Catalogues of disaster

ALONG with an ashtray and fruitbowl, there was once a time when the catalogue was a fixed feature on the coffee table of virtually every family home.

Kays, Empire, Freemans, Littlewoods, Grattan and Great Universal Stores – these six big names dominated a multi-million pound home shopping market.

But over the last 20 years the industry has been in sharp decline. The rise of internet shopping and cheaper, more accessible credit has combined with the simple fact that catalogue shopping has slipped out of fashion.

The Big Six are now effectively The Big Two since Kays and Great Universal Stores merged with Littlewoods four years ago.

Meanwhile Grattan and Freemans were bought out by German group Otto in the 1996 and only this month French group PPR, who bought Empire, announced it was closing the business.

Not only did the latter decision lead to the loss of 850 jobs at three Yorkshire sites, it brought to an end almost a century of trading for the Bradford-based firm and the UK lost another one of The Big Six.

And even the remaining businesses have had to make serious cutbacks. The Littlewoods Shop Direct Group shed 1,200 jobs at its warehouses in the north west in 2006 and just two years earlier axed 1,100 jobs at its centre in Holbeck, Leeds.

In 2000 Otto UK cut 250 jobs at Grattan in Bradford and four years later halved the workforce at its Freeman's HQ in Peterborough reducing the staff from a peak of 2,000 in its heyday to a comparatively meagre 430.

So why has the industry gone into such sharp decline over the last 10 years?

Richard Perks is director of retail research at Mintel. They carried out a recent study which revealed the 53 per cent share of the home shopping market enjoyed by the Big Book businesses had plunged by the mid Noughties to just 25 per cent.

During the same period internet sales had risen from a comparatively small nine per cent to almost a third – and in 2008 the lion's share of all home shopping is expected to be conducted online. "Mail order has simply failed to change or diversify sufficiently to appeal to today's more demanding and sophisticated home shopping audience," said Perks.

"Home shopping retailers must admit that the days of the big book are over and that the great hope of the home shopping industry is, or should be, the internet.

"The trouble with the mail order industry at the moment is that it tends to see the Internet as a threat, where it should be seen as an opportunity.

"The internet is still seen by many as an exciting, new and convenient way to home shop, while catalogues are often seen as old fashioned and downmarket.

"There is a place for home shopping and it will grow its share in the longer term. But if the existing players do not respond quickly it will be new internet operators and store-based retailers, such as Tesco and Argos, which will benefit.

"The future for the home shopping industry lies in responding to the opportunities opened up by the Internet. The sooner it realises that the better. The big book is just the wrong format for the Noughties."

Another factor in the decline of the catalogue has been the accessibility of cheap credit to a greater number of people. Whereas home shopping once offered a rare chance for working class people to get goods on a tab, now the large number of credit cards and loans offering exceptionally low interest rates means this is no longer such a lure.

Over the last 20 years there's also been a surge in more upmarket competitors in home shopping. It began with the emergence of the likes of the Next Directory in 1988 and now includes a litany of titles offering specialist, designer products.

The market has shifted notably from their traditional bases of working class cities to more leafy middle-class towns.

For example, residents of Henley-on-Thames spend an average of 136 per head of population on catalogues compared with less than 30 in locations like Liverpool, Manchester and Birmingham. Unfortunately the upper class market may spend more per person but it's far smaller in terms of numbers.

"Lifestyles are changing." said Melanie Howard, director of the Future Foundation think tank. "With more women working full-time and increasing demands on our leisure time, people want to shop when they want.

"They love the convenience of home shopping instead of being faced with the nightmare of struggling to the shops after work or at the weekend."

But the future isn't completely bleak for the remaining Big Two. They've gradually started to slim down their catalogues to diminish their image as the Big Books and are working hard to improve on value for money and the quality of brands.

And on top of boosting their online facilities they're also making some headway in improving their somewhat hackneyed image.

Littlewoods is currently in the middle of a 250m programme of investment in its titles which over the last two years has seen them heighten exposure and reposition their brand.

If that sounds like corporate jargon then think again. Signing up Trinny and Susannah to an advertising campaign which focussed on selling big names they also sponsored their Undress the Nation show on ITV1.

And the end result was a staggering 30 per cent rise in sales, proving that even veteran giants can move with the times and think a little laterally.

Their image is slowly shifting from the rather kitsch, working class cheese personified by Lulu in the 1980s to a rather more sophisticated mode of retailing.

But will it be enough?

"Well, there's no doubt the catalogues do have an image problem," said David Scott financial expert at Leeds-based stockbrokers Redmayne-Bentley. "There's definitely a lingering perception that they're stuck in the 1950s and only time will tell if that can change.

"I think they're going to have a fight for survival on their hands in the same way as a lot of high street stores face a fight for survival over the next 12 months.

"With a slowdown in the economy I expect to see a number of companies go bust this year and more and more financial institutions reluctant to offer substantial amounts of low-interest lending.

"And in that respect the catalogues might just claw back some of the market they lost over the last ten to 20 years because they could represent one of the few offers of credit your average person has to turn to.

"But the economic climate is so unpredictable at the moment it's hard to say for certain how any retailer – whether it's catalogues, high street or online – is going to fare. Perhaps home shopping might just weather the storm better than most." The big book is just the wrong format for the Noughties.”

Another factor in the decline of the catalogue has been the accessibility of cheap credit to a greater number of people. Whereas home shopping once offered a rare chance for working class people to get goods on a tab, now the large number of credit cards and loans offering exceptionally low interest rates means this is no longer such a lure.

Over the last 20 years there’s also been a surge in more upmarket competitors in home shopping. It began with the emergence of the likes of the Next Directory in 1988 and now includes a litany of titles offering specialist, designer products.

The market has shifted notably from their traditional bases of working class cities to more leafy middle-class towns.

Convenience

For example, residents of Henley-on-Thames spend an average of 136 per head of population on catalogues compared with less than 30 in locations like Liverpool, Manchester and Birmingham. Unfortunately the upper class market may spend more per person but it’s far smaller in terms of numbers.

“Lifestyles are changing.” said Melanie Howard, director of the Future Foundation think tank. “With more women working full-time and increasing demands on our leisure time, people want to shop when they want.

“They love the convenience of home shopping instead of being faced with the nightmare of struggling to the shops after work or at the weekend.”

But the future isn’t completely bleak for the remaining Big Two. They’ve gradually started to slim down their catalogues to diminish their image as the Big Books and are working hard to improve on value for money and the quality of brands.

And on top of boosting their online facilities they’re also making some headway in improving their somewhat hackneyed image.

Littlewoods is currently in the middle of a 250m programme of investment in its titles which over the last two years has seen them heighten exposure and reposition their brand.

If that sounds like corporate jargon then think again. Signing up Trinny and Susannah to an advertising campaign which focussed on selling big names they also sponsored their Undress the Nation show on ITV1.

And the end result was a staggering 30 per cent rise in sales, proving that even veteran giants can move with the times and think a little laterally.

Their image is slowly shifting from the rather kitsch, working class cheese personified by Lulu in the 1980s to a rather more sophisticated mode of retailing.

But will it be enough?

“Well, there’s no doubt the catalogues do have an image problem,” said David Scott financial expert at Leeds-based stockbrokers Redmayne-Bentley. “There’s definitely a lingering perception that they’re stuck in the 1950s and only time will tell if that can change.

“I think they’re going to have a fight for survival on their hands in the same way as a lot of high street stores face a fight for survival over the next 12 months.

“With a slowdown in the economy I expect to see a number of companies go bust this year and more and more financial institutions reluctant to offer substantial amounts of low-interest lending.

“And in that respect the catalogues might just claw back some of the market they lost over the last ten to 20 years because they could represent one of the few offers of credit your average person has to turn to.

“But the economic climate is so unpredictable at the moment it’s hard to say for certain how any retailer – whether it’s catalogues, high street or online – is going to fare. Perhaps home shopping might just weather the storm better than most.”

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