Paper Prices Likely to Rise in Q4, Catalogers Warned
"I don't see paper prices going up right now," said Rex Ciavola, senior vice president, global creative services and production at Office Depot, Delray Beach, FL. "I see demand going up, but if I negotiate hard enough and I have a great relationship with my suppliers, we're going to keep our paper prices flat."
The fourth quarter, however, is a different story.
"I do see that paper prices are going to go up at least 5 percent," he told attendees. "If you're getting increases right now, don't take 'em. Push back. It's not reasonable. Why? 'Cause the demand's not there yet. However, in Q4 it will be."
Looking to 2005 and 2006, Ciavola predicted demand will rise and supply will fall slightly.
He also spoke about the use of catalogs as either promotional or reference tools, which he described as usually being a company's big book.
"You want that to be priced appropriately and sorted appropriately so that the customer keeps that on their desk at least four months, if not six months or longer," he said. "We have customers that have kept their big books for years even though we mail them another one every couple of months."
On the promotional side, the risk of cannibalization was addressed along with the danger of moving customers out of the reference book since that most likely provides a higher margin.
"What you want that to be is a trigger," Ciavola said. "You want them to take that free gift or you want them to take that hot deal that you have on that product in your smaller-page-count promotional vehicle and use it as a reference to take across to your big book so that they don't go shopping in your competitor's catalogs."