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Williams-Sonoma, a housewares and cookware intermediary, is a particularly fascinating case. It was a retail store, which spawned a major mail-order catalog operation, which in turn spawned a chain of retail stores.
The company was started around 1955 by Chuck Williams, who bought an old hardware store in Sonoma, California, and turned it into a gourmet cookware and housewares shop. Later he moved it to San Francisco, where he called it Williams-Sonoma so his old customers would know his new store was run by that same Williams fellow from Sonoma. After a couple of decades, he found he had accumulated customer database of about 10,000 people who had bought from his store but who lived outside the San Francisco area. So he created his first mail-order catalog. Soon, of course, he began mailing the catalog to outside lists as well.

This created a nationwide demand for his unique merchandise which not only boosted his store sales in San Francisco but made it possible to open other stores. By 1983 he had 11 retail outlets. By 1985 the number had risen to 19. And the sales volume rose accordingly, from about $4 million in 1979 to about $40 million in 1983!

What makes the Williams-Sonoma story especially significant is that it is one of the few cases we could find where an effort has been made to measure the effect of catalog circulation on store sales. Here is the report of Pat Connolly, vice president for mail-order sales, in a panel discussion in 1982:

The mail-order business comprises more than half of our business right now, but each of the stores has registered impressive growth gains because
of the catalog, a growth rate about 30 per cent per store. In one of our stores, we increased the sale 300 per cent in four years. This was a store that
was in existence for six years before we started to promote it. Then in our San Francisco store we more than doubled the sales in three years, and that
store had been there for 22 years.

We’ve always tried to measure the excess store sales that result from
catalog mailings. If you have a store and you’re mailing catalogs, it is very difficult to really know how much benefit you’re getting in the store from
the catalog. You know that sales go up, but you’re really not exactly sure to what extent the catalog is responsible.

This summer we did an extensive study looking at results that we’ve had for the past three years. We found that in our business we can get about a
30 per cent lift if we mail our catalog in a store area. That’s 30 per cent additional incremental sales in the store.

Another important discovery the company made was that the completion curve of the resulting store sales was the same as that of the catalog
sales.That’s important news to retailers who may not realize that one of their catalogs or flyers can still be generating retail sales in their stores a month or two later.

Williams-Sonoma carries about ten times as many items in the stores as they do in their catalog-but every item that is in the catalog is also in the stores. To reap the full retail rewards of a catalog-store mailing, make sure that your stores are well-stocked with all the catalog merchandise. Otherwise a customer who visits a store seeking to buy a particular catalog item may simply turn away in disappointment and leave if the store is out of stock. And Connolly points out, “In mail order you can back order, although it’s very painful. In retail when the customer leaves, you’ve just lost the sale.”

One final important point: The names collected from people who visit the store prove to be an extremely productive catalog mailing list, better than most outside rented lists. Points out Connolly: “They’ve had a pleasant experience with the store; they’re familiar with the quality of the merchandise, and this experience breaks down the resistance to mail order that they may have had.”

For some reason, the Williams-Sonoma catalogs we have received list only the cities in which they have retail shops, not the street addresses as well.
The Sharper Image is sharper in this respect. One of their recent catalogs devoted three-fourths of the entire back page to a prominent listing of their stores, including their addresses, and a strong pitch for the retail trade:

Stores To Satisfy Your Curiosity

As soon as you step inside the door of a Sharper Image Store-you know you’ve entered a magical place.
Because in our store all the ingenious products The Sharper Image is
known for are out in the open-waiting for your touch. Test out and try anything that attracts your curiosity-in a relaxed, unhurried atmosphere.
One cannot help wondering if this stronger pitch for a store visit does not result in incremental store sales even greater than Williams-Sonoma’s 30 percent-without subtracting anything from the catalog sales.

Laura Ashley, Inc. is a spectacular example of the potential of database-powered multidistribution by a combination originator and intermediary company. This British-based manufacturer-retailer of home furnishings and women’s apparel, with around 200 stores internationally, grew an average of 46 percent annually between 1975 and 1985, when it achieved a worldwide sales volume of $150 million. About half of this volume was accounted for by its U.S. operations.
The company was started around 1955 by Laura and Bernard Ashley. She began designing prints for tea towels, and he built a very simple screen-printing device on their kitchen table. Gradually they developed a wholesale business selling their own scarves, towels, and home furnishing and accessory items to U.K. department stores.

Next they opened their own store to showcase their collection and found they liked the retail business better than wholesale. So by 1963 they had abandoned the wholesale business and were concentrating on opening up retail shops in the United Kingdom.

One thing that made their operation unusual from the beginning was their decision to retail only products of their own design and manufacture. Even today this is true of 90 percent of their product line.

Laura Ashley entered the U.S. market in 1974 and within 10 years had established 63 stores and built an annual sales volume of $70 ~million.

A key ingredient in this meteoric success was their building of a catalog customer database and the constant interplay between catalogs and stores. When they decided to open a store in Denver, for instance, they were astonished to find that they already had 9000 customers concentrated in a small area of the city. It didn’t take much additional promotion to make the store they opened in that area an instant success. And they are able to use their catalog customer database in this way to identify promising locations for the 15 new stores a year they plan to add.

Their central database at their U.S. headquarters in Carlstadt, New Jersey, captures and retains three kinds of records: people who have ordered a catalog from a direct-response magazine advertisement, people who have ordered from a catalog by mail or phone, and people who have purchased in a store. Presumably this makes it possible to track the efficiency of a magazine advertisement even in terms of resulting store sales as well as mail and phone catalog sales.
Although new fashion catalogs are automatically mailed free to the entire database (and the more expensive home-furnishings catalog is given to their best customers), they are also able to sell a great many copies. The stunning beauty and quality of the catalogs make people willing to pay for them, and the fact that they have paid means that expensive catalogs are not wasted on uninterested prospects.

They sell the home-furnishings catalog for $4 in their shops and also sell some 100,000 copies in bookstores around the country. They also successfully tested selling their fashion catalog in bookstores for $2.
Their direct-response ads in magazines offer a catalog “subscription” (actually eight catalogs within 2 years) for $5. They expected to sell 85,000 to 90,000 catalogs this way in 1985.

They laughed at the line in the Newsweek story about them which said that their remarkable growth has been achieved “with little or no advertising.” That mistaken observation bespoke a common misunderstanding of the value of a store catalog as store advertising.

Their customer database was around 500,000 at the beginning of 1985 and was growing at the rate of 50,000 names a month.
Remember Chapter 10’s discussion of how to clone your best customers? Apparently Laura Ashley is seeking to do just that. In an interview in the beginning of 1985, their vice president for U.S. marketing, ,Jim Frain, said:
We’re looking at the customer base that we have been developing, and finetuning the demographic profile in very local neighborhoods all around the
country. So what we’re working on very painstakingly right now is precisely identifying those neighborhoods within a ZIP code and whether they’re
subscribers to certain magazines and customers of certain stores.

Translation: We’re identifying neighborhoods with the highest concentration of grade-A Laura Ashley customer clones, so that we can distribute catalogs and open stores in those neighborhoods. This is the synergistic promotion and distribution of the future.

Royal Silk is another success story of an entrepreneurial young company which found, like Laura Ashley, that some people are armchair shoppers and some need to touch the merchandise before buying. Pak Melwani founded the company in 1978 to sell exclusive, affordable, imported silk garments for women by catalog. Within 7 years he was mailing 20 million catalogs a year and had achieved an annual sales volume of $30 million.

Melwani had previously invested unsuccessfully in a retail gift shop that had left him with little taste for retailing. But after he began mass mailings of his Royal Silk catalogs, people started coming into his corporate offices in Clifton, New Jersey, asking if they could buy catalog items on the spot.

This led to the opening, in 1982, of the first Royal Silk store, in Clifton. In a couple of years it was doing an annual volume of $1 million and encouraged the company to start opening additional stores, including their flagship store on lower Fifth Avenue in Manhattan.

You will recall our advocacy of double-duty advertising. Royal Silk does triple-duty advertising in selected magazines. The ads (1) offer an item for purchase by mail or phone, (2) offer a free catalog, and (3) promote store traffic by listing the store addresses.
According to Gerald Pike, the company’s vice president, “We include our stores’ addresses in the print ads, and they support the entire operation. We can add the address at no additional cost.”

Another advantage of the catalog and store combination that Royal Silk has found is that their respective seasonal peaks and valleys tend to balance out. In December, the strongest retail month of the year, the catalog business is very slow. But in January it’s just the opposite.

Brookstone is famous for its catalogs of “hard-to-find tools and other fine things.” They also deserve to be famous for their remarkable stores. It’s not easy to invent an entirely new kind of store, but Brookstone has done it. Each store is a kind of walk-in catalog. Or it could be described as a kind of museum of contemporary gadgetry in which everything on display is for sale.

As you enter, instead of picking up a shopping basket, you pick up one of the clipboards, each with its own pen and order form. Displayed on counters or in showcases throughout the store are the items in stockjust one of each-with the catalog description alongside. Thus the store combines the informational advantage of a catalog with the look-touch advantage of a store.

You write the name and order number of the items you want on your order form, exactly as if you were ordering from the catalog, and hand it to the clerk behind the sales counter. A trolley delivers your order form to invisible elves in the back room or basement who pick your items off the shelves and send them back to the sales desk via the trolley. Thus valuable street-floor or up-front space is not crowded and cluttered with stacks of cartons of identical items, nor is it necessary to flag a busy clerk and ask him or her to get you what you want.
It is true that aspects of the system are uniquely suited to Brookstone and similar operations. But there are also clues here to the future of many different kinds of retailing which deserve to be carefully observed and pondered.

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