Last month I highlighted some of our MarketTrends findings for the Apparel catalog sector, noting that while list universes were down in 2009, things were looking up for the area in 2010.
On the flip side, one of our other recent studies covers the Gifts/Collectibles market, and while our findings show similar universe losses, signs of a speedy turnaround are not quite as obvious. To be sure, the economy and unemployment have a significant impact on sales for non-essential gift items. But equally important are changes within the category itself. With the product expansion we’ve seen in larger gift titles, flat or discount pricing strategies, and the growth of smaller boutique books, the catalog gift market seems to be in the midst of its own unique transition.
For clarity, what we currently call the “Gifts/Collectibles” market is made up of marketers with a year-round product mix focused primarily on gift giving. Mailers in this category include a variety of well-known titles like Potpourri, Red Envelope and Signals. We do not include toy catalogers in this set.
To illustrate some of the challenges from the past two years, below is a look at the active 12 month buyer universe for over 100 gift catalogs.
Looking at the chart above, the 12-month active list universe for the gifts catalog market was 23.4 million names in 4Q 2009, down 2.2 million in the past year (-8.5%). Over the past two years, the set has declined by 4 million names (-14.5%).
For perspective, this loss is not the largest we’ve tracked over the past two years. Apparel, for example, lost 4.6 million housefile names in the same time period. But the apparel sector also boasts an overall list universe of over 50 million. The gift market is only half that size, making the percentage loss for the category much more impactful.
As we note in our reports, sometimes a few individual mailers can skew numbers in a given study period, but losses in the gift market were widespread. As the chart below shows, 70% of Gifts/Collectibles lists experienced some degree of decline.
So there’s no question that the recession has played a major role in the losses described above. When times are tough, gift-related items are going to be among the first to take a hit and among the last to get moved up on the shopping list.
This is not to say that gift catalogers sat idly by waiting for the economy to improve. A few mass audience titles – typically those with lower average order sizes and older demographics – have added more utilitarian home and health items into their product mix. The addition of general merchandise would seem a smart move, as it broadens the appeal these marketers already have with their target audiences. It also speaks to how, in hard times, practical items become appealing gifts. Uniform or discount pricing strategies have also done extremely well for select gift marketers in the past.
Moving in the opposite direction is the group of notable higher-end smaller-reach books with a distinct point of view and exclusive product offerings. The eco-friendly Uncommon Goods is a great example of this phenomenon, and its buyer list saw one of the biggest gains in 2009, growing +39%. Another good illustration of the boutique approach is Olive & Cocoa, a new upscale purveyor of gifts and floral arrangements, which uses the unusual, rather romantic tagline “Simply Unique Giving…Textures of Imagination.”
Overall, there has been a lot of change in the gift market over the last several years, but no uniform strategy – get bigger, get smaller, diversify or shift gears entirely. The product expansion we’ve seen in larger gift titles, the almost complete transition to apparel and accessories we’ve seen in others, plus the growth of high-end niche titles all point to marketers’ willingness to retrench and reimagine. Hopefully many will find the right formula to appeal to todays post-recession gift-giver.
