USPS: IT COULD BE WORSE

Postmaster general counting on catalogs, parcels for growth Already unpopular among mailers thanks to a substantial postage increase looming for January, the U.S. Postal Service at press time was expected to post its first annual loss in six years.

But Postmaster General William Henderson tried to put a positive spin on things in his state of the USPS address during the National Postal Forum in Anaheim, CA, on Sept. 11. Referring to his late August announcement that the USPS would post a $300 million loss for its fiscal year closing at the end of September, he said, “We could easily have lost $1.5 billion or more.”

Henderson cited $400 million in unanticipated labor costs, a $375 million surge in fuel costs, and another $200 million-$300 million in higher workers’ compensation costs as the primary causes for the USPS shortfall this year.

But he is bullish on advertising mail – including catalogs – and parcels, which have increased due to the growth in e-commerce. “Our opportunities in packages are just huge,” he said in a live Sept. 12 interview in which he answered pretaped questions from the chief executives of several large corporations. Henderson predicted that catalog customers will eventually be able to send back returns by giving the packages to their letter carriers. The carriers, in turn, would swipe the packages with a wand, instantly transmitting to the cataloger information about the item being returned.

Reducing catalog mailing costs In other sessions of the National Postal Forum, representatives from two major catalog printers and two U.S. Postal Service reps outlined ways they hope to work jointly to reduce how much it costs the agency to process flats, which include most catalogs. Reducing the USPS’s costs would ultimately reduce postal rates for flats.

As Donald O’Hara, USPS manager of classification and product development, pointed out, “Flats automation hasn’t been nearly as successful as letter automation.” That’s troubling when you consider, as Nick Barranca, the USPS’s vice president, operations planning and processing, pointed out, that flats volume has grown 28% during the past five years, compared to just 7.5% growth in letter volume. Processing 53 billion flats a year “makes our challenge so more compelling,” Barranca said.

The Postal Service’s flats automation plans include the ongoing deployment of automated flats sorting machines (known as AFSM-100s); standardization of productivity initiatives; the movement of flat mail to the most productive facilities; and ultimately, the use of delivery point barcodes to sequence all flats for more efficient postal delivery.

Clarence Banks, manager of logistics services for printer R.R. Donnelley, and Quad/Graphics director of postal affairs Joe Schick together head up the mailer side of a joint USPS/industry work group formed earlier this year to bring down rates for catalog flats. Banks says recent efforts to automate more flats have led from 56% of all flats being barcoded in 1998 to 62% in ’99: “Our mission is to identify industry- and USPS-related concerns that hinder the most efficient processes in flat mail.”

The Company Store truly believes in the value of its brand. In April the bedding cataloger, part of the Hanover Direct catalog stable, rolled out Company Kids, selling sheets, furniture, and decorative items for children’s bedrooms (see the New Catalogs department, p. 67). Now La Crosse, WI-based Company Store is leveraging its brand with another spin-off, At Home with the Company Store.

At Home mailed in September to 500,000 names from the Company Store’s house file, says Company Store president Anita Iodice. While the core catalog sells primarily duvets, pillows, sheets, and towels, At Home sells mostly hard goods, including Mitchell Gold sofas and chairs, accent tables, lamps, and armoires. At Home does sell a selection of beddng, window treatments, and towels as well, presented in a lifestyle format with the furniture.

At Home “is a natural extension of the business based on customer requests,” Iodice says. “We did test a few things, but requests for beds, nightstands, and chairs consistent with our style of bedding prompted the launch. Also, we’ve had a phenomenal response to rugs in the core catalog.” The cataloger won’t determine the frequency and size of future mailings until it can analyze response to the title’s debut.

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