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When Perception Is Worse Than Reality

Retailing: Smaller catalog firms and direct marketers are worried the public doesn't know they're still in business.

August 15, 1997|JAMES F. PELTZ | TIMES STAFF WRITER

Catalog and other direct-marketing retailers, especially smaller ones, complained Thursday that business is falling off because the public believes it can't make shipments due to the strike at United Parcel Service of America, when, in fact, deliveries are still being made.

"Our phones have stopped ringing because there's a perception out there that nothing is moving," said Jim Zimmerman, president of Cottura, a Los Angeles importer of painted ceramics that sells about a third of its merchandise by catalog. "And you can't sell unless somebody calls you up."

Cottura and other direct-mail merchandisers have made other arrangements to ship their goods, in most cases with only slight delays. But the much-publicized scramble by businesses to work around the UPS walkout has inhibited the public's desire to order by phone, they said.

And the concern among catalog firms has become so pronounced that their trade organization, the Direct Marketing Assn., is placing ads in several major newspapers today to reassure customers that they can keep ordering without fear of having shipments interrupted.

The ad is signed by 150 companies, including Spiegel, Ross-Simons, Talbots, Lillian Vernon and Starbucks.

The DMA said a survey of its members showed that more than half had suffered reduced orders primarily because "continuous media attention on 'disaster' stories is clouding the reality of businesses' ability to meet customer needs."

"The perception is the problem, not the deliveries," said Connie Heatley, the association's senior vice president.

UPS was hit by a nationwide strike Aug. 4 when the Atlanta-based company and the Teamsters union, which represents 185,000, or 55%, of UPS' domestic work force, failed to reach terms on a new contract.

UPS, which normally moves about 12 million parcels daily, dominates the ground-delivery business, with about 70% of the market. That forced businesses of all stripes to place their packages with other shippers--and their scramble made headlines as the strike progressed.

After the walkout began, several direct-mail firms--among them L.L. Bean, J.C. Penney, Lands' End and J. Crew--bought their own advertising to head off the public's

perception that the strike has paralyzed the shipping market altogether.

Lands' End, the big sportswear company, has been running newspaper and radio ads for several days to remind consumers that it's still shipping. The reason: "We have noticed that our call volume has been down since the strike began," said spokeswoman Charlotte LaComb. She declined to quantify the drop.

Some major direct marketers said their phone order volumes are normal. For instance, Amazon.com, a Seattle-based online bookseller, reported business as usual.

Spiegel likewise said its phone order traffic is currently normal, "but we share the concern that if customers believe that they can't order [and get products shipped], that they won't," spokeswoman Allison Scherer said.

"The issue is not the nondelivery of orders, but some people perceive that," said David Hochberg, a vice president at Lillian Vernon's headquarters in New Rochelle, N.Y. "We're shipping like we normally do," using the U.S. Postal Service and other carriers, he said.

For some smaller firms, though, the public's perception has turned into an ugly business reality.

Phone orders have plunged 35% at Performance Products, a Van Nuys-based firm that sells replacement parts and accessories for Porsches, Toyotas and other vehicles, said President Ron Rowen.

"And it's not because we haven't come up with alternatives to shipping; we have," he said.

Rowen said he's been forced to temporarily lay off 15 of his firm's 65 full-time workers because the drop in orders means "we just don't have work for them." Moreover, the decrease already has meant a loss of about $500,000 in sales for Performance Products, which normally posts annual sales of $20 million, Rowen said.

Cottura's Zimmerman said his firm usually gets between 200 and 400 phone orders a day; lately, he's been getting about 10. "It's affecting my cash flow," he said. "I have to do payroll tomorrow and I'm losing up to $20,000 a week in sales."

Zimmerman said he's not panicking, though. Cottura also operates stores in Century City and Newport Beach, and he sells ceramics to other retailers.

"Luckily, I'm diversified," he said, "so I'm not laying anybody off yet."

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