If you saw this post (“Nordstrom President Cuts Direct Mail. Then This Happened.“), I recently found that Nordstrom blamed their slumping sales on (in part) a cut-back on direct mail.
So when I noticed that another retailer — J.Jill’s (NYSE: JILL) — was getting ready for their Q1 earnings call, my ears perked up.
I found a copy of the Q1 press release (typically issued in advance of the conference call), and what Linda Heasley (President and CEO) said immediately caught my eye:
“We are disappointed with our first quarter performance and are taking immediate actions.”
Reading on, I noted that for the first quarter ending May 4, 2019:
- Total net sales for the thirteen weeks ending May 4, 2019, were $176.5 million versus $181.5 million for the thirteen weeks ending May 5, 2018;
- Gross profit fell to $116.3 million year-over-year from $120.3 million; and
- Net income plunged to $4.4 million from $11.3 million in the year-ago quarter.
“OK, sales are down. Let’s find out why …” I thought to myself. “Slim chance they’ll mention direct mail, but you never know.“
A few minutes into the call, I sat stunned as I heard Linda Heasley say something that sounded eerily familiar:
Going into the quarter, we planned some shift from direct mail to alternative media options, primarily digital.
In hindsight, we moved too much too soon.
We made adjustments quickly when we saw the results, and we were able to add back some direct mail touch points along with some changes in digital to better support our promotional activities.
That restored traffic to planned levels albeit belatedly.
Incredible. What are the chances that I join two earnings calls, and hear almost the same thing?
She did go on to say:
The digital ads we ran drove a significant number of impressions, which should boost brand awareness over the longer term.
We will continue to test and optimize the balance between the catalog and alternative media to maximize the effectiveness of our campaigns, our messaging and creative expression and overall efforts to attract customers to J.Jill.
A few minutes later during the Q&A, Ross Collins, an analyst from Cowen and Company, asked Linda to clarify what she meant by “moving too much too soon” and what they intend to do going forward.
Thank you for your question. Relative to the marketing mix, we have been trying to right-size the role of the catalog in the overall marketing media spend, it’s a significant investment for us.
[…] We shifted those dollars into social and digital, and we probably moved a little too much from print into social and digital, although social and digital do seem to be paying off in a very good way.
It’s again better appreciating what the role of the catalog does for our customer, as she is highly engaged — and while you might not redeem the coupon on the front of the catalog cover, she is using the catalog for inspiration. And that’s what we mean by we moved a little too much too fast and we’re looking at remixing that spend to the back part of the year. We’ve invested more into print touch points for the customer.
Wow. Print is not dead. The consumer is speaking loudly and clearly. And so did the market: later that day, shares of J. Jill fell nearly 54%. Ouch.
I’m certainly not suggesting that direct mail is the single cause of their drop in sales… but even so, it played a significant part.
Here are my takeaways; I’d love to hear yours:
- First, if you offer print and mail services, you should call on both Nordstrom and J.Jill. Like right now.
- Second, be confident in your assertion that print still plays an integral part in driving sales. Used wisely with digital, it can play a role that ephemeral electronic messages simply cannot.
- Third, if you are considering cutting back on mail, or have a client who is considering doing so, point them to this data and the Nordstrom case study. Encourage them to test their theory first before it negatively impacts sales.
What else? What do you think?
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