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2005 CATALOG PRINTING Outlook -- Still Making the Sale

December 2004

6Perry Judd's
Waterloo, WI
$98$297

7Cenveo
Englewood, CO
$86$1,728

8Brown Printing
Waseca, MN
$80$400

9Spencer Press
Wells, ME
$75$83

10Consolidated Graphics
Houston
$70$708

Sales figures are based on above printers' self-reported total and market segment breakdowns.


* RR Donnelley's figure for this market segment also includes revenues from publications and ad inserts.


Following Amazon.com's lead from the 2000 holiday season, eBay Inc. recently attested to the enduring value of printed Catalogs by distributing its own wish book. This move arguably is more significant because the eBay culture is so dependent on the Web. Also, the catalog is being issued at a time when the online shopping experience has matured and high-speed access is commonplace.

According to the "2004 Abacus Annual Catalog Industry Trend Report," only 43 percent of sales attributed to a catalog mailing were conducted through a catalog call center in the past year, with the remaining sales being recorded on Websites and in retail stores. Existing customers, in particular, are more likely to use a Website or store to complete purchases, with a third (33 percent) of their catalog-driven purchases occurring online and almost a quarter (24 percent) placed in a store.

Missing the Boat

Why should printers care how the sale is completed as long as the printed catalog continues to play an integral role? As the report points out, "by only measuring their call center sales, marketers may be under-valuing their catalog mailings by up to 50 percent and making the wrong mailing decision on up to one third of rental lists."

It is in their own best interest for catalog printers to work with their customers to develop a means for accurately gauging the value of catalog mailings. Catalogers need a true assessment of sales resulting from traditional mailings as they increasingly adopt online marketing opportunities such as e-mail campaigns, search site tie-ins and online affiliations.

The longer term competitive concern is whether increased comfort with online order placement and the ever-growing level of broadband connectivity will lead shoppers to bypass the printed catalog and immediately call up a Website.

In 2000, conventionally completed catalog order sizes were 13 percent higher than online orders, notes the Abacus industry trend report. Average order sizes have since converged, as consumers have become more comfortable with Websites and marketers have gotten more effective at up-selling and cross-selling online.

According to the report, the Tools category has seen the fastest growth in total purchases, rising 16 percent last year. Men's Products and Senior Products both saw 9 percent increases in sales, while the Gifts sector recorded a 7 percent growth in sales. Home Décor and Furnishings remained steady, while Apparel and Accessories experienced a 5 percent decline.

DoubleClick Inc. sponsored a related study—"The Changing Role of the Catalog for Multi-Channel Retailers"—that was conducted by the J.C. Williams consulting group. Among its key findings is that "the future of the catalog lies in. . .tailoring smaller versions of catalogs to multi-channel customers and high-value customer segments, while leveraging customer data."

Sending out smaller, versioned catalogs also mitigates some of the concern about paper and postal costs, but these issues are still likely to impact the outlook for the market. Paper availability actually may end up being the bigger problem, but printers don't seem to have any horror stories as yet. One bright spot in the postal arena is the anticipated extension of the rate discount for co-palletized mail to catalog mailings (see sidebar, "Printers in Full Court Press").

Save a Tree

On another front, The Direct Marketing Association (DMA) reports the catalog industry as a whole has been experiencing renewed scrutiny of its commitment to "earth-friendly" practices. This includes encouraging recycling of catalogs (which the association chiefly addresses through www.recycleplease.org) and buying paper that comes from certified, sustainably managed forests.

RR Donnelley is one printer that has jumped on the latter issue. Initially it achieved "Chain of Custody" certification from the Forest Stewardship Council (FSC) at two of its plants. The company continued this effort and now has received "Multi-site Chain-of-Custody" certification for all of its U.S. magazine, catalog, retail insert and directory printing plants.

"RR Donnelley has achieved chain-of-custody certification on a scale that no other printer has achieved," claims John Paloian, president, RR Donnelley Group Publishing and Retail Services.

With this certification, RR Donnelley customers will now be able to use the FSC-trademarked "checkmark and tree" logo on printed materials as a means to demonstrate their commitment to the environment when they use FSC-certified paper. The printer worked with Scientific Certification Systems, an independent, third-party evaluation and certification service.

"Favorable environmental practices continue to be of interest and importance to many of our customers, across each of our major market segments," says George Zengo, president, Catalogs and Retail Inserts, at RR Donnelley. "This certification essentially confirms that RR Donnelley has the appropriate paper tracking and auditing procedures in place to ensure that the specific rolls of paper that are designated to be used on a specific printing job, are indeed the exact rolls that were used.

"This, in turn, allows our print customers to use the appropriate FSC environmental designation on their finished printed piece, if they have obtained the stock from a source where this is warranted," Zengo continues. "Having these tracking systems in place also provides our customers with the data to back up any recycling content claims that may also be listed on their finished products."

Given that catalog and publication printing tend to be linked, the accompanying sidebar highlights other steps being taken by major printers to address key trends in both markets.
 

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