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Why Nordstrom and J. Jill’s Direct Mail Mistake Cost Them Millions

Ashley Luehmann

A very unexpected article drew me out of my usual morning email-checking haze today. My supervisor Debora Haskel had forwarded me an “interesting read” from MindFire, highlighting a drop in sales for clothing retailer J. Jill. The headline read “Retailer J. Jill learned the Hard Way Why Direct Mail is Still Relevant,” and the smell of scandal perked me up more than the cup of coffee I was holding. I leaned forward in my chair, because seeing a globally recognized brand getting called out for their marketing tactics usually means they fudged up big time (looking at you, Pepsi and Kendall Jenner), and I love to start my day with some good gossip. The tantalizing part of this article was that the cause of the profit decline wasn’t a poorly thought-out ad or a bad choice of spokesperson, it was the marketing tactic: a decision to stop using direct mail marketing.

Removing Direct Mail Leads to Massive Profit Losses for Major Retailers

In recent years, the disappearance of traditional brick and mortar retailers has pushed brands to reinvent themselves online and integrate technology into every step of the selling process. J. Jill and Nordstrom even went so far as to cut direct mail marketing from their budgets. Unbeknownst to them, this move would have dire consequences.

According to press releases at the end of Q1, both companies’ sales were far below expectations. J. Jill’s profits dropped to $116.3 million from last year’s $120.3 million. Nordstrom’s hit prompted Co-President Erik B. Nordstrom to say:

“…We had some executional misses with the customer experience that had an impact on sales … as part of our decision to move to a digital-first program, we eliminated paper notes but later discovered that a segment of our customer base relies on receiving these notes by mail.”

Direct Mail Marketing Reaches New Segments and Encourages Sales

He directly credits the drop in sales to Nordstrom’s decision to eliminate direct mail marketing from touchpoints with customers in their loyalty program. His team had not known that a group of their customers relied on the mail to see coupons, deals, and discounts, and they didn’t take into consideration that even those who use the online tools are prompted to shop thanks to the impact and shelf life of direct mail. And this group is not just a small segment of older customers; the all-important millennial consumers consistently rank among the highest to engage with direct mail.

Retailers Who Add Direct Mail See Growth

On the other side of the table, JCPenney is a store that utilized direct mail marketing to their advantage and gained sales because of it. In 2015, they re-introduced their  “lifestyle catalog,” a “modernized,” slimmed down version of the yellow pages-esque catalogs distributed in the ‘90s. It featured models styling ensembles, staged in front of scenes with price callouts for everything from the clothing and jewelry they’re wearing to the lawn chair they’re lounging on and the glass they’re sipping from. After they relaunched the catalog, sales rose by 6%.

We are all embracing and reinventing technology at a breakneck pace in the marketing world. J. Jill and Nordstrom’s recent losses are attributable to the elimination of direct mail (which stopped them from providing an omnichannel experience). The impact on their bottom line highlights how we can get so wrapped up in rebranding to be seen as being more tech-savvy that we forget to keep an eye on what actually works in reaching our customers.

Omnichannel marketing—which should always include direct mail—creates cohesive campaigns that utilize new marketing channels to make sure your company doesn’t end up sprawled across a headline with the latest marketing gossip.

link https://www.iwco.com/blog/2019/06/12/direct-mail-marketing-mistake-nordstrom-j-jill/
Ashley Luehmann

Author

Ashley Luehmann

2019 Marketing Intern working toward a degree in Journalism with a certificate in Entrepreneurship from UW-Madison. Follows the “never strive to be perfect, but to perfect” mindset in all aspects of her work. She enjoys working with her amazing team at IWCO Direct, cooking, hiking, taking her two dogs paddleboarding, and the Minnesota Wild.

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