News
Catalogers React to
Rate Hike News
---Jim Tierney, staff writer for
MCM weekly
Catalog mailers tend to view any postal rate hike
with fear and loathing. But now that rate increases
are capped to the CPI (Consumer Price Index), or
rate of inflation, the May postage hike was greeted
with mostly sighs of relief—and even some cheers.
The U.S. Postal Service® announced Feb. 11 that
price increases for Standard Mail Flats – the
category affecting most catalogers – would stay
below the CPI. As described by USPS® spokesman David
Partenheimer, the increase for Standard Mail Flats
as a whole is about 1.67%, But for the non-carrier
route flats -- the category that experienced the
largest increase last year – the hike is less than
1% (0.86%).
For Hamilton Davison, executive director of the
American Catalog Mailers Association (ACMA), which
formed less than a year ago, the news about the
increase was music to his ears. “It’s a terrific
result,” he says. “It’s an important first step in
what I hope is a significant series of improvements
to the rate structure and totality of how mail is
managed.”
The USPS clearly needs to grow its volume and cover
its structural decline in other mail classes,
Davison says. “We represent a great opportunity to
do that. The USPS has shown a willingness to meet
with us. This shows that the USPS is clearly
reaching out to the catalog industry through the
ACMA.”
Chris Bradley, president of Portland, ME-based
bedding merchant Cuddledown, praised the work of the
ACMA. “I think that it is clear that [the ACMA] has
had a positive impact on postage rates,” he notes.
“The USPS has obviously listened to what the
catalogers have had to say, and I am thankful that
they have recognized how sensitive our business
model is to rate increases.”
The new rates for catalogers reflect a few things
that have happened since the big rate increase of
2007, Bradley says. “One thing is the amount
of work that catalogers have done in the past year
to educate the postal community on how
rate-sensitive catalog mailing volumes really are,
as well as the value to consumers and the economy of
a robust catalog industry.”
The other factor is the recent decrease in catalog
mail volume, which has fallen 13% below the level of
this time last year. “The new rates are certainly a
little lower than the CPI average, and that is a
good thing, but our industry is still trying to cope
with both last year’s massive increase and the
current weak economy,” Bradley says. “I think we
will continue to see decreases in mail volume.”
Simon Nynens, CEO of Shrewsbury, NJ-based software
merchant Wayside Technology, agrees. “More and more
promotional items are sent via e-mail,” he says.
“Catalog production is down because of the
effectiveness of this media as compared to other
tools, such as paid advertising, e-mail, outbound
calling campaigns, etc.” The increased postal rate
is just one additional layer that will push more and
more of mailers toward electronic delivery of
promotions, Nynens says.
Other catalogers, such as Michael Muoio, CEO of
Virginia Beach, VA-based Lillian Vernon, are more
pessimistic about the fate of the catalog business.
Lillian Vernon is still reeling from last year’s
exorbitant rate hike, which increased its postage
bill 20% and in part forced the mailer to lay off
about 25% of its staff in December.
“For those not going out of business, it will be
relief,” Muoio says about the lower rate hike, “but
for many, I assume, it may be too late.”
---Source: Reprinted from MCM Weekly
newsletter Feb 14, 2008 (www.multichannelmerchant@pbinews.com).
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