All in the family

Direct sellers have a wealth of data at their disposal. They know the name and address of their customers, the types of products bought, how often someone buys, and how much an individual spends on an average order. Further profiling can reveal the customer’s age, whether he has children, and what other hobbies and interests he has. With so much information available, it’s no wonder that many merchants choose to extend their ranges to target a specific segment of their database.

“Range extensions can address lifestyle or lifestage changes among core customers, attempting to ‘grow’ with them and attract more of their spend,” says retail and mail order consultant Stella Hartley. “Or they can be designed to attract a different customer altogether.”

Take for instance The Hut Group, the online retailer operating TheHut.com, Zavvi.com and MyBag.co.uk, as well as a “behind-the-scenes” provider of online retail services to partners such as Asda, Argos and Tesco. It identified the health and beauty category as a key market and has been selling female-focused cosmetics and beauty products on its general merchandise site for some time. In June 2010, it announced it was breaking into the male-grooming market with the launch of Washbag.com. Among its USPs is free shipping on all orders.

Men are also the target at Net-a-Porter.com. Ten years after it was founded, luxury-apparel etailer Net-a-Porter said it was launching a menswear site called Mr Porter. The new site, set to go live in January 2011, will offer a selection of global designer labels as well as niche specialist brands alongside Net-a-Porter’s editorial content and style advice. Net-a-Porter founder Natalie Massenet said in a statement that Net-a-Porter was always going to be a women’s brand, but that for some time now a dedicated men’s offering had been in the pipeline. “We have a ready-made customer base for our men’s business,” she explains. “One hundred percent of Net-a-Porter customers have a man in their lives in some capacity and 59 percent of them are married or living with their partners.” Further, Net-a-Porter aims to attract new, male users, to its site.

BrightMinds, a cataloguer of educational toys and games, is another business expanding its product range with the creation of the Baby BrightMinds catalogue. Alison Quill, managing director, says that she picked best-sellers for the new mailer, “we had the idea to segment [products for] 0-36-month-olds into Baby BrightMinds as these development stages need a bit more focus”. The first mailing is scheduled for early July, with Quill using list swaps and data pools to supplement the housefile. “Plus, as this is recruiting at a totally different age of child, we are looking at inserts and of course social stuff online,” she adds.

In the above examples, the logic behind range expansion is clear to see. In the case of Net-a-Porter and BrightMinds in particular, the two have spent a considerable amount of time building a brand profile and have become trusted in their niche. For The Hut, this is a natural progression in its aggressive expansion plans that will see it strengthen its presence in a range of sectors including health and beauty, sports, footwear, fashion, and toys.

According to Andrew Wilson of the Catalogue Consultancy, succeeding in launching a spin-off title that targets another segment of the database will reap great rewards, “the value of the company will be enhanced by having a stable of catalogues or income streams rather than just the one.”

Doing it for the kids
On 16th June, Scottish cashmere cataloguer Brora sent a customer email heralding the launch of its new children and baby catalogue this autumn. Brora already includes childrenswear in its main offering, so this launch will test whether it can make this segment work on its own steam. “Fashion brands with a clear image and identity can extend into childrenswear if they understand the dynamics of the marketplace and can position a children’s offer without adversely affecting their adult range,” says Stella Hartley. One company that has done this well, she notes, is The White Company with its Little White Company catalogue that “remains true to the principles of the parent brand by offering beautifully designed, principally white products for children”. In short, producing “specialogues” to appeal to a specfic set of customers can work, so long as brands “target those customers effectively and really understand from their data or market research that the product offer is relevant,” she says.

For Andrew Wilson, Brora is an interesting case. “With a short range of clothing for children they are evidently successful, or they wouldn’t be looking to expand the range. However, are there enough people willing to pay £129 for a child’s jumper that may get destroyed in an afternoon at the park?”

Hartley is more confident in the Brora extension, “as long as they can identify the customers to whom a childrenswear offer would be appealing and the range is of a style and quality that enhances rather than diminishes the image of the parent brand then, it will be a success.”

Out of range
This strategy isn’t for every business. Shirt retailer/cataloguer Charles Tyrwhitt discontinued its short-lived childrenswear range in 2007. Tiny Tyrwhitt never performed as expected because the majority of Tyrwhitt’s customers are men, and not the primary buyers of children’s clothing. “No successful mail order company is short of opportunities,” says Andrew Wilson of the Catalogue Consultancy. “They have a responsive housefile, mail order core skills and the ability to manage a customer relationship,” all of which are good groundwork for a range extension. But not every company can do it.

He highlights the financial as well as human resources needed to meet the demands of a new venture. Businesses should also consider “what are they going to have to give up doing in their main business in order to feed the new baby? New things are always more interesting, but would their time be better spent on core business?”

Wilson says that if a company believes it can succeed with a range extension, and that the extra time and effort are worth it, it should go for it. But, he adds, “if you are going to do it, mean it.”