Talbots' database pampers customers; use relationship marketing to get close to consumers - Special Report: Reinventing the Discount Store: The Concept - Company Profile

Discount Store News, May 15, 1995

What is keeping discounters from using database marketing to build sales and customer loyalty? The most likely answer is uncertainty over the cost/benefit equation and cultural barriers between mass merchants and direct response marketers.

Mass merchants today have several key database tools in place: advanced computer technology capable of tracking a multitude of checkout and inventory activity, and increasingly, in-house credit cards or charge cards that permit capture of individual purchase activity. By and large, they lack the personnel to whom "relationship marketing," or individualized mass marketing, is second nature. Specialty stores and those department stores and national chains that use mail order catalogs in synergy with their stores have been the main areas for retail database marketing.

The costs of computer-personalized mailings and the database maintenance overhead must be weighed against the benefits of tapping more revenue from core customers, strengthening their loyalty over the long term and discovering new opportunities.

Cynthia Cummings, director for direct marketing systems for Talbots, the upscale ladies' apparel, accessories and shoes retailer , has stated that the key advantage to relationship marketing is the ability to identify and market to the core customers. This can lead to segmented, targeted direct response advertising that yields volume and margin at reduced promotional cost.

Talbots captures data like items purchased and size of order, and when the sale is made via the Talbots charge card. the name and address of the customer. Talbots learns how to narrow its marketing focus by an infallible method: asking the customer. Shoppers are asked, for instance, whether they want to receive mailings for missy, intimates, kids' or other segments--or to be on a list to receive only those promotions geared to events at a particular store location. "Best of all," said Cummings, "you can retain and reactivate customers with continuity programs like hosiery clubs."

Talbots mails 60 million catalogs each year and operates 393 stores in the United States. Of these, 54 are Talbots Petites. There are also 41 Talbots Kids, four Talbots Intimates and nine Talbots Surplus stores.

Cummings said the chain has enjoyed particularly good success in using its database to choose sites for the Talbots Petites stores. She said this is a powerful example of how, with database marketing, "you can detect opportunities for new markets, new products and new locations."

Is the siting strategy paying off? Talbots' 1995 comp store sales gains at the Petites stores are outpacing chainwide comp store gains by 3-to-1.

A mass merchant may not have the budget, as Talbots did, to mail a Valentine's Day chocolate from the ceo to each of the chain's best female customers--but part of the reason is that mass merchants haven't captured a list of those customers. This will begin changing with the recent introduction of private label credit cards by chains from Target to Caldor. The Ames 55 Gold seniors discount program has captured nearly one million names and addresses in its first six months. Ames president and ceo Joe Ettore believes this customer base is more responsive than average to direct mail and to good price/value offers.

Effective use of database marketing can be as simple as a postcard mailing to announce in-store event promotions aimed at specific customer segments. Talbots uses a range of methods and vehicles to profit by its captured information. These efforts are part of the reason this apparel retailer is enjoying solid growth--including a 10% gain in March 1995 over the same period last year--in a hard hit industry.

Category killers like Circuit City and off-price apparel chains like Loehmann's have already integrated database marketing into their strategic and day-to-day operations. General merchandisers face tougher decisions on its use, since the costs may appear daunting and the benefits are harder to predict accurately. But some degree of risk is taken every time a weekly advertising circular goes out, and the gain is generally short term.

Database marketing can pay dividends well beyond a periodic spike in volume, as valuable as that can be.