Secrets of the Catalog Master
Vol. MMVII No. 6 October 2007
(Continued--page 2)
The Fourth Quarter 2007 Economic Outlook
As of early October, continuing caution is wise due to the fluctuating economic performance indicators. Consumer confidence and corporate confidence have both dropped sharply in the last month. The subprime mortgage difficulties are, in fact, much deeper than first thought and the effects on the international credit markets continue to be significant. The tear in the private equity bubble that we mentioned last issue has, to some degree, spread as an increasing number of deals are being refinanced, postponed or abandoned due to the higher cost of money and the lower tolerance for risk.
The political climate is a miasma domestically and globally with the U.S. dollar weakening daily. Congress and the administration are actively ‘spin controlling’ the economic outlook until the primary and national elections. The reality of a severely battered economy is going to surface at some point.
My view for the fourth quarter has not changed much from last month. The holiday season will be constrained for consumers. Less money will be spent this year as the heating season forecasts mention record-setting costs for petroleum products. The housing market sinks further and, yet, consumer spending is up. Go figure. There is nothing to justify this increase in spending.
Given the fundamentals of the overall economic performance, the stock market should not be as robust, and I believe a serious second correction is building and will occur at some point in the near-term.
The balance of the year, however, bodes reasonably well for the economy. I will remain with my belief in a 2% to 3% growth in the economy, when all is done. That is less than half of where we were in the last two years and points to continuing pressure in 2008. Still, I would not pull back on mailings or prospecting in the fourth quarter or in the first quarter of 2008. Many of our catalog companies are projecting 6 percent increases for 2007 and, while not robust, these are, nonetheless, positive gains. Follow the money.
Signs of Regional Stability or Status Quo
Region One (CT, ME, MA, NH, RI, VT)
Region Two (NY, NJ, CT, PR, VI)
Region Four (OH, KY, PA, WV)
Region Six (GA, AL, FL, LA, MS, TN)
Region Seven (IL, IN, MI, WI, IA)
Region Nine (MN, WI, ND, SD, MT, MI)
Region Ten (KS, CO, MO, NE, NM, OK, WY)
Region Twelve (CA, UT, AZ, NM, OR, WA)
Slower (Individual states)
Region Three (PA, NJ, DE)
Region Five (KY, MD, TN, VA, NC, SC)
Region Eight (MO, IL, IN, KY, TN, LA, AR)
Region Eleven (TX, LA, NM)
Evaulate individually
Louisiana
Mississippi
The Fourth Quarter 2007
Circulation and Prospecting Outlook and Recommendations
Synopsis
The short-term economic outlook for the catalog industry remains positive. The intermediate-term outlook remains positive for the fourth quarter of 2007 and the long-term outlook into the first half 2008 remains positive. While positive, the outlook continues to show slower growth than that seen over the last two years.
Prospect as an Investment
For planning purposes, turn your attention to the 2008 circulation planning. Even with the signs of slowdown in the economy and in overall business, we recommend maintaining normal strategies for circulation and investment prospecting plans, but we remain with our recommendation of not more than 10 to 15 percent increases. The economy is likely to slow further in the fourth quarter and into the first half of 2008, but there are, as yet, no valid reasons for reductions in either prospecting or customer circulation, or both, in the first quarter of 2008. We remain comfortable with modest increases in prospecting levels, particularly where there pockets of concentrated niche-related prospects can be found. Test lists!
Nation At A Glance
We will stick to our mailing recommendations extending into 2008. We caution against decreasing prospecting or customer mailings except for normal hygiene and mailing frequency improvements. Do not fall into the trap of reducing mailings; the end result is always diminished customer acquisition performance. Changes are in bold.
| State |
Mailings |
|
|
| Alabama |
Normal |
| Alaska |
Normal |
| Arizona |
Normal |
| Arkansas |
Normal |
| California |
Normal |
| Colorado |
Increase |
| Connecticut |
Increase |
| Connecticut-Fairfield |
Increase |
| 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 |
Increase |
| Kansas |
Normal |
| Kentucky—East |
Normal |
| Kentucky—West |
Normal |
| Louisiana—North |
Evaluate locally |
| Louisiana—South |
Evaluate locally |
| Maine |
Normal |
| Maryland |
Increase |
| Massachusetts |
Increase |
| Michigan |
Normal |
| Michigan—Up.
Pen. |
Normal |
| Minnesota |
Increase |
| Mississippi—North |
Evaluate locally |
| Mississippi--South |
Evaluate locally |
| Missouri—North |
Normal |
| Missouri—South |
Normal |
| Montana |
Normal |
| Nebraska |
Increase |
| Nevada |
Increase |
| New
Hampshire |
Normal |
| New
Jersey—North |
Increase |
| New
Jersey-South |
Increase |
| New
Mexico—East |
Normal |
| New
Mexico—West |
Normal |
| New
York |
Normal |
| North
Carolina |
Increase |
| 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 |
Increase |
| Wisconsin—South |
Increase |
| Wyoming |
Normal |
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