siness
•
Some of
Group SAA's
catalogues.
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The increase invostage rates could force more direct-mail
companies to out-source their catalogues to "experts."
STEVE STEIN STAFF WRITER
THE DETRO I T J EWISH NEWS
THE ANN CHAPMAN COLLECTION
30
ir
he cost of mailing that birthday
card to your friend in New York or
that pizza-money check to your son
at college will be rising from 29 to
32 cents come Jan. 1.
While 3 cents here and 3 cents
there eventually will add up, most
people probably won't cut back on
their mailings following the first postage-rate increase
since February 1991.
But what about companies which rely on direct-
mail sales for their business? Will the 10-14 percent
increase in third-class (bulk) rates cause them to raise
prices or change their sales strategies?
Not if they're smart, says retail expert Fred Marx
of Marx Layne Marketing & Public Relations in
Farmington Hills.
"Now's the time many of these firms must rely
on experts because, combined with the postage-rate
increase, the cost of paper is rising," Mr. Marx said.
"Direct-mail companies either have to absorb the in-
creases or start relying on economies of scale.
"There is so much competition in the retail world
today that retailers are in no position to start raising
prices. Consumers want to pay less, not more."
One of the "experts" who could benefit from the
postage-rate increase is Steve Simons, president of Group
SAA Limited in Farmington Hills, one of the busiest pro-
ducers of direct-mail catalogues in North America.
`The postage-rate increase is going to produce more
out-sourcing of direct-mail materials from business-
es which have a difficult time doing them cost-effec-
tively," Mr. Marx said.
"Outside companies can do things like buy paper
in larger amounts, keeping costs down. It's tough to
`lose control' of something as important as putting to-
gether a catalogue, but more direct-mail companies
are doing it.
"Those companies which have already made the
investment of working with catalogue experts are go-
ing to benefit. Those which have not are going to find
themselves in trouble in an industry which already
is moving too fast."
Besides producing catalogues, Mr. Simons' com-
pany helps its clients reach their target group. That
service will become more valuable when the cost of
mailing catalogues goes up.
"A retailer can create a stunning catalogue, but
if it doesn't get into the right hands — consumers
who are buyers, not browsers — it's of little value,"
Mr. Simons said.
"People in the catalogue business are going to have
to be smarter now. There's been talk for three years
about the postage-rate increase, so that didn't come
as a surprise. The paper-rate hike snuck up on every-
body."
Terry Lyon, director of advertising for Ann Chap-
man Co., of Galena, Ill. which sells casual attire
through catalogues produced by Mr. Simons, says
the postage-rate hike won't affect her company.
"It's something you have to learn to live with in the
mail-order business," she said. "You have to roll with
the punches."
Lands' End, an international direct-mail seller of
casual clothing based in Dodgeville, Wis., also isn't
complaining.
"We hate to see our cost of business go up for any
reason. But it's been almost four years between
postage-rate increases and we view this increase as
a commitment from the U.S. Postal Service to keep
its costs under control and overhaul the present sys-
tem to make it simpler and more market-driven,"
said Lands' End chief executive officer William End.
Mr. Simons estimates his company has done about
100 catalogues since getting into the business about
15 years ago, but most have been produced in the last
five years.
Group SAA, which employs 30, has done catalogues
for several major colleges across the nation, along
with clothing, food and wallpaper companies. It does
photography work both on-location and in its office,
and the pages of its products are produced by com-
puter.
"Because of our lifestyle today, I see the catalogue
business continuing to grow," Mr. Simons said. "Both
parents work in many families, so there isn't much
time to go shopping.
"Our goal at Group SAA is to make catalogues as
attractive as possible because the pages are like the
front of a store. They are what attracts the consumer.
'e want to call our clients two weeks after their
catalogues are mailed and be put on hold because
their lines are jammed. That's the ultimate compli-
ment." ❑
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