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Each year, we devote this issue of the FBMIU to the season-to-date trends in sales and order flows we see in the specialty-food-by-mail industry. Our hope is that this information will be useful to you when evaluating your season.
We have also included a few recommendations for programs you can still implement if you need an extra late-season push to help make your numbers.
Season-to-date Trends
Below are the highlights of our compiled response data from several of our clients and other mail order/internet marketers of specialty food.
The season started pretty strong for most food catalogers, and then slowed down considerably in October. Aggregating all of the companies we track:
September’s order volume rose 7%, and sales were up 9% over September 2006.
October turned upside down. Order volume was down 10% and sales were off 9%. As bad as this seems, most if not all of the shortfall was due to companies shifting a large part of their list rental prospecting circulation out of October and into November and early December.
For the first three weeks of November, orders are running 9% ahead of last year, and sales are running 3% ahead of the same period last year.
Through 12 weeks of the holiday season, orders are 3% ahead and sales are flat with the same period last.
Looking at individual companies and not the aggregate of all of the specialty food mailers we track:
In September, 56% of the companies were behind last year, 11% were flat, and 33% were up. The slowest growth company was down 21%, and the fastest growing company was up 33%.
In October, 44% of the companies were behind, 44% were ahead, and 12% were flat with October 2006. The slowest growth company was down 20%, while the fastest growing company was up 24%.
Through the first three weeks of November, 33% of the companies were down, and 67% were up compared to the same period last year. The slowest growth company was down 5% and the fastest growing company was up 20%.
We are beginning to see signs that the season is picking up steam compared to this time last year. However the signals are still mixed. Therefore, we don’t see December coming on as strong as we had hoped it would be.
Based on last year’s order curve, as of the end of the third week of November, the season was 31% complete. What does that mean? Simply stated, take the orders you have in the door from September 1 through the third week of November, divide them by .31, and you will have a reasonably close estimate of how this season will shake out for you—assuming that you have not made major changes to your mail dates and circulation levels.
The half-life of the season is the point at which half of the orders are already in and half are still to come. We see this half-life point getting later and later each year. For example, four years ago, the half-life of the season was the third week of November. Three years ago, it was the last week of November. And the last two years, it was the first week of December.
As people order closer to need, and we (mailers, internet marketers and retailers) reward them for late ordering with better deals closer to Christmas, decent on-time delivery records for last-minute orders, and now e-certificates—this year the half-life may creep back to the second week of December.
We are seeing a continuing trend of more and more food catalogers using promotions and offers to drive sales. Two years ago at this time, only 40% of the food catalogs we received had any type of promotional offer. Last year that figured ballooned up to 60%.So far this season, 63% of the food catalogs had an offer.
Summary
We believe food mailers are going to have to fight for every order they get this season.
There will be a continuation of the trend for later holiday shopping by consumers. Therefore, none of us will really know how this season will play out until it’s over.
Companies that have promotions and offers in place and ready to pull out of the hat on a moment’s notice will likely garner a larger share of the pie than more passive marketers.
To get your fair share this season, you will need to be ready for more last-minute shopping than ever before this holiday season.
Last-minute sales drivers
Promote gift certificates, gift cards and e-certificates. It’s cheaper and easier to ship a piece of paper or plastic card than it is a cooler of steaks, a fruit basket or gift tower. Use this to your advantage.
Send email and perhaps even a mid December post card to promote your gift certificates as great stocking stuffers and last-minute gift solutions. If your sales are really flagging, you can run a “gift certificate sale” to bring in extra cash now.
Make sure your web site is loaded with quick gift ideas. The home page should have a few of your best sellers in key gifting price points.
Extend the discount you give employees to their family & friends. Several of our clients have “friends and family weekends” and give a bigger discount for orders to ship before the really busy second and third weeks in December. This helps people closest to your organization save some money and spend it with you vs. the local mall, and it helps (a little) soften the Dec 10-20 order spike.
Pull a list of your top buyers from last year who have yet to order this year and call them. Find out why they have not ordered from you and see what it will take to win their business again this year.
Make it easy for time-starved customers to get in and get out of your site and take care of all of their gifting needs—navs should show last-minute gifts, gifts by price, gifts for special dietary needs (e.g., sugar free, low sodium), hostess gifts, gifts by gender, corporate gifts, gift certificates/gift cards.
Change the copy on your paid search ads to communicate a sense of urgency—stress “supplies are limited” or “only X days left for guaranteed Christmas delivery.”
Include a discount offer for a self-purchase to the buyer (a gift-giver special) in all order confirmation and order tracking emails. These emails should be linked to landing page on your site that reinforces offer.
Don’t forget to up-sell and cross-sell all callers.
Have a list of “phone only specials.” Work with your operators to teach them how up-selling benefits the customer. This will reduce the resistance you will get from your operators, many of whom are not comfortable even suggesting a gift solution, let alone trying to sell add-ons.
Games and contests work well in call centers. Give movie passes to the operator with the highest up-sell percentage in a shift.
Other low-cost incentives that work well are paid time off (after the holiday season of course), bringing in pizza or lunch, and gift cards to local movie theaters or restaurants. Generate some fun around your up-sell program and the reward will be yours.
Ask everyone in your organization to recommend one potential new corporate customer (caveat: they must be able to recommend a company and a named executive)…send that prospect a free gift (something edible) with a catalog and a sales letter. If they become a customer, reward the recommender with a merchandise credit, paid time off, or even cash.
We hope these ideas help you squeeze a few dollars from the holiday season.
This is the last issue of the FBMIU this year. In January, we will present our annual statistical recap of the holiday season.
Best of luck on a successful and prosperous Holiday 2007 season.
All the best,
Tony Cox
President
The 5th Food Group and Catalog Solutions, LLC
ABOUT 5TH FOOD GROUP & CATALOG SOLUTIONS
5th Food Group helps specialty-food catalogers and internet marketers grow and make more money by developing, managing and implementing their mail order and online marketing programs. We are the only catalog/internet marketing firm that works exclusively in the specialty food industry. Helping smaller companies or large companies with small mail order or Internet divisions is what we do best.
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