Several multichannel merchants are changing their circulation strategies following Hurricane Katrina. However, the adjustments are expected to be short-term as businesses nationwide hope for a quick rebound during the important lead-in to the holiday season.
For catalogers, Labor Day week and the week before it are “typically one of the biggest mailing [periods] of the year,” said Don Landis, vice president of postal affairs at catalog printer Arandell.
Early on during the catastrophe, the Menomonee Falls, WI, company held onto catalogs that were supposed to be shipped into the affected areas, as many as 20,000 for one customer. The average, however, was closer to 3,000.
“That area does not get a lot of catalogs,” Landis said.
Once Arandell had information from the U.S. Postal Service about which ZIP codes were closed, it suppressed those ZIP codes for any additional mailings. Clients are supplying more names from other areas of the country to make up the difference.
For October, Arandell's clients do not plan to reduce their print runs, but will continue to send catalogs to names from other areas of the nation if needed. October is as far ahead as any clients are talking about, Landis said.
Redcats USA, which publishes catalogs under the names Chadwick's, Lerner and Lane Bryant, among others, expects a sales downturn from the hurricane and its aftermath.
“We will see a negative impact in the areas directly affected, and as evacuees move out to other areas, people in those areas will be distracted as well,” said Mark Friedman, chief marketing officer at Redcats.
Though the company expects some reduction in circulation as a result of the hurricane, Friedman said, it won't be significant.
“We've got a lot of customers, and we're able to shift around circulation to people that we might not have been mailing to,” he said.
Looking further ahead, Friedman is concerned about the rise in gasoline prices.
“Our customer base is a moderate consumer — and when her income is impacted, our business is impacted,” he said.
In emergencies, prospecting shouldn't be an optional strategy, it just needs to be adjusted, Donald R. Libey, managing director of Libey-Concordia, Philadelphia, advisers and investment bankers to the catalog industry, wrote in a special report about circulation after the hurricane.
Certain areas of the country are bound to see increased circulation to offset the absence in the devastated areas. However, in those parts with widespread devastation, it makes sense to re-establish contact — once the infrastructure returns — with house-list customers and provide compassionate offers of assistance in their refitting and recovery, Libey wrote.
Early indications are that sales have been and will continue to be affected by Katrina. National sales for the week before Labor Day were flat versus the previous week, according to the International Council of Shopping Centers' retail chain store sales index. The results “reflect the fallout of Hurricane Katrina as national sales were held back by about 1 percentage point as stores were closed in the path of the hurricane,” said Michael Niemira, director of research at ICSC.
The group predicts that September sales will be slower than previously expected “as a result of higher gasoline prices, which continue to drag on discretionary spending, and the fallout from Hurricane Katrina,” he said.
The bipartisan Congressional Budget Office said last week that damage from the hurricane would reduce employment by 400,000 in the coming months and reduce economic growth by as much as a full percentage point in the second half of the year, according to wire reports. However, the effect is expected to be temporary.
A bigger problem than lost sales, however, could be the damage the storm caused to the retail supply chain, Libey told DM News. Gulf-area ports, roads and rail systems all suffered devastation, and already reports have surfaced of increased traffic in other parts of the country.
Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters