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It is easy to identify the launch of the Next Directory in the late-Eighties as the moment when old-fashioned definitions of British home shopping habits were consigned to the past. But where will mail-order historians draw the line between the single-channel model of old and the multi-channel future?

This Christmas more than ever, the home shopping market is teeming with new launches, high-street names and established direct brands, just as increasing numbers of mail order names are moving into bricks-and-mortar retail. And the co-existence of big books, niche catalogues, online stores, interactive television channels and even transactional mobile sites means no two home shopping brands can be expected to recruit customers or sell their goods in the same way.

"Channels are becoming interchangeable and the customer has a much more flexible attitude towards which channel they use at any particular time," says Andrew Wilson, founder of the Catalogue Consultancy.

"If it is a straightforward transaction then they are very likely to use the web; if they have to ask questions, people tend to find email to be a bit unreliable and they have more confidence in the telephone.

And if they want it today or there is some cosmetic aspect which means they want to have a good look at it, they will go to the store."

An increasing number of companies are covering all those bases. Retail brands, from John Lewis to Tesco, are equally trusted online and offline, while stylish mail-order specialists, such as Boden, The White Company and Lakeland Limited, are perhaps best known for their catalogues but increasingly vie for attention in the high street.

The breadth of our multi-channel habits means that retailers are not going online just to reach a particular niche market, but to deliver an added-value service the market increasingly expects. "A multi-channel offer is seamless," says Wilson. "The experience should be the same however you transact with a company."

At this stage of the process, the key driver of this shift is the internet, especially as more and more people are using it for transactional purposes.

Mintel found that the number of British consumers who buy goods through a catalogue fell from 53 per cent to 25 per cent between 2000 and 2004, and that 32 per cent did some business online last year, compared to nine per cent four years earlier.

Such figures tell only part of the story, of course. Catalogue sales in 2004 still accounted for 65 per cent of European home shopping revenue, while many of the online transactions registered by the Mintel research may well have been carried out by people who had used a catalogue.

In fact, the catalogue and the internet are increasingly emerging as complementary channels which need each other if home shopping is to maintain its share of overall retail sales.

Manchester catalogue giant N Brown, which publishes numerous niche catalogues across its group, has an ideal position from which to assess the growth of the internet across the market. In its annual results, released in October, the home shopping company behind such brands as House Of Bath, JD Williams and Ambrose Wilson, reported a growth of 55 per cent in its internet sales, building the amount of business conducted online up to 15 per cent.

"For some of our younger catalogues, such as Simply Be, we are into more than 40 per cent online trading," says N Brown chief executive Alan White.

"But for some of the others you are looking at much lower numbers. The growth rates are highest in the oldest categories, but from a much lower base."

Right across the market, the growth of the internet is in tandem with the continued use of the catalogue as a browsing tool. While it may be at the forefront of a very modern, lifestyle-driven form of catalogue shopping, Boden and its customers demonstrate the point where the internet currently ends and traditional methods prevail.

"At the moment, we are still basically a catalogue-based business, although the internet is becoming a much bigger part of how the customers use us and shop with us," says Boden marketing director Mark Binnington, who reports that half of Boden's orders are now taken online.

But even though 75 per cent of Boden customers are online at home, Binnington cannot foresee a time when the paper catalogue does not do the lion's share of the selling. "The majority of customers' buying decisions are coming from the catalogue," he says. "Touch and feel is a big issue, especially when you are selling clothes. That is one of the challenges of any kind of home shopping and, compared to the catalogue, the internet is one step further removed from that."

Few can dispute that the outright cost of acquiring customers online is lower than that for an offline drive via direct mail, for instance.

But while offline customers may be harder and more expensive to catch, they are often also more valuable.

"Although channel is very important, it is much more about trying to bring in people who are going to be very profitable for you," says Gillian Buttree, international marketing director, Experian Marketing Services.

"We will always have direct mail, not because it is the cheapest, but because if you look at the data that is available now, and the emergence of transactional data in particular, direct mail is a key channel for recruiting quality customers."

But not every company has the same experience. Mankind, a mail order and internet venture which specialises in grooming products for men - and also for women, through its separate Beauty Expert brand - finds that lists which strike at the heart of its niche are hard to come by.

"Because of the kind of target area we are in, our sector is not terribly responsive to cold mailing," says co-founder Hilary Andrews, who reports that about 98 per cent of orders come via the internet (see above).

Boden marketing director Mark Binnington reports that his own company identifies word of mouth as its most potent recruitment tool, with two obvious advantages being that it is far cheaper than catalogue mail-outs and that, unlike any formal type of marketing, it does not simply shift consumers from one channel to another.

"The issue for us with the internet is that you get a lot of cannibalisation," says Binnington. "You get a lot of people who are already customers but who see an offer with an online affiliate, and buy something on the web just because you are giving a slightly better deal through that promotion."

N Brown's experience relates closely to that of Boden in that existing customers are using the internet effectively as an order form. "The vast majority of our online trading is substitutional rather than incremental, but we get higher average order values and greater loyalty from our online customers, and the cost of handling those customers is cheaper in the online world," says White.

"We sent 21 million emails during the first six months of this financial year, and the cost of doing that is very small relative to sending 21 million pieces of direct mail."

However, the introduction of Royal Mail's new pricing in proportion tariff in August 2006, will help to level the playing field in favour of old-fashioned paper methods of recruitment.

Under the new scheme, mail weighing between 100g and 249g will be charged at a flat rate. At the moment mail is charged per gram if weighing more than 60g, so under the new scheme items at the upper end of that scale will be up to 50 per cent cheaper to send.

"There will hopefully be a mindshift in the way people put their catalogues together," says Andrew Wilson. "We can expect to see mail-order companies lowering page densities, using more pages, giving more advice and greater breadth of choice. You will be able to mail lists you could not justify before and, of course, the higher the response rate, the higher the average order value."

Edmund Smiley-Jones, managing partner of direct marketing agency D-SJ, believes the key for catalogue firms is to create an experience that compares more than favourably to the high-street, and the possibilities of larger catalogues will help.

"We believe the key is to get customers to 'shop the book'," he says.

"You have to get someone into it as quickly as possible and help them build a habit of using it on a regular basis. So you have to do what the retailers are good at doing, which is retail theatre - making it really fun and really exciting for people. If you can do that, they will have the want and the need to come back."

Illustrating the point that catalogues need to evolve to survive is the Mintel research earlier this year, which was unequivocal about the changing fortunes of the old-fashioned "big book" mail order offerings. "The big book is the wrong format for the 21st century as customers want a more clearly targeted offer," said Richard Perks, director of retail research at Mintel.

Given the relatively gradual growth of the internet, it is possibly premature to report that mobile and interactive television are coming up fast on the outside, but the channels are there and the sales are ever increasing.

"Our current consumer base, which is slightly less than 10,000, is not big enough in its own right to be compared with the internet channel," says Richard Watney, managing director of Java-based mobile shopping application Reporo, which numbers Amazon, CD WOW! and John Lewis among the shopping experiences it delivers to our phones.

"It is an early adopter channel for retailers at the moment, but it is an opportunity for them to get some fairly uncrowded real estate on customers' handsets. If they wait a year or two, they will find that customers are used to shopping with the brands that got on there early."

Most home shoppers are still some way off buying goods via their phones, but it would take a brave soul to discount the emergence of yet another mass-market channel. "Whether or not mobile applies to our market, I am not sure," says Binnington. "But I would not say never - it is only a few years ago that we were slightly sceptical about the internet."

SALES CHANNEL EVOLUTION

- Internet and catalogue-based brands are increasingly finding success outside their original channel, just as large and small retailers are integrating home shopping into their business.

- A particular sales channel will not generate loyalty in its own right as consumers expect to use a variety of different channels for different types of purchase.

- The internet and the catalogue experience are driving each other in the clothing sector, and will continue to do so as long as catalogues provide the best forum for browsing product.

- As the big book continues to lose its power, targeted offerings and niche markets are key to mail-order success.

- Radical changes to the business mail tariffs next year will enable catalogue companies to send out larger, more descriptive catalogues at a lower cost.

- While customers recruited online are cheaper to come by, transactional data in the offline world is helping to drive fruitful mailing campaigns, and can also identify a catalogue shopper's propensity to shop online.

CASE STUDY: MANKIND

Beauty and grooming specialist Mankind is a young company, but it exemplifies the progressive approach mail-order operators are taking to the retail channel.

Its eponymous brand, which focuses, as the name suggests, on male grooming products, exists in catalogue form, online, via a transactional mobile site on the Reporo platform and through newly opened retail concessions in the Manchester and Dublin branches of Harvey Nichols.

The variety of sales channels reflects the routes favoured by both the male section of its market and the female gift-buyer. "As men are very interested in technology and we have done well selling by the internet, we felt mobile was a technology men would embrace," says co-founder Hilary Andrews.

But although almost all the company's mail order sales are carried out online and most of its recruitment is through pay-per-click advertising, it continues to refine its approach to the paper catalogue. "We are still a catalogue company, but we don't do cold mailings or recruitment," says Andrews. "We wouldn't be as successful without a catalogue and we see a big rise in business whenever we send one out."

This Christmas, the company will be mailing more actively than ever as it exploits the power of its own database, sending out eight-page Christmas gift catalogues for both its Mankind range and its Beauty Expert women's line to all customers, regardless of gender.

"Last year, we sent everyone a catalogue for men and women, but this year we felt we needed to separate it, because women buy differently and they buy different kinds of product."

TRANSACTIONAL DATA

Transactional data can be key to the development of new home shopping channels. It is the basic factual information any company can divine about its customers in the course of a direct sale. "It is who their customers are, what they are buying from them and how often, how they are interacting and via which channels," says Tash Whitmey, business development director at EHS Brann Discovery.

"If we know these things, we can cluster a client's database into a number of groups of people who look like each other, and then market to them with the right message, at the right time and via the most appropriate channel."

The rise of transactional data has been steady over the past six or seven years. "There is no doubt that the increase in home shopping has huge implications for marketers, not only when it comes to data collection but also relating to customer relations," says Ian Dignum, sales director at e-commerce solutions and mail order fulfilment provider Prolog.

According to Whitmey, while transactional data is useful in driving customer analysis, it can be quite dry in its raw form, which is why it is often rounded out with external data. "Data such as lifestyle and hobbies, media consumption and what people read bring segments to life," she says.

The value of such analysis is twofold. If companies can get to know their customers better, they can reward frequent buyers, divert marketing resources to increase frequency among those who shop less often, and stop marketing to those who are not buying anything at all. But by segmenting their own database and pooling it into a data co-operative, they can also find new recruits who resemble their most profitable customers.

Most larger home shopping firms are represented in most data co-operatives on the market, but Gillian Buttree, international marketing director at Experian says that its Club Canvasse database attracts several new prospective contributors each month.

"When a new company joins the co-operative, we match their customers against our existing database," she says. "Where a customer is a multi-buyer, that person goes into the database."