2020 is a year we will always remember, yet one we would like to forget. It was a year that changed our lives forever. Some have been affected more than others, but we all have a story to tell. People talk about “the new normal,” but what exactly does that mean to retailers and direct marketers? Let’s take a walk into the future and see what it looks like. Actually, we’re living the future now.
Several of our clients cut circulation in early 2020 in light of the advancing pandemic. They reduced their marketing efforts in anticipation of what was to come. It was the logical action to take, but for many consumer mailers, it was the wrong thing to do at the time. Revenues increased unexpectedly and remain strong today. Trips to retail stores reduced by at least half, and consumers went online to order gifts, apparel, home furnishings, food and other products. COVID changed the way we shop.
It also leapfrogged us into the future. From a marketing standpoint, 2020 looks more like what we would have expected five years from now. The pandemic has sped up the convenience of shopping from home online. Consumers who previously needed to “touch and feel” the merchandise in a retail store are getting more comfortable ordering online. Driven by necessity, there has been a shift in the way we shop. COVID-19 has caused the shopping experience to change from in-store to online — a contactless and time-saving experience.
According to Coresight Research, as many as 25,000 stores could close due to the pandemic. The research firm also expects a quarter of America’s malls could close in the next three years. Unprecedented bankruptcies have been filed by J.C. Penney, Neiman Marcus, and Brooks Brothers. These are real icons of retail. Stein Mart, Gap, Pier 1, Lord & Taylor, and Sears are closing stores and struggling to stay in business.
Several of our consumer clients, especially in the food and home furnishings markets, experienced significant growth last year in both print catalog and digital channels. For some mailers, orders and revenue increased almost 100 percent over 2019. It’s interesting to note that while orders and revenue increased significantly, the percentage of orders coming from the catalog channel also increased year-over-year. Both channels were up in actual dollars. The real challenge was the supply chain and fulfilling the increased demand.
Online shopping grew significantly in 2020, and it will most likely continue to grow. Print catalog revenue also increased. Online marketers like Amazon.com, Walmart, Target, etc., have seen a boom in revenue. Online marketers will need to embrace and adapt to this surge in business because I believe it’s here to stay. Online shopping will need to become even more convenient and efficient in order for this trend to continue. This includes easier ordering, online or by catalog, as well as returns and/or exchanges.
Panos Mourdoukoutas, GuruFocus.com wrote on Nov. 18, 2020, that Walmart, the nation’s largest retailer, experienced a 79 percent increase in its online sales. According to ABC News, holiday retail sales increased 3 percent over 2019. However, online sales were up 49 percent, while department store sales were down 10.2 percent.
What will happen to online and print catalog sales when the pandemic is over? Will the gains we’re seeing last?
Some consumers will go back to shopping in-store. However, I feel much of the shift that has occurred will be permanent. The clock has been turned forward and, for the most part, it won’t revert back. The way people work, how they shop, act and participate in family/community activities has changed. What’s more, companies realize that employees working from home can be extremely productive. (All of us at Lett Direct have been working at home for the past 25 years). There’s less downtime due to the elimination of nonproductive activities that can take the focus off the job. But it’s more than that. Companies realize they can eliminate the expense of having to rent office space.
Even with companies bringing employees back to a central workplace, a large percentage of their workforce will continue to work from home. For example, even after we’ve all been vaccinated and it’s safe to return to the workplace, “Facebook has said that within the next 10 years, up to half of its roughly 52,200 employees across the country would work from home”. Working from home allows more time for using your computer to shop online, and direct marketers are making it easier to purchase and to return merchandise without leaving.
The pandemic has caused people to realize they can have more free time on their hands. They’ve found new activities to fill their additional time. For many, it has been a life-changing experience for the better. Take golf, for example. Golf Magazine says there were 27 million more rounds of golf played in June, July and August 2020 vs. the same three months in 2019. The magazine points out that the new study shows the shocking effects of coronavirus on the golf industry. Consumers also realize that you don’t have to go out to a nice restaurant to enjoy a good meal. You can order online from a number of different specialty catalogs and restaurants and have complete meals delivered to your door.
Moving forward, companies will be better positioned to deal with the next crisis and/or surge in business. Direct marketers have made adjustments to handle additional business advanced by the pandemic. It has caused all of us to think differently. Be sure to do the prep work to deal with whatever comes your way.
Stephen R. Lett is the founder and chairman of Lett Direct, Inc., a catalog consulting firm specializing in circulation planning, forecasting, digital marketing and analysis since 1995.
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