Stop The Presses
Bob Burrington doesn't get a kick out of answering survey questions -- that is, unless there is some payoff for his printing company, Arandell-Schmidt Corp., of Menomonee Falls, Wis. So, when a big-name paper company came to him in 1979, asking for his participation in a study of the printing industry's future, Burrington established a condition: that he, Arandell-Schmidt's executive vice-president of marketing, get to see the results of the survey.
"It took eight months of bugging them, but when I finally got the results, I couldn't get to the phone booth fast enough," Burrington recalls. There wasn't anything earthshaking in the numbers themselves; it was what Burrington read between the lines that excited him. He detected signs of a coming surge in the printing of mail-order and retail catalogs -- the coffee-table quality glossies that nearly every upscale retailer now uses, either to build local traffic, or to attract buyers in distant locations. His guts told him Arandell-Schmidt -- a company that was born of the merger of two 60-year-old printing stalwarts in 1981 -- had everything to gain by going after the niche. After hearing him out, the rest of management agreed.
"We were known as a calendar printer then," Burrington explains, shouting to be heard over the din of a web press that is spitting out Saks Fifth Avenue pamphlets at the rate of 40,000 per hour. "We knew it was a declining industry -- even our customers were telling us so -- and here we had 40% of our business in it. We needed something else. Something growing. Something less cyclical. Catalogs seemed to be it."
Burrington targeted Dallas -- the home of Horchow's, the mail-order house, and retailer Neiman-Marcus -- as the place to start. He established a marketing team there, armed them with sample press runs, and told them to be persistent. A year and a half later, Arandell-Schmidt had landed Horchow Collections, and after two years, Neiman-Marcus signed on.
"After that, the stores rolled in from across the country like a wave," Burrington says. "Now 80% of our business is in retail and mailorder catalogs, and calendars have dwindled to 4%. And we're not just the fly on the elephant's ass, either. We now print for 75 of the top retailers in the country."
It has been a capital-intensive changeover. By swapping niches, the company automatically incurred the cost of two room-size web presses -- the first of which, at nearly $5 million, increased the $53-million company's debt by 30% -- plus a variety of binding, distribution, and quality-control machinery that wasn't necessary to print calendars.The added production capability and reduced over-time the equipment provides is paying off in handsome profits. Having all of one's eggs in one basket, Burrington says, is only bad if it is the wrong basket.
"We're committed to specializing, keeping the blinders on," he says. "But doing one kind of printing doesn't mean we won't be doing different things in distribution. We see opportunities in newspaper inserts -- they're cheaper, and they're improving in quality. We also have the computer capability to personalize our mailings -- directing Mr. Jones, who likes tennis, to the tennis gear on page 38, and Mr. Smith, who likes golf, to the clubs on page 57."
These ideas aren't coming from consultants or marketing studies; they are the result of attending printing-industry conventions, watching buying patterns in allied fields, and, yes, reading and responding to surveys.
"If there's one thing Arandell-Schmidt's proven," says Burrington, "it's that even a small company can do its own marketing research. The answers are there, if you're willing to dig."