Pulp friction

To judge by what's been happening to some of the more well-known catalog purveyors of home textiles, you'd think the channel was teetering on the brink of collapse.

The Spiegel Group now sees its stock trading on the over-the-counter market after it was delisted from the Nasdaq market earlier this month, partly because it has delayed filing its financial reports while it restructures its credit facilities. The company's Spiegel catalog, one of the top 20 sellers of home textiles with annual sales of more than $200 million, has been scrambling since last year to freshen its merchandising and marketing. And at its ailing Eddie Bauer division, home sales have provided one of the few positives as lackluster apparel sales have sucked life from the division.

Spiegel's credit card division also has a serious problem, with bad debt related to a strategy it launched in late 1999 to pursue consumers with bad credit histories in order to reap the higher interest payments on their accounts. If the company is forced to jettison the division — a real possibility — it could have an enormous impact on the catalog's sales volume.

That scenario calls to mind hard-luck catalog operation Fingerhut (the second largest catalog seller of home textiles after JCPenney), which over the past few months has been treated like the ugly cousin nobody wants to take home from the party. Threatened by loads of bad debt Fingerhut had taken on, parent company Federated Department Stores said in January it would dispose of the division. Last week, after several failed attempts by other suitors, a new concern whose principals include former Fingerhut ceo Thomas Petters put an offer on the table.

It's just the latest chapter in Federated's attempt to reconfigure its direct-to-consumer operations, which last year included pulling the plug on Macy's By Mail and integrating the buying operations for Bloomingdale's and Bloomies By Mail.

But Federated isn't the only department store operator looking to consolidate its catalog operations. Target Corp. is planning to reposition the Seasons catalog its picked up during its 1998 acquisition of Rivertown Trading Company, and will relaunch it in August as Marshall Field's Direct. It looks like Seasons will be saying goodbye to butterfly accent lamps and hello to designer bedding.

All of which rather begs the question of what it takes to create a compelling catalog shopping environment these days.

Perhaps the most promising formula can be found at Williams Sonoma — but not from its already well-established namesake catalog or its even more productive Pottery Barn franchise. The exemplar of how to do it right is its fledgling West Elm book. Launched less than 10 weeks ago, the catalog is already exceeding expectations, Williams-Sonoma execs told analysts last week. With just one catalog out in circulation, the company already is planning to add e-commerce in 2003 and follow up with bricks-and-mortar stores the year after.

For other catalogers struggling to find some relevance to today's consumer, it's a formula worth emulating — providing a consistent point of view, understanding who the target customers are, and offering product that communicates value.