The most unlucky cataloger I ever knew was a food cataloger who watched helplessly in 1994 as its retail store in Northridge, CA, turned to rubble in a disastrous earthquake.
A year later, the same cataloger was again forced to watch as its retail store in Japan literally slid into the ocean in the Kyoto earthquake. Next time you think the gods have singled out your catalog for special torment, remember this cataloger.
Cataloging has seen its share of recent collapses and closures (e.g., Fingerhut, Springhill Nursery, Willis & Geiger, Balduccis). Several others have come right to the brink of disaster before pulling through.
It’s also true that, in general, catalogers have endured the recession, the aftermath of Sept. 11 and anthrax in the mail better than many industries. This is partly thanks to built-in advantages that catalogers have for surviving disasters, and partly because of specific business principles and techniques catalogers have applied.
A small food cataloger’s first big fall mailing was set to land in-home on Sept. 10. When the aftermath of Sept. 11 wiped out sales from that first drop, catalog officials put their second big drop on hold until things settled. They waited breathlessly day after day, then released their second big drop—which arrived in-home the same day the anthrax disaster struck.
One reason catalogers do better than other industries in hard times is that their response rates are so low. Indeed, low response rates mean almost every cataloger will lose money on the first sale to each new customer. Most catalogers won’t see a profit from a new customer until the second sale six to 12 months or more after the first sale.
That means most fast-buck, funny-money financing schemes (i.e., steeply leveraged buyouts, huge debt loads, and mergers and acquisitions financed by sharp differences in price/earnings ratio between acquiring and acquired firms) seldom work in cataloging. This industry just can’t produce the fast growth and quick paybacks required.