Direct marketers of apparel this year are failing to get much bang from their catalogue buck.
A survey by the investment bank of Tully & Holland Inc. revealed a 6.6 percent decline in demand — essentially, orders received by direct marketers — despite a 3.4 percent increase in circulation of catalogues in the apparel sector during the second quarter. The showing put the figure for the first six months at negative 4.4 percent despite an 8 percent increase in catalogue circulation.
During the first half of 2012, apparel demand rose 5 percent but lagged the 7 percent increase recorded in circulation.
Stuart Rose, managing director of the Wellesley, Mass-based firm, said the most recent quarter began poorly for the larger sample of direct marketers, with a decline in April, but showed some signs of improvement as the period wore on.
“May and June were generally flat, which offered a positive sign,” he told WWD, “but the most recent week [ended July 13] was quite weak.”
For all 20 of the direct marketers participating in the survey, demand in the first half rose 0.5 percent as a 0.7 percent decrease in the second quarter nearly erased the 1.8 percent increase logged in the first quarter. A 1 percent decline in circulation during the most recent quarter lowered the increase in year-to-date circulation to 2.6 percent.
In the first half of 2012, overall demand was up 4.7 percent on a 1.6 percent drop in circulation.
The weakest performance by category came from the home sector, in which year-to-date demand declined 6.3 percent on a 7.8 percent decline in circulation. The strongest showing came from the business-to-business category, where demand in the first half grew 8.1 percent on a 14 percent increase in circulation.
Rose cautioned that the apparel sample is small, consisting of just four companies, the largest of which has annual sales of about $150 million, and that none of the results are not weighted according to the revenues of the participating merchants. Still, Tully & Holland has found them to be an accurate barometer of performance overall and by category.
Tully & Holland plots the performance of the direct marketers it follows against those of 13 publicly held U.S.-based retail chains. Looking at results over the last 12 months, direct marketers’ monthly sales initially increased and then declined at a faster pace than general retail sales, although in recent months retail sales have rebounded more rapidly than direct marketing demand, possibly because of catalogue merchants’ conservative catalogue circulation plans for the second quarter.
“A few years ago, it wasn’t unusual for a traditional catalogue company to get 60 to 80 percent of its orders by phone and the rest through the mail,” Rose pointed out. “Today, more typically, three-quarters of the orders are coming online. The majority of demand is registered on the Internet.”
He observed a general bifurcation on the direct marketing landscape, where “the strong are getting stronger and the weak are getting weaker. These days, I think the weak are getting weaker at a faster pace, too.”