The Next Direct Marketing Evolution:
Survival Changes For the Coming Five Year

continued -- page 4

The Solution

Focus on the things that matter:

1. List technology with advanced database structures and advantages (such as MeritBase);
2. Sourcing for margin advantage; a minimum of 12 points improvement, net of import costs and transport;
3. Incremental sales over the threshold for carrying fixed costs. If this means taking high sales volume from the low-end of the market under another name and operation, so be it.
4. Increased economies of scale from import strategies combined with low price leader sales volume strategies;
5. Acquiring multi-channel merchandising and sales skills beyond the requirements of the catalog.
6. Adopting local prospecting and retail tactical planning to take market share from the largest portion of the market—the retail share--and convert it to better and smarter direct models.

Those six tactics, focused on and done well, will put you back in the game and eliminate much of the profit-eroding bind that has plagued the industry as it matured and changed. The smart, successful retailers did not take their eye off the ball; the Wal-Martization of America is almost complete and they own your future customers.

Now, you may not agree or like what you have heard. But, I ask you to present the rebuttal. What exactly do you have as an alternative? Where will you get the 12 points of margin to offset the ever-present margin erosion and variable cost creep that is legion in this business? How will you develop the necessary ongoing EBITDA to maintain your business valuation and the financing essential for your growth? The solution is clear and logical.

Donald R. Libey

Don Libey is co-founder of Libey LLC, Cherry Hill New Jersey, Philadelphia, Pennsylvania, and Des Moines, Iowa, advisors and investment bankers to CEOs of catalog, direct marketing and e-commerce organizations. The firm specializes in representing buyers and sellers in mergers & acquisitions, investment capital placement, strategic growth planning, and in-depth forensic reviews of marketing and financial performance for CEOs of direct marketing companies and for investment groups and banks with catalog company holdings.

Don, a long-time industry advisor and strategist to CEOs and boards, is the author of six books on marketing, future change, and the economic and technological influences on the global marketplace; he is the author of the Libey LLC Economic Outlook, the bi-monthly, in-depth analysis of the economy and its implications for circulation and marketing strategy, published by MeritDirect. Don has operated numerous direct marketing, catalog and publishing companies as an owner and CEO and sits on the boards of a number of direct marketing corporations.

Libey LLC
Advisors and Investment Bankers To The Catalog Industry

Copyright 2003 by Donald R. Libey. All rights reserved. This material may not be reproduced or used in any way without written permission form the author, Donald R. Libey, Libey LLC, 811 Church Road, Suite 105, Cherry Hill NJ 08022, (877) 903 9448, www.libey.com, e-mail Libey LLC@Libey LLC.com.

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