Catalog Postal Rates to Rise 2.3% - Multichannel Merchant

Maybe the U.S. Postal Service is finally trying to give catalogers a break. The USPS announced Feb. 10 that price increases for Standard Mail Flats — the category affecting most catalogers — would stay below the Consumer Price Index (CPI), or rate of inflation.

The average increase for the Standard Mail Flats is 2.3%, says USPS spokesman David Partenheimer, while the average rate hike for Carrier Route Flats is 4.3%.

Postal rate hikes are now capped to the CPI, which was 3.8% for 2008. The 2.3% increase, which takes effect May 11, is higher for catalogers than last year’s average of 1%, but less than 2007 when rates rose 20% to 40%.

Chris Bradley, president of bedding merchant Cuddledown, says he’s pleased with the relatively low increase, which he attributes in part to the work of the two-year-old trade group American Catalog Mailers Association.

ACMA executive director Hamilton Davison agrees, noting that the perception in Washington is that “catalogers fared much better than others. Our initial assessment is that catalogers got an increase about 1% lower than those levied on other mailers.”

Still, mailers such as David Kravetz, cofounder/catalog and Web team leader for food gifts cataloger Fairytale Brownies, view the increase as “more bad news” for catalogers. How will it affect Fairytale’s business?

“We’re just now starting to project for the fall 2009 circulation, so it’s a little early to tell what we’ll be doing as far as the overall numbers,” Kravetz says. But the cataloger has been aggressively looking to reduce mailing costs.

Kravetz says the company will take a close look at prospecting to cut back on the poor performance lists; it might go with four catalogs in 2009 instead of five; and it will consider flat or reduced circulation to concentrate on profitability rather than growth for the next year.

Indeed, any increase in this economy is potentially crippling, Bradley says. Consumer confidence and spending are at all-time lows, and catalogs need lower costs to start prospecting again.

“We’re all cutting our budgets, and so are most of our suppliers, but the USPS is still unable to get its costs under control,” Bradley says. “I expect that this increase will contribute to the decline in catalog mail volume that we’ve seen since the big [postal rate] increase in 2007.”

It seems that the U.S. Postal Service is trying to give catalogers a break. The USPS announced Feb. 10 that price increases for Standard Mail Flats—the category affecting most catalogers—would stay below the Consumer Price Index (CPI).

According to USPS spokesman David Partenheimer, the average increase for the Standard Mail Flats is 2.3%, while the average rate hike for carrier route flats is 4.3%. The price of a first class stamp will go up 2 cents to 44 cents. All postal rate increases announced take effect May 11.

Postal rate hikes are now capped to the CPI, or rate of inflation, which checked in at 3.8% for 2008. The increase for catalogers is higher than last year’s average of 1%, but significantly less than 2007 when rates rose 20%-40%.

John Rogers, vice president of multichannel marketing for outdoor gear and apparel cataloger/retailer The Orvis Co., says he is encouraged by the modest increase. “Not only was it less than I had been advised to anticipate, but it suggests to me the USPS is beginning to realize that placing the full burden of budgetary shortfalls squarely on the backs of direct marketers is not a winning long-term strategy.”

Chris Bradley, president of bedding merchant Cuddledown, says he’s pleased with the relatively low increase, which he attributes in part to the work of the American Catalog Mailers Association. But any increase in this economy is potentially crippling, he adds: “It’s still an increase, and it comes at the worst possible time for catalogs.”

Consumer confidence and spending is at an all time low, “and catalogs need lower costs in order to get our prospecting going again,” Bradley says. “We’re all cutting our budgets, and so are most of our suppliers, but the USPS is still unable to get its costs under control. I expect that this increase will contribute to the decline in catalog mail volume that we’ve seen since the big increase in 2007.”

The USPS in 2008 lost 9 billion pieces of volume. Catalog-dominated service categories were down nearly 25% for the year ended Sept. 30, 2008. This news in part fueled Postmaster General John E. Potter’s Jan. 28 proposal to pursue five-day mail delivery.

David Kravetz, cofounder/catalog and Web team leader for food gifts cataloger Fairytale Brownies, looks at the increase as “more bad news” for catalogers. How will it affect Fairytale’s business?

“We’re just now starting to project for the fall 2009 circulation, so it’s a little early to tell what we’ll be doing as far as the overall numbers,” Kravetz says, noting that the mailer has been aggressively looking to cut catalog costs.

“Postal rates going up—what else is new?” says Jady Regard, “chief nut officer” for Cane River Pecan Co. “I guess we will dump even more money into online marketing initiatives.”

Cane River Pecan may not be happy about the rate hike, but Regard says that the mailer will probably still follow through with plans to increase its mailing by 10% to 20% for two reasons.

First of all, “we are still such a small company, and we find direct mail to be the best way to grow our brand and family of products,” Regard notes. “Second, I don’t think the increase is enough to make that big of a difference to our size mailing.”

Cane River Pecan is a small cataloger, mailing 250,000 books per year. “A much larger catalog mailer may feel much different,” Regard says. “But we will look at the size of the catalog we send, the page count and the overall weight of the catalog.”