Jack Rosenfeld’s Take on 2008: Play Good Defense

During the Jan. 29 DMA Catalog on the Road conference in Cambridge, Mass., Jack Rosenfeld, chairman of the multititle gifts cataloger Potpourri Group and former CEO of Hanover Direct, offered several tips and his overall take on catalogers’ best approach to what’s shaping up to be a difficult year ahead. “There are times to be offensive and times to get defensive,” he said. “Right now’s the time to play defense and hang in there.”

Among other tips, Rosenfeld suggested raising product prices, taking advantage of postal reform, backing off aggressive marketing by reeling in circulation, and looking for possible acquisitions or acquirers. Sharing experiences from his lengthy career and current work at the Potpourri Group, which mails such catalogs as The Stitchery, Nature’s Jewelry, its namesake and more, Rosenfeld reeled off the following:

1. Raise product prices: “As much as we wouldn’t like to,” Rosenfeld said, “we’re going to be forced to raise prices. Our costs are rising; paper’s going up; everything’s going up.”

2. Postal rates: The Postal Accountability and Enhancement Act of 2006 (postal reform) “was a wonderful thing to cap rates at the inflation rate,” Rosenfeld said. “It’s going to help us a lot going forward.”

3. Don’t be aggressive. The most important thing in a difficult environment, such as the possible inflation the country is headed for, is to not be aggressive. “The biggest mistake is to zig when you should zag,” Rosenfeld said. “This isn’t the time to ramp up circulation. I don’t agree that you shouldn’t still prospect. Do prospect. But if your business is having a difficult time, don’t be aggressive.”

4. Get larger by buying or selling. With costs going up, larger companies have greater advantages over smaller ones, he pointed out. “Paper, printing and outsourcing are all cheaper when you’re larger,” he said. “If you’re large, consider buying a company. If you’re small, consider selling.”

5. Consider retail. “The retail business is tough,” Rosenfeld said, “but we as catalogers have to consider it now. Some catalog concepts fit retail; it’s been done successfully, and we do have to look at it.”

6. Co-mail. With all the tremendous discounts to be had from today’s postal system, “you have to co-mail with a lot of volume,” Rosenfeld said. “You may have to change mail dates and other things. We’ve actually solicited other mailers — mostly smaller ones — to co-mail with us, and we’ve saved a huge amount of money.”

7. Consider mailing a slim jim. Although a show of hands revealed almost none of the 100 or so catalogers in attendance mailing slim jims, Rosenfeld urged them to reshape their books to save in postage and paper. “You can save up to 35 percent depending on how much your presort discounts are,” he pointed out, “particularly with sale catalogs.”

At the same time, he noted, if your catalog isn’t making postal discount minimums, consider adding pages to your catalog.

8. Operations and fulfillment savings. To multichannel marketers who farm out their fulfillments, Rosenfeld advised them to negotiate for better rates. “In distribution,” he said, “we’ve found that incentives work. Have workers share in productivity.”

In the call center, Potpourri turns to a third party to handle upselling. “We had done it and dropped it previously,” he said. “But we’re now able to do it and sustain it. When Hanover Direct did third-party upselling, it made $20 million a year.”

But aggressive upselling can be dangerous, Rosenfeld cautioned. “Test it to see what effect it has, although the benefit outweighs the cost. To me,” he said, “an incentive program is such a good thing for a company and its workers.”