After Hurricane Katrina devastated the Gulf Coast in late August, marketers had to quickly adjust their mail plans to avoid dropping catalogs into flood-ravaged areas and decimated neighborhoods.
Ceasing mailings into the region was not merely a courtesy; the U.S. Postal Service announced Aug. 31 that it was not accepting any standard (nonletter) or periodicals mail addressed for delivery to several zip codes in the hardest-hit areas of Louisiana and Mississippi.
Even after delivery is resumed there, though, it will be months until the area returns to any semblance of normalcy. So marketers are further adjusting their fall/holiday mail plans.
“Like everyone else we were listening and following and tracking what the Postal Service was telling the mailing industry last month,” says Mike Muoio, president of Oshkosh, WI-based gifts and housewares cataloger Miles Kimball. “We don’t intend on producing books for any affected zones for the rest of this year.”
As of early September, Boca Raton, FL-based women’s apparel mailer Boston Proper was “still working out the final details [regarding fall catalog mailings] at the printer, as things are still being evaluated based on postal delivery points,” says Doug Brown, vice president of circulation. “Some decisions are based on day-by-day events and changes by the Postal Service, and others are based on geographical distribution. Both our printer and list house will stay on top of things as they happen.”
While mailers should indeed discontinue mailings into the affected areas, “it’s critical to prospect elsewhere,” says consultant Don Libey, president of Cherry Hill, NJ-based Libey and Associates. Expanding prospecting efforts in the Northeast, the Midwest, and the Southwest — all areas that have shown improved numbers during the past year — will help make up for a lack of business from Gulf Coast area customers.
Reducing circulation is a surefire way to reduce long-term profitability, Libey continues. It took some companies more than two years to recover from a lack of prospecting after the 9/11 terrorist attacks, he recalls. “Prospecting is a constant strategy that must be adjusted and logically addressed,” he says. “But it does not stop.”
Beyond circulation changes, many catalogers are worried about Katrina’s impact on the already-volatile oil market. “Our biggest concerns are fuel costs and what that may mean to the catalog industry,” Muoio says.
Some believe that direct marketers could benefit from rising gasoline costs, if they encourage consumers to shop from home rather than drive to the mall. But Muoio believes that shoppers will cut back on their holiday spending to compensate for increased fuel and energy costs.
“In some ways, this was worse than 9/11,” he says, in that the effect on oil and gas prices may well linger through the rest of this year and into 2006. “We might have to start thinking of Katrina as a wake-up call for energy policy issues.”
And if fuel prices remain high, parcel carriers may adjust their fuel surcharges, which are based on government indices, accordingly. Atlanta-based United Parcel Service, for one, is monitoring both fuel supply and price, says spokesperson Norman Black.
So is Memphis-based FedEx. The parcel carrier did take a step to provide short-term aid to some customers. After Katrina hit, FedEx froze its 16.7% surcharge on freight for LTL (less-than-truckload) shipments for 30 days. “Due to fuel sales volatility, those rates have been temporarily frozen until we can determine when refineries damaged in the Gulf Coast region will get back up to speed,” says spokesperson Jim McCluskey.