DMSI catalogs — a chip off the old book

Carole Sloan, Staff Staff, July 30, 2001

Recouping quickly after his family's company, a major lighting supplier to Sears, lost that business when Sears left the category and closed down its catalog business, David Milgrom, scion of the supplier, moved to provide Sears with off-site catalog services.

Starting with HomeCenter in 1993 and moving quickly over eight years to now include Sears ShowPlace, Sears Great Kitchens, and most recently Sears Room for Kids, Direct Marketing Services Inc. (DMSI) expects this year to post sales slightly better than its $150 million in 2000 revenues.

Along with the Sears catalog success story, DMSI launched its own catalog, Home Visions, "which is more theme-oriented, and targeting a younger and more urban customer," Milgrom explained.

Milgrom and Sears' vendors got together when the legendary Sears Big Book and its offspring were dropped as one of the first moves toward turnaround under Arthur Martinez, then chairman and ceo. What started as an outdoors/ home improvement book, HomeCenter, has evolved into more of a home furnishings catalog with emphasis on the indoor aspects of the home, Milgrom explained.

In March 1997, DMSI acquired the Sears ShowPlace activity, a catalog that is driven by home textiles and had been until the year prior produced by Domestications.

"We're dealing with a very broad audience in dealing with Sears' customer base," said Steve Hujar, vp, merchandising, and a long-time Spiegel catalog home merchant.

ShowPlace, he explained, focuses on windows, bedding and rugs. "We're now big in slipcovers as well and are increasing the amount of accent pieces as well as coordinated art with the bedding."

While back-room activities have been crucial to the success of DMSI, "the customer service aspect is paramount to this business," Hujar said.

ShowPlace sends out 10 versions a year, four major redos and six remails, Hujar said.

Room for Kids, the most recent Sears catalog, launched in February 2000 and already has a circulation of several million, with issues dropped six times a year, Milgrom reported.

The genesis for Kids "was that we saw how well Neiman Marcus and Pottery Barn Kids had been doing since we started. We adopted the ShowPlace format for kids but added more room environments vs. line merchandising as we do in our other books," Milgrom said. "We've had good success in home textiles as well as in furniture."

Interestingly, he related, "our biggest success is in the 7 to 13 tweeners. We make it fun, and the approach is not geared to infants."

Underscoring the differences between Kids and the company's other catalogs, Milgrom said, "We use a separate agency for the layouts."

Kitchens, the newest label under the Sears banner, launched in April 2000 and was followed by an October edition and one in March and June of this year, Milgrom reported. "Sears came to us to develop this one, and it's still in the test phase."

While home textiles play a support role, they are the decorative element, with the cooking aspect the focus.

"There is very little Sears product in the catalogs," Milgrom explained, with the exception of a few proprietary items such as Bay of Leaves. "We've done some in the past and will be evaluating doing more in the fall. We're looking to have as much synergy with Sears as possible between the store merchandise and the catalog."

Unlike a retailer, "we don't run towels and only a few sheets: they're too commodity-driven for us, too loss-leader," said Milgrom. Window coverings, a big piece of the business, are more basic, not elaborate with emphasis on priscillas and antique satins.

One issue, he explained, "is that most of our vendors are direct-mail people; they make unique product for us and are not with the mass merchants. We tend not to look at mass merchant products, and sometimes we can get open-line items on a time-exclusive basis."

Hujar said that the company typically starts "from artwork, and we go to market twice a year and are constantly working with suppliers."

Key among the home textiles suppliers are Cadillac, Whiting, Outer Bounds, Dan River, Sure-Fit and Arley.

Merchandise assortments, Hujar said, change every six months by about 40 percent.

The Internet is becoming an increasingly important part of the marketing thrust, Milgrom said. Just this month, Room for Kids' website was launched, and the other books have had their own sites since last year. "HomeCenter and ShowPlace do a substantial business in the Internet, and we do a lot of target e-mails," said Milgrom. Overall, the Internet adds about 5 percent in incremental sales, and an overall influence of about 15 percent. "We're getting Internet customers that are not in the catalog model."

Catalog circulation is controlled by Sears. "We stay within the Sears universe but use different modeling techniques. Sears handles the circulation part of our relationship. But we're always prospecting, and we have qualifiers on the return form," Milgrom said.

While the Sears name is emblazoned on the catalogs, customers cannot return merchandise to Sears stores; it must be returned to the sender. And the Sears credit card, as well as other cards, can be used.

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