Lessons for the FutureEveryone reading this column would agree that 2001 was one of the toughest years for catalogers in memory. Even in 1990-91, the other period cited most often as terrible, catalogers had to contend with only one problem -- the recession.
But with last year's economic slowdown, many catalogers found their customers, consumers or businesses, reluctant to spend, especially as the year progressed, which hurt all catalogers. Compounding this were negative news stories about remote shopping, especially privacy and difficulties with delivery and back-orders, last fall's World Trade Center tragedy and the anthrax scare. All these problems, when totaled, made 2001 the toughest year I have seen in more than 30 years in cataloging.
The glimmer of hope is that by year's end many catalogers reported that holiday 2001 was not "terrible." Most reported a rough first six to nine months, and holiday success may have resulted from lowered expectations. However, that does not appear to be the case.
Catalogers can react much more quickly than all other shopping channels. Retailers are saddled with expensive real estate, and their only option is to blow out inventory through massive markdowns, destroying profits. The dot-coms that still exist struggle for customers and cannot afford to not prospect heavily.
However, classic catalogers after identifying trouble can quickly reduce mailings and combine this with reductions in inventory to achieve profits even in tough times. Hopefully some of 2001's negative factors will not reoccur -- the terrorist and anthrax attacks. Others, such as a slowing economy and reluctance to shop remotely, will continue at least until mid-2002. What, if anything, can catalogers do to overcome these obstacles? There are several signs that not all is bleak and that with effort catalogers can rebound faster than any other channel.
I would be remiss by not reporting some good news. According to the Pew Internet & American Life Project, Washington, of the 29 million Americans who shopped online in holiday 2001, 58 percent were women (DM News, Jan. 7). AOL reported that 64 percent of its holiday shoppers were women. This is good news for consumer catalogers since the overwhelming majority of these companies' primary customers are women.
There cannot be anyone in cataloging, mailer or supplier, who does not realize that at some point the cost of mailing catalogs will become prohibitive unless something gives. And it will not be lower postal rates nor lower paper, printing and package delivery costs. So what will it be? An improvement in response rates through better mix of paper and electronic cataloging and getting more to shop remotely.
One of the most critical steps for all catalogers is to face that most of the decisions that affect the future will occur in Washington and 50 state capitals. The struggle to attract new customers -- in the consumer world, year after year only about 60 percent of the adult population shop remotely -- is one we are all aware of and work on. But we tend to leave the effect of government decisions to the other guy.
The following are just a few of the nonsales critical issues that will affect us all:
· While there is in place an Internet tax moratorium (which when removed will probably mean taxation of all remote shopping), it is again temporary. In this fight, remote-shopping companies face two large and well-funded opponents: the National Retail Federation and the state governments.
· Postal woes are just beginning, meaning the woes of the U.S. Postal Service and, therefore, all of its users. The General Accounting Office -- Congress' budgetary staff -- predicts that in less than 10 years the USPS pension liabilities alone will grow from $8.5 billion to more than $14 billion annually. There is only one way any organization can absorb such an increase, and that is from its customers -- including catalogers.
· Privacy issues will remain a major headache. While catalogers can talk all they want about not causing privacy problems, the damage will be done to all remote shopping by nonshopping firms.
The problem is that most catalogers will ignore these issues, assuming that somehow the issues either will not affect them or that they can do nothing about them. That is a serious mistake. These issues will reach every cataloger. What is more important is that you can do something about them.
Moreover, this battle will not be fought in the mails or through advertising but in the halls of government, which means we will have to fight through spokespeople, better known as lobbyists. There is a tendency among many to think that lobbying is dirty or beneath them. They think that the only organizations or companies that lobby are those trying to get an advantage, like a tax break or to be able to advertise/promote to the public something that is not good for it.
That is foolish. Our representatives in the legislatures and executive branches of our governments can make an informed decision -- whether we agree -- only when they have all the facts. This is what lobbying is all about, making sure that all the information is available to those making the decisions, legislators, regulators, whoever.
Therefore, for catalogers' message to be heard. we need lobbyists. Walking the halls of legislatures, testifying in hearings, holding meetings with legislators and regulators and, yes, even taking them out to dinner. And before you get upset with that, remember it is no different than a printer taking a cataloger out for a meal and discussing business. If you wish to argue your case, you have to get the person's attention.
So what can you do about it? You can either ignore the issue or hope that someone else will fight your battle, or you can become proactive. If you ignore it, I guarantee that you will wake up in the near future and find that your business has been severely affected. If you want to help get our story out, all you have to do is support one or several of the organizations that are fighting to be sure our industry is heard.
This can be the Direct Marketing Association, a DMA chapter, the New England Mail Order Association (oldest cataloging group in the country) or the Catalog and E-Commerce Club of Northern California. Neither of the latter two groups restricts membership by locale, and anyone in the country can belong.