002 catalog, “We will bring the product to the forefront to show the fabric and thus relate the quality of the product offering,” says Payner, noting that this strategy is being applied to both apparel and home furnishings.

In addition, Payner says, the layout of the book will change so that the entire catalog reads with one voice and an elevated taste level. One illustration of the new focus: The graphics in the Big Book will be very much the same for home and fashion. And the home section will be divided into two main style preferences—Country Chic and Soft Urban. Payner says, “Everything we do has a consistent, expressive style point of view—from product to presentation.”

Spiegel mails three major books a year—spring, fall and Holiday—and 83 different catalogs were mailed in 2000, including a variety of seasonal and specialty catalogs, among them: Onview, Kid’s Resource and Spiegel Life, a recent addition geared toward the younger customer, average age 32.

Catalog copy is written in-house. Art direction also is done in-house, but Spiegel does use freelance fashion photographers.

On the production end, Payner says the company has taken small steps into the digital world by using digital photography for some of its product shots, mainly of items such as vacuum cleaners, TVs and stereos. “But,” she explains, “we don’t use it for our fashion shots, because we don’t get enough depth to really show the color and texture of our apparel and home fashions.”

The catalogs are printed by either R.R. Donnelley & Sons or Quebecor World, and according to Payner, paper is a key ingredient in creating a quality catalog presentation. She explains, “We choose high-quality stocks to print our catalogs on. Our catalog is our only view to the customer, and we don’t want to do anything to risk losing depth or color accuracy.”

In Search of Spiegel Shoppers: Prospecting Online and Off

Since it’s not cost-effective to mail copies of its Big Books to all of its prospective buyers, Spiegel relies on other print media for prospecting. One of the key ways Spiegel brings in new customers is through space advertising. And its print ads recently got a face-lift to go along with the catalog’s new fashion-forward focus.

Under the tagline, “Here’s to being a woman,” the ads are intended to be witty and eye-catching at the same time. Copy in one ad states: “We can play sports. We can make millions. We can wear spaghetti straps” and shows a woman in a spaghetti strap dress with faux-fur trim. Another ad reads: “Men get the basement. We get the rest of the house. You do the math”; it shows silk sari bedding.

Created by agency Cramer-Krasselt/Chicago, all the ads display the Spiegel logo, and the 800 number to call and Web site address to visit to “Get the Fall Big Book.” The direct response ads appeared, along with a business reply card or envelope, in 21 leading women’s and style-oriented magazines, including Harper’s Bazaar, House Beautiful, Marie Claire, Martha Stewart Living, and O, The Oprah Magazine, this past summer.

In addition to space, Spiegel taps into some other print prospecting media. Says Payner, “We use postcards to get customers to order a catalog for $10. That price includes a merchandise certificate to put toward their first purchase, and this marketing program pays for itself,” says Payner. The company also mails smaller prospecting catalogs to some lists.

In addition, Spiegel uses the Internet, including banner ads and placement on search engines, for prospecting. Featuring a total of more than 15,000 items, the

Spiegel Catalog Web site (spiegel.com) has some items on it that are not in the catalogs. “It’s a great testing ground for us,” says Payner.

Spiegel actively cross-promotes the Web and catalog channels. “And they do cross-over,” says Payner, noting this impressive fact: Customers who shop through both the print and electronic catalogs spend three times as much as

those who shop just through one channel.

“In terms of our online business, we view it as another channel, another way for our customers to buy from us,” says Payner. When it comes to the Internet, Spiegel’s theme is to offer customers the convenience of shopping Spiegel “in a way that best suits their lifestyles.”

The catalog company’s Web business experienced a 205-percent increase in sales in year 2000 from the prior year, though Payner wouldn’t reveal specific dollar figures or what percentage of the total business is generated from the Web vs. catalog.

What the Future Holds

Spiegel Catalog continues to identify opportunities by testing new areas and expanding on those that make sense.

For instance, next spring it plans to launch a Modern Classics catalog as a new specialty business. The book will feature business casual clothes in classic styles.

“The move is a direct response to what our customers told us,” says Payner.

Looking back on the past few years, Payner says, “There’s a reason to buy from Spiegel today. We have a brand style, and we’re demonstrating the Spiegel style through our products and in our catalogs.”

Payner makes sure she keeps an ongoing check on the customer through research and also by remaining a customer herself of “every catalog we send out.”

As Payner sums it up, “The key to keeping it working is to be ever-evolving.”

At a Glance
Spiegel Catalog,
Division of Spiegel Inc.
Headquarters: Downers Grove, IL
Employees: 800
Outlet stores: 18
Catalogs mailed in 2000:149 million
Year 2000 revenues:
$833 million
Printers: Quebecor World and R.R. Donnelley & Sons
List Manager: Direct Media

Payner’s Retail Roots

Prior to working at Spiegel, Melissa Payner, president and CEO, came up through the ranks at various top retail companies, most recently Chicos but also including iMagnin, Henri Bendel and Ann Taylor. As she notes, “One of the main differences between direct marketing and retail is that retail is a gut business. You only know about the customers who buy from you—not those who come in and don’t buy. In direct marketing, you know a lot about who buys, as well as those who don’t buy.”

Spiegel Catalog’s Buyers
* 2,631,994 12-month buyers
* 84 percent are women
* Median age: 43 years
* Average unit of sale: $150
* Median household income: $60,000-plus
* List manager: Direct Media
Contact: Karen Mayhew,
(203) 532-2307

Spiegel Timeline
1865 Spiegel starts as a furniture retailer by Joseph Spiegel.
1905 The first Spiegel catalog is mailed.
1976 Spiegel identifies a new market segment: working women.
1982 German retail conglomerate Otto Versand buys Spiegel and later sells its shares to a group of individual investors.
1995 Spiegel goes online.
1997 Spiegel Catalog Inc. is spun off as a subsidiary of The Spiegel Group.