1 Catalog Industry Update Tom Foti David Mastervich April 14, 2010
Dec 24, 2015
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Catalog Industry Update
Tom FotiDavid Mastervich
April 14, 2010
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Agenda Background Product Challenges 2010-2011 Initiatives
Catalog Industry Update
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Product Performance $5.1 Billion Std. Flats/Carrier Route (~60% catalogs) 31% decline in volume since 2007
2006/2007 price increase Ongoing economic recession Accelerated migration to web
2010 YTD Still in decline Slightly below plan 12% below SPLY
2007 2008 2009 2010
Background
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Recent Activities USPS & Industry Collaboration
Dedicated Catalog business team Operational and Cost Containment Activity Product Development Activity
Growth Opportunities 2009 Summer Sale
Background
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No identification of catalogs Cost coverage challenges
Standard Flats = 82% Carrier Route = 145% Standard Flats & Carrier Route = 102%
Product Elasticity Competing market forces:
Customer need to control price USPS need for revenue USPS need (& regulatory requirement) to cover costs
Product Challenges
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USPS Catalog Priorities
Identify and manage catalogs as single product 2011 price change strategy Operational cost saving initiatives Incentive programs Marketing opportunities 2012 and beyond pricing and product strategies
2010 – 2011 Initiatives
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Identify and manage product as single product
Finalize definition of catalog Build capability to identify catalog on mailing
statement and in PostalOne Combine Standard Flats and Carrier Route
products Creates more accurate representation of the product and
use of product Maintain existing price structures Maintain existing makeup requirements Aligns products with future FSS optional preparation
2010 – 2011 Initiatives
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2011 Price Change Strategy
Recognize immediate financial organizational need to generate revenue
Working with industry to gain better understanding of product price elasticity
Strategy to address cost coverage issue with Standard Flats
2010 – 2011 Initiatives
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Operational Cost Savings Initiatives
FSS Implementation Operational FSS Mail Preparation Distribution productivity improvements
Implementation of mixed-class comail Identify and implement other preparation and
process improvements
2010 – 2011 Initiatives
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Incentive Programs
2010 Summer Sale 5-Month program: June – October 2010
Sale period: July – Sept Control months: June & October
Discount on incremental Standard Mail letters and flats volume above threshold Customer threshold = SPLY volume + 5% Discount = 30% Downward adjustment if June & October volume is below
threshold
2010 – 2011 Initiatives
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Incentive Programs
Proposed Weight Based Catalog Incentive Discount available only to those who meet/exceed volume
threshold Enables catalogers to increase page count without
increasing postage More pages => more sales = > better ROI and new customer
names Larger books are attractive to titles who need to feature a wider
breadth of assortment Catalogers indicate that merchandise assortment and relative
space should drive page counts Limited increased USPS operational costs
2010 – 2011 Initiatives
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Incentive Programs
Catalog Weight Based Incentive example:
2010 – 2011 Initiatives
Customer xyz Year 0 Year 1Carrier Route & Standard Flats Volume 1,000 1,000 Carrier Route & Standard Flats Weight (lbs) 250 350Avg Weight Per Piece (oz) 4.00 5.6Rebate CalculationsAvg Weight Per Piece Increase (oz) 1.60Avg Price for Add'l Weight 0.030$ Catalog Volume >3.3 oz 900Rebate Amount 27$
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Incentive Programs
Evaluate Potential Future Incentives Volume growth Volume commitment Prospecting Fulfillment Total customer value
2010 – 2011 Initiatives
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Marketing Opportunities
Catalogs and E-tailing…reaching customers beyond the web Target 35,000 pure-plays e-tailers (revenues > $3 million) Business has grown without benefit of the mail
Many have “hit a wall” Hungry for new growth solutions
Multi-channel strategy for multi-channel world Ultimately adds names to the 12-month file
Develop strategies to use usps.com to promote catalogs
2010 – 2011 Initiatives
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2012 and beyond product and pricing strategies
FSS Impacts Pricing and preparation in FSS zones Pricing and preparation in non-FSS zones
Catalog product Mixed product opportunities Product cost coverage strategy
2010 – 2011 Initiatives
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Questions?