The direct route to beating recession: Selling on the doorstep and through parties is resolutely profitable, Janet Robson finds

CONSUMER spending may be in a dire state, but one group of retailers does not seem to have noticed. Direct-selling companies, which use door-to-door salespeople or party plans, are booming.

According to the Direct Selling Association (DSA), the industry has enjoyed unbroken growth of 10-14 per cent over each of the past five years. In its forthcoming annual report, the DSA is expected to show that total direct sales reached pounds 800m in 1991, up from pounds 725m the previous year.

One reason for this imperviousness to recession is that direct- selling companies offer low prices.

One of the fastest-growing is Betterware, whose sales rose by 44 per cent to pounds 41m last year. Betterware sells a range of more than 400 household goods, from mops to microwave dishes. The average price of one of its products is pounds 3.40, with only around a dozen items costing more than pounds 10.

Low overheads allow direct- sales companies to offer goods more cheaply than retailers or mail order firms. Martin Williams is managing director of Amway (UK), whose parent group is the second-largest direct-selling company in the world, after Avon, the toiletries company. 'Retail prices in the UK have risen by around 64 per cent over the past 10 years, but in direct selling they have risen by only 28 per cent,' he said.

Direct selling is successful not only for cheap products. Encyclopaedia Britannica, for instance, costs between pounds l,000 and pounds 4,000, depending on the binding. 'We sell to institutions, but families are our main market,' Derek Snoxall, executive vice-president of Encyclopaedia Britannica, said. 'Our business is fairly recession-proof - the average family spend is pounds 1,200 and we haven't seen any change in that.'

However, most direct-sale products cost much less - the average value of a transaction is about pounds 8. Part of the reason for the enduring popularity of direct sales may be that, while postponing buying a car or a television, women are still prepared to allow themselves the luxury of a perfume or a body lotion.

The ability of direct-selling companies to reach the consumer depends on being able to recruit and hang on to salespeople, who are usually self-employed and earn commission only. Mr Williams commented: 'The recession does enable recruitment to occur more easily.' Most salespeople are women working part- time, perhaps looking for extra income to help pay for a family holiday or Christmas presents. For example, Betterware's distribution force increased by 20 per cent to 9,000 in the first quarter of this year. The Dee Group, which sells mainly clothes, has increased its number of demonstrators by 30 per cent to 6,000 since January. The average spend per customer may weaken during recession (though not necessarily), but direct-sales companies are more than able to compensate for that by increasing their market penetration.

Although direct selling appears to be recession-proof, that is not to say that it succeeds only during a recession. It is one of the oldest forms of retailing, and Richard Berry, director of the DSA, believes that recession merely 'brings out the latent strengths of direct selling'.

Many companies say that personal service is where direct selling scores over other forms of retailing. In a recent Mori poll conducted on behalf of the National Consumer Council, 40 per cent of shoppers complained of unhelpful and uninterested shop staff treating them with 'ignorance and rudeness'.

They also complained about goods being out of stock or faulty, and about queues at check-outs. Department stores, clothes shops and electrical stores attracted most complaints. Mr Williams is in no doubt about the reasons for the success of direct selling. 'There's been a growth in multiple retailers who haven't capitalised on customer service. People are becoming more discerning about what they buy and they expect more information about products.'

Amway (UK) sells cosmetics, jewellery, clothes, and household and environmental products through a catalogue and by trial sampling; it is expecting sales of pounds 34m for the financial year to August, an increase of 61 per cent, and is forecasting strong growth for next year. Other valued aspects of the service are convenience - goods are delivered rapidly to the door - and product guarantees. Direct sales companies generally offer money-back guarantees on all their products.

Nearly 80 per cent of direct selling is on a one-to-one basis, but party plans are popular for some products, such as women's clothes. A sales representative will host a party in her home, inviting a group of women to spend an evening being shown the clothes and trying them on in a relaxed atmosphere. As every woman knows, communal changing-rooms in fashion stores are at best uncomfortable and at worst downright embarrassing. 'Customers appreciate being able to try on clothes in private,' said Maureen Phillips of The Dee Group.

This is particularly true if they are the kind of clothes sold by Ann Summers. Though perhaps still best known for its Soho sex shops, Ann Summers now generates 94 per cent of its sales through parties. These achieved sales of over pounds 35m in 1991, with 80 per cent coming from the kind of lingerie you would not want to try on in a communal changing- room, and the rest from 'sex-orientated products'. Party-plan selling, whether of cookware or underwear, has an added entertainment value. Jacqueline Gold, a director of Ann Summers, confirmed: '(We) provide quality and choice to women within a comfortable yet exciting, ladies-only atmosphere. The 'fun' factor has proved to be the cornerstone of the success of the parties.'

Ann Summers also demonstrates another strength of direct selling, the market research readily available from contact with customers. As a result of feedback from parties, Ann Summers launched two new ranges in January - swimwear and lingerie for larger women. Since then, sales have increased by a record 43 per cent.

Perhaps it is this interaction with customers that enables direct selling to succeed while contradicting the modern marketing gospel of narrow client targeting. Direct mail employs ever more sophisticated selection techniques to identify people with desirable traits, such as 'opportunity- seekers' or 'cat-owning ABs with green front doors', yet the take-up rate from mail-shots is only about 2 per cent. Betterware, on the other hand, has a response rate of 20 per cent. 'It's not that we don't target customers,' contended John Lloyd, the managing director, 'just that our target criterion is a lot wider - it's if you can see the front door from the road.'

Direct-sales companies seem to be bucking the retail trend because they are selling actively. Ms Phillips said: 'We are going direct to customers, not waiting for them to come to us.'

Mr Berry believes that the strength of direct selling while retail sales are weak may have widespread implications for the economy. 'Many people are not spending because they are afraid. In a sense, it's auto-suggestion - they keep reading that people are not buying in the High Street, so they think they shouldn't. But when salespeople actually go and talk to people they find that there is a strong demand.' The Chancellor take note: maybe the Treasury should ditch its economic advisers and hire a few psychologists instead.

(Photograph omitted)

News
Fatale attraction: Brigitte Bardot in her youth
people Biographer says cinema’s enduring sex symbol led a secret troubled life
News
newsGlobal index has ranked the quality of life for OAPs - but the UK didn't even make it into the top 10
News
people

Kirstie Allsopp has waded into the female fertility debate again

News
In 2006, Pluto was reclassified as a 'dwarf planet'
scienceBut will it be reinstated?
PROMOTED VIDEO
News
people
News
Researchers say a diet of fatty foods could impede smell abilities
scienceMeasuring the sense may predict a person's lifespan
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
News
peopleStella McCartney apologises over controversial Instagram picture
News
Gillian Anderson was paid less than her male co-star David Duchovny for three years while she was in the The X-Files until she protested and was given the same salary
people

Gillian Anderson lays into gender disparity in Hollywood

Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsA Welsh town has changed its name - and a prize if you can notice how
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Italian couples fake UK divorce scam on an ‘industrial scale’

Welcome to Maidenhead, the divorce capital of... Italy

A look at the the legal tourists who exploited our liberal dissolution rules
Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

The vintage series has often been criticised for racial stereotyping
An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

An app for the amorous

Could Good2Go end disputes about sexual consent - without being a passion-killer?
Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

Llansanffraid is now Llansantffraid

Welsh town changes its name, but can you spot the difference?
Charlotte Riley: At the peak of her powers

Charlotte Riley: At the peak of her powers

After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
She's having a laugh: Britain's female comedians have never had it so good

She's having a laugh

Britain's female comedians have never had it so good, says stand-up Natalie Haynes
Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

Let there be light

Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
Great British Bake Off, semi-final, review: Richard remains the baker to beat

Tensions rise in Bake Off's pastry week

Richard remains the baker to beat as Chetna begins to flake
Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

A look to the future

It's time travel fashion at Louis Vuitton in Paris
The 10 best bedspreads

The 10 best bedspreads

Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
Arsenal vs Galatasaray: Five things we learnt from the Emirates

Arsenal vs Galatasaray

Five things we learnt from the Gunners' Champions League victory at the Emirates
Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?