DMSI sees growth in Internet

Carole Sloan, August 26, 2002

Reacting to what it sees as a shift in on-line business and more demanding customers, Direct Marketing Services Inc. portends even tighter controls with vendors than in the past.

David Milgrom, president and principal of DMSI, believes he has positioned the company to effectively adapt to its changing customer base. The nine-year old catalog, now also an Internet specialty business, "is forging long-term and tighter relations with its vendors," Milgrom said, "and some have been with us for the whole nine years."

At a vendor appreciation dinner held here earlier this month at the Chicago Firehouse, Milgrom said "I emphasized to the some 200 vendors attending, that product is the key but also key is service."

Milgrom said "I've seen a big shift to on-line buying and those customers are even more demanding. But this is a good thing. It forces us to continue to raise the bar — and we're encouraging our vendors to make investments in technology."

On-line sales, Milgrom said are up 30 percent over 2001 and continue to grow. But catalog is still an important and growing piece of the business. "People like to get the catalog in the mail, browse and then order on line. But there are those customers who just search for products like bedding or furniture on-line and get to us."

Once an Internet customer places an order, "we send a catalog, and these transactions are trackable. Our non-catalog customers represent 10 percent of our Internet business."

As an example, Milgrom points to rugs, which are featured in 50 styles in the catalog, and 500 on-line.

DMSI creates, merchandises and supplies the catalogs under the Sears umbrella ranging from Room for Kids to Sears Showplace, an offering of window coverings, bedding, rugs and slipcovers, along with accent furniture and decorative accessories.

Home Visions, Milgrom's own label is a more upscale catalog targeted to a younger, more urban customer and theme-oriented rather than classification driven.

The home textiles business, Milgrom related, "is more difficult than other segments of the business. There's enormous price erosion and the mass merchants are in the business quite heavily."

But for DMSI, the focus is on quality, higher thread counts and expanded custom window covering business, Milgrom said. "Right now we're strongest in bed in a bag, slipcovers and kids. But we see a lot of opportunity in quilts and home textile products that are heavily embellished with ornate treatments. We see more opportunities in Chinese factories, but only when they can offer value added."

Home textiles racked up about 40 percent of the company's 2001 sales of just under $150 million, Milgrom said. The company is expecting to increase overall sales about 10 percent in 2002.

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