1. The UK Direct Mail Catalogue Market What lessons can we learn? Ray Morris-Hill Associates

2. Introduction l Direct Mail is the fastest growing segment of the UK catalogue market l In the Middle to Upmarket sectors the market is developing similarly to the USA l Close study of this development over the last 10 years produces key lessons for any Direct Mail catalogue

3. Ray Morris-Hill Associates Key Lessons l Merchandise l Inventory Management l Creative Presentation l Circulation and Customer Recruitment l Fulfilment l Financial

4. Ray Morris-Hill Associates The UK Home Shopping Market Total Retail £167,551 41,218 +4.4% Home Shopping £7,551 1,858 +3.4% of which: Agency Mail Order £4,048 996 +0.3% Direct Mail £1,515 373 +12.1% Other Home Shopping £1,988 489 +3.7% 1996 Data Source: Verdict Research Sales £ million Sales Pta ‘000 million Growth % vs LY

5. Ray Morris-Hill Associates Home Shopping Share of Total Retail Home Shopping Sales Share of Retail £ million Pta 000 million (% vs LY) Clothing£3,492 859 (+6.3%) 12.8% Home£2,336 575 (+7.3%) 6.2% Other£1,723 424 (-6.5%) 1.7% Total£7,551 1858 (+3.4%) 4.5% 1996 Data Source: Verdict Research

6. Ray Morris-Hill Associates Company Characteristics l 5 Big Companies dominate l Big Books l Agent Commission l Middle to Lower Market l “Free” Credit Offer l Thousands of small young, companies l Smaller Catalogues l No Commissions l More Upmarket l Cash with Order or Charge for Credit AgencyDirect Mail

7. Ray Morris-Hill Associates Merchandise l Determine the target customer and select merchandise to meet this customer’s requirements l Why would they buy this item, by mail order, from you? l Items not Ranges l Limited Merchandise offers lack credibility l Repeat winners

8. Ray Morris-Hill Associates Inventory Management l Forecast stock to determine: - Re-orders of fast selling lines - Clearance of surplus merchandise l Back orders are necessary, but monitor, control and inform the customer l Price aggressively to clear slow moving lines l Use almost every opportunity to clear old stock l Do not get emotionally attached to stock!

9. Ray Morris-Hill Associates Creative Presentation l Item must be shown well enough for the customer to determine if they want to buy it l Personality marks you out from the rest l Image may enhance personality but it is the product that sells l Repeat winners l Paper weight and quality l Do not give too much space to low price items

10. Ray Morris-Hill Associates Circulation and Recruitment l Key code every segment of your mailing l Use RFM to segment your customer list l Re-mail your buyers l Use Mail Order Buyer lists l Repeat winners l Try all methods of recruitment - Lists, Ads, PR, Retail names, Friends …

11. Ray Morris-Hill Associates Fulfilment l Decide on your Customer Service Policy and communicate to all staff l Make the Policy consistent with Personality l Use a tried and tested computer system l Keep your staff informed l Plan ahead for growth

12. Ray Morris-Hill Associates Financial l Make a Plan l Start with enough Cash l Tight Cost control l Accurate, Timely and Relevant Reports are essential l Evaluate Profit or Loss of each activity * See also “Top Ten Tips for More Successful Catalogues” - Catalogue & Mail Order Business May/June 1998

13. Ray Morris-Hill Associates Summary l Learn from everything you do l Repeat winners, drop losers l Plan activity l Tight financial control is essential to survival and success l An integrated business