I’m optimistic that 2009 will be a better year for multichannel merchants, even though the experts say our recovery will be gradual. There are bright spots within given merchandise categories, such as religious goods, pet supplies and hobbies — all of which are doing well — just to name a few.
There are other reasons for my optimism, as well. Selling expense-to-sales ratios should stabilize, perhaps even decline, due to three main factors: postage, paper prices and response rates.
Postal rates will remain stable in 2009 with no large increase on the horizon.
Paper prices are expected to decline, because demand is soft and the dollar is more favorable with respect to foreign markets.
We’re no longer seeing frequent paper price increases, and it’s quite possible that they’ll start to decline early this year.
Paper and postage costs combined represent 60 percent to 80 percent of total selling expenses. We should see an increase in response as consumer confidence improves. This will have a favorable impact on selling expense-to-sales ratios.
With all that in mind, here are my suggestions when planning catalog circulation for this year:
1. Absolutely continue prospecting. Don’t stop. Stay focused on growing your 12-month buyer file. If the count declines, it’ll be difficult and costly to reverse that trend.
Catalogers who’ve been cautious while sticking to a plan of growing, or at least maintaining, their 12-month buyer files have been impacted less by the downturn. If your 12-month buyer count declines, sales also will decline by approximately the same percentage.
2. Prospect vs. housefile circ. Control the ratio of prospecting to total circ, being careful not to cut too much. Mailings to prospects should represent approximately 60 percent of your total circ depending on the season. Don’t get overly aggressive by increasing the ratio of prospecting to housefile mailings. At the same time, avoid cutting the amount of prospecting you do and relying too heavily on your housefile.