Secrets of the Catalog Master
Vol. MMVIII No. 4 May 2008
(Continued--page 3)
The Third Quarter 2008 Economic Outlook
The economic outlook continues to deteriorate as the third quarter looms. All regions of the country continue to experience a generalized economic slowdown with little growth in GDP. Inflationary pressure related to energy and food is serious and is creating consumer havoc.The credit/mortgage/housing difficulties have spread deeper into the market with many families facing loss of their homes if jobs are lost due to the slowdown. This could escalate if the economy contracts further./p>
Still, within the continuing and deepening troubled economic outlook, the evidence is that the multichannel and direct marketing industry performs better than retail, and business-to-business markets are delivering modest performance for the year.
If we look at historical economic events, the cycles are normally mixed; that is, if the U.S. has been in a down-cycle, Europe has often been in an up-cycle. This cycle appears to very much global; the down-cycles are in synch in most of the “First world.” Where we are seeing up-cycles is in the emerging economies, such as China, and those cyclical events tend to produce shortages and inflation, and that is exactly what is happening in China. In fact, we hear of numerous situations where business-to-business marketers are seeing huge increases in prices coming from China, all due to this cyclical shortage phenomenon caused by counter-cyclicality in the economic cycles.
And the economic cycles are not caused only by demand factors. The value of trading currencies is very much a primary contributing factor, as is interest rate policy. As the interest rate in the U.S. declined, so did the value of the dollar (and this administration has not exactly been concerned by the value of the dollar). The low dollar value, coupled with numerous other economic factors, produces a very complex interrelationship among the world economies; however, it suffices to say it is a global economic result that is not favorable to the U.S. economic performance.
Signs of Regional Stability or Status Quo
None
Flat or Slower
Region One (CT, ME, MA, NH, RI, VT)
Region Two (NY, NJ, CT, PR, VI)
Region Three (PA, NJ, DE)
Region Four (OH, KY, PA, WV)
Region Five (KY, MD, TN, VA, NC, SC)
Region Six (GA, AL, FL, LA, MS, TN)
Region Seven (IL, IN, MI, WI, IA)
Region Eight (MO, IL, IN, KY, TN, LA, AR)
Region Nine (MN, WI, ND, SD, MT, MI)
Region Ten (KS, CO, MO, NE, NM, OK, WY)
Region Eleven (TX, LA, NM)
Region Twelve (CA, UT, AZ, NM, OR, WA)
The Third Quarter 2008
Circulation and Prospecting Recommendations
Synopsis
The short-term economic outlook for the catalog industry in the third quarter of 2008 continues weakly positive. The intermediate-term outlook is turning to weakly positive for the fourth quarter half of 2008 and the long-term outlook for 2009 is also moderating to weakly positive.
Within the direct marketing channels, I see overall catalog and mailing performance growth at the 2-3 percent level and overall online marketing growth at the 5 percent level. This is a slightly reduced expectation from earlier estimates.
Investment Prospecting
For the third and fourth quarters, we continue to encourage careful review of your investment prospecting plan and your attempts to remain in the market for new customers. It is fair to say the die has been cast for 2008 and the outcome is likely to be a slow year. It is time to begin diligent analyses of financial performance—under a variety of economic scenarios—for 2009 while attempting to productively remain in the market for new customer acquisitions.
Looking ahead to the third and fourth quarters, I would continue to encourage a modest expansion in prospecting and a solid contact strategy to the customer files.
Nation At A Glance
There are no recommended changes for the balance of the second quarter mailings. Our recommendations remain at “Normal Mailings” nationwide.
| State |
Mailings |
|
|
| Alabama |
Normal |
| Alaska |
Normal |
| Arizona |
Normal |
| Arkansas |
Normal |
| California |
Normal |
| Colorado |
Normal |
| Connecticut |
Normal |
| Connecticut-Fairfield |
Normal |
| Delaware |
Normal |
| District
of Columbia |
Normal |
| Florida |
Normal |
| Georgia |
Normal |
| Hawaii |
Normal |
| Idaho |
Normal |
| Illinois—North |
Normal |
| Illinois—South |
Normal |
| Indiana—North |
Normal |
| Indiana—South |
Normal |
| Iowa |
Normal |
| Kansas |
Normal |
| Kentucky—East |
Normal |
| Kentucky—West |
Normal |
| Louisiana—North |
Evaluate locally |
| Louisiana—South |
Evaluate locally |
| Maine |
Normal |
| Maryland |
Normal |
| Massachusetts |
Normal |
| Michigan |
Normal |
| Michigan—Up.
Pen. |
Normal |
| Minnesota |
Normal |
| Mississippi—North |
Evaluate locally |
| Mississippi--South |
Evaluate locally |
| Missouri—North |
Normal |
| Missouri—South |
Normal |
| Montana |
Normal |
| Nebraska |
Normal |
| Nevada |
Normal |
| New
Hampshire |
Normal |
| New
Jersey—North |
Normal |
| New
Jersey-South |
Normal |
| New
Mexico—East |
Normal |
| New
Mexico—West |
Normal |
| New
York |
Normal |
| North
Carolina |
Normal |
| North
Dakota |
Normal |
| Ohio |
Normal |
| Oklahoma |
Normal |
| Oregon |
Normal |
| Pennsylvania—East |
Normal |
| Pennsylvania—West |
Normal |
| Puerto
Rico |
Normal |
| Rhode
Island |
Norma |
| South
Carolina |
Normal |
| South
Dakota |
Normal |
| Tennessee—East |
Normal |
| Tennessee—West |
Normal |
| Texas |
Normal |
| Utah |
Normal |
| Vermont |
Normal |
| Virgin
Islands |
Normal |
| Virginia |
Normal |
| Washington |
Normal |
| West
Virginia-East |
Normal |
| West
Virginia-West |
Normal |
| Wisconsin—North |
Normal |
| Wisconsin—South |
Normal |
| Wyoming |
Normal |
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