CATALOGS LOSE TEEN APPEAL
Byline: Melanie Kletter
NEW YORK — Don’t count today’s teens among the fans of direct merchants. They prefer e-mail to the U.S. Postal Service.
While teens are powerful consumers and love to shop — they spent an estimated $153 billion last year — catalogs are clearly not among their favorite places to spend.
Teen catalogs were hot in the mid-Nineties — before the Internet revolution — led by Delia’s explosive foray into targeting teens through direct mail. But even Delia’s went the Web route with e-commerce and has also introduced freestanding stores in the last 1 1/2 years.
Teen catalogs have had their problems keeping up with the lure of cyberspace, and in the last year, a number of catalogs targeting teens have closed up shop.
Among the teen catalog problems cited by analysts and industry executives are high expenses associated with printing and mailing, faulty infrastructures, copy-cat merchandising and a general malaise in the catalog industry, which has hurt even established players such as Lands’ End and Tweeds.
In addition, catalog firms can’t compete with the social aspects of the mall, which doubles as a place for teens to hang out and socialize, as well as shop.
The most recent fourth quarter and holiday period was generally difficult for most catalog houses, including ones targeting teens, said Kelly Armstrong, an analyst at Wheat First Union, who follows the teen catalog sector.
“Catalogs have no margin advantage,” she said. “No one is going to start a business with a catalog anymore. There are much higher margins at retail and on the Internet.”
The teen catalog industry was pioneered by Delia’s, which debuted in 1993 and went public in 1996.
“After Delia’s started, many imitators sprung up, but most have floundered,” Armstrong said. “Everyone was trying to be Delia’s, but the whole area softened with so much competition, and there are not many players anymore.”
Among the teen catalog casualties are Just Nikki, Zoe and Airshop. Moxiegirl, which used to operate a magalog including content and merchandise that could be purchased, has changed its name to MXG and is now aiming to be more of a lifestyle concept with multimedia properties, including a magazine and Web sites. Wet Seal, the junior retail chain, is said to be evaluating the status of its catalog.
Just Nikki, the catalog operation started by retail chain Claire’s Stores, which specializes in teen accessories, was launched to great fanfare in January 1998. However, the chain discontinued the catalog after just one year in operation.
“Just Nikki was an artistic success but a financial flop,” said Glenn Canary, Claire’s director of investor relations. “We didn’t have the back-end infrastructure in place, and it was difficult to fulfill orders.”
After its experience with Just Nikki, Claire’s has decided to focus primarily on building its retail business, which consists of more than 3,000 stores, Canary said.
Delia’s is still the clear leader in this industry, Armstrong noted. While catalogs still account for the lion’s share of the business, Delia’s has also become a multi-channel retailer. The company opened its first store in February 1999 and now has 17 units, with plans to open 10 more this year, according to Estelle Demuesy, executive vice president of Delia’s Direct, which includes Delia’s catalog and Internet businesses.
“Our objective is to service teenage girls in multiple channels,” she said. “While the bulk of our business is catalog, we expect a large amount of growth to come from retail.”
Demuesy declined to break out sales figures, but according to Armstrong, Delia’s catalog sales for 1999 are expected to be $113.4 million, while total sales should come in at about $190 million, once 1999 results are reported. In 2000, catalog sales are expected to be a lower portion of overall sales: $120.2 million of a total $215 million, Armstrong prognosticated.
To thrive in the teen catalog market, Delia’s has focused on building its own customer file and mailing list, according to Demuesy.
“We had first-mover advantage, and we have been able to stay ahead,” she said. “A lot of magazines rent and exchange lists, and we created a fairly extensive file that wasn’t used by other companies.”
In addition, Delia’s has developed more of its own private-label merchandise in order to offer its customers more unique merchandise, she said. To keep its momentum flowing, Delia’s is attempting to target slightly older customers in its most recent spring book.
“We want to be aspirational for young girls and not turn off older girls,” she said.
The catalog features a wide range of merchandise, all of which is available on the Web site, the address for which is tagged on the front cover and throughout the book.
At Alloy Online, the growing direct merchant for teens, catalogs have always been secondary to the firm’s Web site, which was launched in August 1996.
Matt Diamond, one of the company’s founders, said catalogs have helped to build the brand, but his company is foremost an e-tailer.
“We felt in order to survive we needed a real world presence, and we felt strongly that circulating a catalog out there has helped us to grow as fast as we can,” Diamond said. “Our goal primarily is to drive people to the site. If you are a catalog company, you have to be on the Web.”
Alloy’s total catalog circulation is about 35 million, and the company puts out about three to four catalogs a month, according to Diamond.
While it at first focused on urbanwear and outerwear, Alloy, which went public last May, now carries a wide-ranging product mix, including accessories, bags, shoes and apparel for young men and women. Alloy recently took an unusual step of including beauty advertisements in its catalog, and Diamond said Alloy may add more advertisers in the future.
A tween catalog called Brat, which shipped its first edition about 1 1/2 years ago, has steadily moved toward Internet selling, said creative director Michael Burwasser. Currently, the Web accounts for about 20 percent of the firm’s annual sales, and the firm plans to build the Internet business to about half of sales. This spring, for the first time, Brat put its entire catalog offerings on the Internet.
Brat, similar to most other direct merchants targeting teens, is using its catalog to promote its Web site.
“We generate a lot of advertising for the Web site through the catalog,” Burwasser said. Brat’s sales were $5 million last year and are expected to rise about 15 percent this year, he said.
Another teen cataloger called Girlfriends LA is finding success in direct mail by including apparel for plus-size juniors in its product offerings, although it, too, has built up its Internet business. The three-year-old company started e-commerce last November and now offers its entire catalog offerings on the Internet, a company spokeswoman said.