LIVE FROM THE ANNUAL CATALOG CONFERENCE: Good News, Bad News

Chicago–The first-quarter data shows us that business is on the upswing–industrywide as well as for catalogs,” H. Robert Wientzen, president/ CEO of the Direct Marketing Association, reported during yesterday’s opening session here.

Drawing on information from the DMA’s most recent Quarterly Business Review survey, Wientzen said that catalog sales during the first quarter of this year were up 11% over the same period in 2003.

A further indicator of the strengthening health of the catalog industry is seen in increasing advertising spending among catalogers. According to the DMA’s Economic Impact study, catalog-related ad expenditures exceeded $15 billion in 2003, Wientzen said. That figure is projected to increase 4.7% compounded annually during the next four years, reaching $19 billion in 2008.

On the sales side, catalogers generated an estimated $133 billion in sales last year, said Wientzen. These sales are projected to grow 5.7% annually during the next four years, increasing to $175 billion in 2008.

It’s not all good news for catalogers, though. Legislation that could require marketers to collect remote sales taxes is still a threat, though most likely not this year. “While we think the [Senate Finance Committee] could hold a hearing on the so-called streamlined agreement in the next couple of months, we do not expect Congress or the administration to address this issue in an election year,” Wientzen said. The proposal for a streamlined sales tax agreement calls for mandatory collection of the sales taxes appropriate to the customer’s location, even if the catalog does not have a physical presence in that municipality or state.

A sizable postal rate hike is another looming threat. While it is encouraging that the U.S. Postal Service has put off a rate hike until 2006, Wientzen said, that increase could be in the double digits. “Certainly mail volume, which has been deteriorating, will impact the 2006 rate hike, since less volume ultimately means less revenue, which will mean higher rates,” he said.

The third major challenge for catalogers, he continued, is the public perception of the catalog industry as an environmental villain. Environmentalists and consumers have turned their attention to catalogers’ potential impact on endangered forests and their usage of post-consumer recycled paper.

“Companies may want to explore the possibilities of using more recycled-content paper in their catalogs and packaging,” Wientzen said. “We need to step up our endeavors to encourage consumers, businesses, and local governments to recycle paper-based products. This ultimately would benefit our industry because if people recycle more paper, then all paper-using industries, including catalogers, will have more post-consumer recycled paper.”

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