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Less Mail on Order : Paper and Postage Hikes Are Trimming Catalogue Industry


Tough times haven't yet forced Miles Kimball Co. to drop the rotary nose hair clippers from its 60-year-old mail order catalogue. But the company has made other changes.

It has slashed by 16% the number of pages in its holiday catalogue, featuring the clippers and other favorites such as the musical Merry Christmas baseball cap. And the Oshkosh, Wis.-based company is mailing out 10% fewer catalogues than in 1994.

Many of the nation's 8,000 or so mail-order companies are taking similar steps, hoping to offset a surge in paper prices and postal rates that have increased the cost of producing and mailing catalogues by as much as 75%. They are shrinking the size of their catalogues and using lighter-weight paper. They are sending fewer catalogues to non-customers, a drastic step, as that is the chief way mail-order companies solicit new business.

For consumers, the result has been a noticeable drop in junk mail. The U.S. Postal Service reports that the volume of third-class mail slid nearly 2% at the end of March, compared to the same two-week period in 1994, the latest figures available. People in the catalogue business attribute the dip in advertising mail to fewer catalogue mailings.

"The industry really put on the brakes in March," said Terry A. Tevis, president of R. R. Donnelley & Sons' Sterling Group, the nation's leading catalogue printer. He doesn't expect the situation to improve before next June.


The cost increases are forcing mail-order firms to reach prospective customers in new ways. Lands' End, a large marketer of casual clothing, is trying to attract new business with television commercials. Viewers can order a catalogue or merchandise by calling a toll-free number that appears during the TV spot. This way, the company sends catalogues to people most apt to become customers.

At Miles Kimball, a stodgy catalogue owned by the Toronto Star, innovation means bringing the company into the 1980s with introduction of a toll-free phone number customers can call to place orders. The 800 number appears on only half the catalogues because the company's phone center isn't large enough to handle more calls.

"We sell low-priced, low-end merchandise," said Michael Muoio, the catalogue company's president. "My predecessors didn't think we needed one. The business is changing."

The double-whammy increases in paper and postage costs hit the catalogue business at a time when overall growth was slowing. The industry is no longer racking up the double-digit sales gains it enjoyed in the mid- to late-1980s when the economy was booming. Last year, consultants say, catalogue sales grew between 7% and 8%.

Peter Ulin, managing director of the Boston-based investment firm Ulin & Holland, expects catalogue sales growth to be flat in 1995. Others in the industry are predicting growth this year of between 3% and 6%.


The dismal economics have led some firms to drop whole categories of slow-selling merchandise. Apparel is a leading victim. Jos. A. Banks Clothiers has dropped women's clothing, and Fingerhut, a general merchandise catalogue, has eliminated most apparel, keeping only a few items such as boots.

Current, a Colorado-based stationery and paper goods catalogue, has eliminated two catalogues, one with a religious theme and another featuring school-related items. A spokeswoman said the two catalogues were "in a growth mode" but that they had to be dropped to lower costs.

Customers that buy infrequently are getting dropped.

"The marginal customers are getting less books or no books," said David Hochberg, a vice president at Lillian Vernon. "The economics isn't there."


Illinois mail-order marketing consultant Arnold Fishman said there is a danger in reducing mailings to occasional customers and to prospects obtained from rented mailing lists.

Mail-order firms lose between 10% and 20% of their customers each year on average, he said. "In two years, their base is gone," he said.

Nonetheless, company representatives say, the current round of cuts is necessary because mail-order firms can't raise merchandise prices to cover increased costs. If they did, they would risk losing customers to retail chains.

Bad times have brought out bottom fishers looking to invest in failing catalogues that could benefit from a capital infusion. Genesis Direct, a New Jersey firm headed by direct-mail millionaire William Struhl, has announced plans to buy as many as 50 catalogues. It is currently closing its first deal with the owners of a small children's products catalogue.

Struhl said he can operate efficiently because his catalogues will share the same telemarketing, accounting and other functions.

Mail-order consultants say that many catalogues will probably go under, particularly those with annual sales of less than $20 million. They say the shakeout will benefit survivors by thinning a marketplace that had become cluttered during the 1980s boom.

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