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After a Slow Start, Rand McNally Finds Road to 21st Century

The mapmaker hopes to stand out from online rivals with a push into electronic products.

October 16, 2006|Dave Carpenter | The Associated Press

SKOKIE, Ill. — As the Great Chicago Fire was ravaging the city in 1871, William Rand and Andrew McNally saved their business by burying two printing machines on the sandy Lake Michigan shore.

No such clear-cut solution emerged to preserve Rand McNally & Co.'s dominance more than a century later, when the mapmaker lost its way in the age of the Internet.

But after two ownership changes and a bankruptcy reorganization, the storied company appears to have regained its bearings. A sales decline has been reversed, the company says profitability is up more than 30% since its 2003 overhaul, and it is poised to make acquisitions.

Left behind in the online mapping revolution by comparative upstarts MapQuest Inc., Yahoo Inc. and Google Inc., Rand McNally is marking its 150th-anniversary year by aggressively playing catch-up with a raft of new products designed to capitalize on its famous brand name.

A push into electronic gadgets and navigational software is part of the effort, including the release this fall of the Rand McNally GPS Navigator. The $500 portable navigation system is its entry in the increasingly crowded field for devices using global positioning system satellites.

True to its heritage, however, the world's largest seller of maps has atlases and paper maps as the backbone of the initiative. The privately held company doesn't disclose specific figures about its business, but Chief Executive Robert Apatoff says print products still account for the majority of its sales.

Anyone who thinks old-fashioned folded maps are going away should think again, Apatoff said.

"It's kind of like saying newspapers are going to disappear," he said in an interview at the company's headquarters north of Chicago. "There's going to be some changes in how they're used, but people still want to open them and read them with their coffee.

"Same thing with trip planning. People will continue to want to be able to consume maps this way," he said, even if they use maps together with hand-held devices or the Internet.

More maps are sold now than ever before, according to the International Map Trade Assn. Rand McNally's competitors include American Map (a unit of Langenscheidt Publishing Group) and Universal Map Enterprises Inc.

Oddly enough, the mapmaker didn't start out in the business in which it is a household name.

The Chicago printing shop that young Boston printer William Rand opened in 1856 specialized in railroad tickets. Then Rand teamed up with Irish cartographer Andrew McNally and they branched out to train schedules and maps, eventually publishing their first road map in 1917.

McNally bought out Rand, and the McNally family owned the business for four generations, selling it in 1997 to New York investment firm AEA Investors Inc. for $430 million.

By that time, the mapping industry was being transformed by the Internet and technology. But Rand McNally found itself outmaneuvered by start-up ventures.

"They were caught looking when MapQuest and the dot-coms came in and did the door-to-door directions and the online stuff," said Henry Poirot, a member of the map trade group's board and a three-decade veteran of the map and book industry.

The company racked up so much debt trying to keep up with its online rivals that it ended up in Bankruptcy Court, where a majority stake was bought in 2003 by Leonard Green & Partners, a Los Angeles investment firm.

Consequences remain from the slow start on the Web.

An analysis of traffic on map sites by ComScore Media Metrix found just 1.6 million visits to www.randmcnally.com last month, down 11% from a year earlier and dwarfed by those to Maps.com (71.4 million), MapQuest (48.6 million) Google Maps (23.4 million) and Yahoo Maps (20 million).

Tim Calkins, a marketing professor at Northwestern University, believes one of the biggest problems for Rand McNally is that so many maps are available free.

"They have an incredible history and product lineup," Calkins said. "The challenge is the world has changed so much in the last decade that the need for their core product has really diminished."

That's not the view of Apatoff, a veteran marketing executive who since arriving as president and CEO in June 2003 has tried to reinvigorate what many saw as a tired brand, without abandoning the company's strengths.

Rand McNally closed its 25 retail stores in 2003 to cut costs as part of the makeover, but it still sells maps and other paper products in more than 55,000 retail stores in North America.

The trademark road atlas, now in its 83rd edition, remains its bestselling product by far. That's one reason the company isn't striving to become like MapQuest, Yahoo Maps or Google Maps.

"We're the only ones [of that group] that actually sell product in the store," said Apatoff, 47. "While we encourage people to go online, it is truly a different business model."

Rand McNally's business model is paying off in annual sales growth of 4% to 5%, he said. Its online division also is growing in double digits, with an advertising blitz planned soon for its website and online store.

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