Victoria’s Secret ditched their catalog, then took a 20 percent hit in same store sales over a year ago. Was it the right move? Should they stay the course? Should they cut and run?
Here’s a little analysis I did with the folks at QuickPivot:
When L Brands, the owner of Victoria’s Secret, decided to eliminate the catalog, they had the data to back it up: In a test conducted during the fourth quarter of 2015, the company reduced the number of catalogs it released by 40 percent without seeing a negative impact on sales. But how has it turned out?
When you consider that the retailer has been producing up to 300 million copies of its catalogs per year—at a cost of $125 million to $150 million, annually—reducing the print run substantially (can’t get more substantial that going from 300 million to zero) without sales taking a nosedive seemed like a risk worth taking. According to their model, any loss in sales revenue would be offset by the savings in printing costs.
As we noted when the announcement was made, to make up for the elimination of what was arguably the brand’s strongest piece of marketing—and most iconic—they planned to focus more on loyalty programs, online, and other customer touch points.
This reduction in catalog printing seemed to be part of an overall strategy of reducing marketing costs—a strategy that seemed to be working. However, things seem to have changed.
L Brands, announced Wednesday, February 15—the day after Valentine’s Day—that same-store sales at Victoria’s Secret may plunge 20 percent for February as compared to a year ago. That news was not received well by Wall Street where shares of L Brands (LB) plunged 16 percent on Thursday, February 16. This seems to part of a larger pattern that has seen the stock price tumble more than 25 percent so far in 2017, and more than 40 percent over the past 12 months.
Choosing to eliminate one of their main marketing and sales channels was a bold move that showed they were not content with the status quo—a refreshing change in today’s tumultuous retail environment. But what’s more refreshing, and impressive, is their decision to publicly own up to the results, and seek strategic solutions. Mall stores in general are struggling this year. And that trend seems to have swept up specialty retailers and anchor stores, alike. For these retailers to survive, they need to take a long hard look at the internal and external forces and make some though decisions. It looks like L Brands is ready to do that.
We’ve said it many times—print isn’t dead, it’s evolving. And, research shows that print is still a strong motivator to purchase, especially when it’s part of a robust omnichannel marketing plan.
According to Kurt Salmon, a management consulting firm, 13 percent of consumers say they’d want more catalogs and 44 percent said they like to receive fewer. Based on those statistics, you might understand why L Brands killed off the Victoria’s Secret catalog.
However, that same research shows 58 percent of online shoppers said they get their ideas from browsing catalogs—and nearly a third said they have a retailer’s catalog on hand when making an online purchase. And, when polling women ages 18 to 30, 45 percent reported that catalogs sparked interest in a retailer’s products, and nearly 90 percent bought items they saw first in a catalog. Those numbers seem rather compelling, and are worth a second look.
Today’s marketplace is robust, multi-faceted, and fast-moving. In this environment, eliminating a marketing channel completely can be as risky as using only one channel in the first place. That’s why we focus on helping brands connect with consumers in multiple ways. By taking on and offline customer data and uniting it, even if it’s siloed, we can create strong connections across multiple channels and engage customers more holistically.
It seems like the Victoria’s Secret Angels need to get some wind beneath their wings. And catalogs—backed by a new strategic plan—just might help them fly.