AIR GIVES CATALOG INDUSTRY A LIFT CONTINUITY PLANS ARE TAKING OFF

AIR GIVES CATALOG INDUSTRY A LIFT CONTINUITY PLANS ARE TAKING OFF

Devotees of Fruit-of-the-Month club are hooked on air freight.

And so are fans of the cookies-of-the-month, flowers-of-the-month, English muffin-of-the-month, lingerie-of-the-month and even dog food-of-the-month companies. This segment of the catalog shoppers paradise is growing.This concept works best with perishable items, mainly food. Although there are no statistics on how many clubs currently exist, most of the many gourmet food, fruit and candy catalog companies offer of-the-month clubs or continuity programs as they are known in industry lingo. In addition to the general growth of the catalog industry, these clubs have proliferated because of their long-term gift-giving quality, especially for business-to-business concerns.

"The idea of a continuity program is a great way of keeping customers connected to the company throughout the year," said Lisa Caugherty, director of the Shop-At-Home Information Center of the Direct Marketing Association, a New York-based trade association. "It's also a great gift idea. That's why it's been so successful."

A Role Model

The granddaddy of of-the-months, Harry and David's Fruit-of-the-Month club features a different crate of fruit every month and lets customers choose between 3-box, 5-box, 8-box and 12-box plans. Harry and David also runs several other continuity programs including: Four Seasons Plant Club, Veggie Club, Light Size Club (smaller crates of fruit) and a mixed item Favorites Club (a combination of fruit and other treats).

Pinnacle Orchards, a rival gourmet fruit and food producer in Medford, Ore., runs a growing Harvest-of-the-Month club. Steven Spatz, general manager of Pinnacle, noted that gift giving comprises about 95 percent of the overall catalog operations and probably 100 percent of Harvest-of-the-Month.

"It's a lot of business gifts; you want to remind people that you're still in business. It's mostly business to business."

Add to Convenience

Continuity programs have also boomed because they add to the convenience aspect essential to catalogs' success. Rather than ordering throughout the year, customers can place all their orders in one fell swoop and not worry about missing upcoming birthday or holiday gifts.

"We're craving convenience," said Jonathan Ellenthal, vice president of sales for Catalog Media Corp., a Memphis, Tenn.-based catalog marketing services company. "There's less discretionary time. What time we do have we want to spend with our families and loved ones, not shopping. So if you can knock off gift needs all at once with Fruit-of-the-Month club or whatever, you're going to do it."

Continuity programs are also advantageous from the catalogers standpoint, as they provide a long-term and perhaps deepening connection with customers. "As the customer gets more familiar with the Body Shop, they develop products which they use regularly; they develop a product loyalty . . . it's familiarity development," said Laure Morris, assistant manager of customer service for the Body Shop Inc. in Cedar Knolls, N.J.

Mr. Ellenthal said that with increased costs for finding new customers and shipping catalogs, catalogers are trying harder to maintain and strengthen relationships with existing ones. "A lot of direct mail people like to lock customers into higher revenue relationships with existing customers. This is

because the cost of acquiring new customers has gone up so much.

"USPS costs have gone up. For third-class mail it's increased 70 percent in the last few years. In addition, the competition is stronger," he said. ''There are many more companies trying to catch the attention span of potential customers. So with increased costs combined with higher competition, the focus is on finding ways to keep existing customers happy."

With the preponderance of perishables among of-the-month clubs and their emphasis on the marketing concept of convenience, these companies are more reliant on air express services than is the general industry.

Many companies use air delivery exclusively, including Miss Grace Lemon Cake Co., Culinary Crafts, Ethel M. Chocolates and Calyx & Corolla. Miss Grace, a Beverly Hills, Calif.-based gourmet baked goods producer runs several cake-of-the-month type gift plans and usually relies on United Parcel Service's second-day air service. Culinary Crafts also uses UPS's second-day air 99 percent of the time to deliver its Desserts Monthly and Soups and Breads Monthly from Orem, Utah.

Although these companies rely on air freight, carriers do not actively solicit continuity programs. "As with all of our customers, we work with their specific needs," said Ken Shapero, a spokesman at UPS. "It's open to discussion, but there is no standard discount just because you're a certain type of customer."

Calyx & Corolla, a San Francisco-based upscale flower distributor, sends everything including its several continuity programs - a Year of Flowers, a Year of Bonsai and a Year of Wreaths - via Federal Express Corp. "Because our product is fresh flowers, perishability is of paramount interest to us. And

because we're mail order, we need one reliable system to deliver the product," said Ruth M. Owades, president and founder of Calyx & Corolla.

Ethel M. Chocolates in Las Vegas also runs its Chocolate-of-the-Month club and other catalog operations via Federal Express, partly as a marketing tool to attract customers. "We're using Federal Express as part of a proposition to the customer," said Dan Bearss, Ethel M.'s mail order manager.

Although Federal Express dominates the air express market among catalogers, they may be seeing competition soon from other integrators such as Airborne Express. Currently, Airborne concentrates on business-to-business deliveries, rather than residential. Culinary Crafts, which has 50 percent residential clients, is among those looking for an alternative to Federal Express and UPS.

"With Airborne Express we're trying 20 test packages," said Ron Crafts, Culinary Crafts chief executive. "Their prices are very, very impressive, and their service is unbelievable. For packages six pounds and lighter they charge less than second-day air charges for next-day air. It's cheaper than UPS's second-day air service and they guarantee that it gets there before 3 p.m. the next day."

Whatever the carrier, many in the industry believe that increased air express use is integral to the next phase of growth in the still burgeoning mail order industry. Mr. Ellenthal noted: "There is no segment that isn't growing in its air express conversion. In the '60s and '70s, mail order basically meant fourth-class parcel post. Then UPS came along with seven-day nationwide delivery, and they became the dominant carrier.

"In the '80s and '90s, air express is saying that seven-day is not fast enough to meet the demands of how we live. Air express is becoming the next national phenomenon in distributing products from catalogs. One day it will be the dominant means."

And Ms. Owades said she believes that companies that currently provide full air service are shaping customer demand for it: "We've trained our customers so much that they call other companies which aren't using air and can't believe that they're shipping the same old, boring way. We've really changed their expectations."