The PRC rules!

The News Last Month that the Postal Regulatory Commission had unanimously rejected the U.S. Postal Service’s request for an exigent rate case hike was music to the ears of catalogers everywhere.

The best part of the decision, obviously, is that postal rates for Standard Mail flats or catalogs rates will not go up 5.1% on Jan. 2. Woo hoo!

Perhaps more important, though, is that the ruling sends a message to the USPS that retailers (and pretty much any nongovernment business) already know all too well: You can’t necessarily just jack up your prices when your costs go up or when you need money.

Another lesson the Postal Service might want to take away from this: Have a Plan B. When asked by Multichannel Merchant in mid-September what would happen if the PRC were to reject the proposed exigent rate case in totality, a USPS spokesperson admitted, “We really haven’t thought of that.”

No doubt the ruling was a blow to the money-losing USPS, but in the long run it’s a good thing for the agency. It saved the Postal Service from another hefty drop in volume that it would not have been expecting.

It’s true: Many Postal Service officials did not believe an exigent 5.1% rate hike would cause catalog mail volume to drop. One USPS executive even said as much to me at an industry dinner two months ago; I was so shocked that I nearly choked on my Caesar salad.

Come on, catalog volume is falling steadily: It peaked in 2007 with 19.6 billion catalogs mailed and then slipped to 16.9 billion in 2008 and 13.6 billion in 2009. Yes, some of that’s due to the recession, but most of it is a result of the massive 2007 postal rate hike. A 2011 increase would have been devastating.

So while the USPS may not be too pleased with the PRC’s decision, I’d say both catalogers and the Postal Service dodged a bullet when the exigent rate case was denied.

Speaking of catalogs, what do you make of J.C. Penney’s decision to stop mailing direct response catalogs next year? (See page 7 for details.) The headline of my Sept. 30 blog post “Is J.C. Penney Nuts?” sums up my take on the move. Several people agreed with me on the blog, but I’m sure many others think Penney is doing the right thing, and that this is the way of the future.

Time will tell, but I believe quite a few J.C. Penney customers still like to order via catalog/call center. And those folks may not appreciate the retailer’s attempts to force them to shop online or go to the stores with the “look books” it’s mailing instead of real catalogs. I predict Penney will go back to more traditional catalogs — maybe even by 2012.

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