Reference no: EM131234299

Catalogue shopping and social class Mail order catalogue agencies became popular in the 1950s and 1960s with the rise in disposable income after the war. In the UK, catalogues were aimed at C2 and Ds, the largest socio-economic group of the time, using agents - usually women - who sold goods to a circle of family, friends, neighbors and acquaintances. Such circles were often referred to as ‘clubs' and were an integral part of some close-knit communities. Agents received commission on the amount of goods they sold whilst customers appreciated the weekly payment option at a time when credit was difficult to obtain. By the late twentieth century the industry had been reduced to five main retailers: Littlewoods, Great Universal Stores (GUS), Grattan, Freemans and Empire (later to become Redcats). In 1985 GUS launched Innovations - often given away as a free supplement in Sunday newspapers. The Innovations mini-catalogue aimed to bring the latest in technology to its customers and became required reading for those seeking quirky and unusual gifts. However, agency catalogue shopping is in decline. Agents now buy mainly for their own families whilst the traditional customer base finds it easy to obtain credit elsewhere. High street retailers have always been around 15 to 20% cheaper than agency catalogues and now firms such as Tesco and next offer their own direct-order catalogue service. Added to this is the growing popularity of Internet shopping and the rise of TV shopping channels such as QVC. The catalogue business is finding it difficult to compete. Freemans was bought in 1999 by German firm Otto Versant, owners of Grattan. In 2000 GUS bought online retailer jungle.com but was forced to close the loss-making Innovations in 2003. Meanwhile the Littlewoods group is seeking permission from the Competition Commission to buy GUS and Keys catalogue. Analysts believe that if the catalogue companies are to survive they must be more flexible and more effective at individual marketing.

Question

1 What type of market structure describes the agency catalogue industry?

2 What has happened to the traditional target market of the catalogues?

3 Why have the catalogue companies found it so difficult to survive?

4 What steps did the companies take to fight back?