CATALOG SALES are expected to reach $104.3 billion this year and are forecast to jump to $142.9 billion in 2005 at a compound annual growth rate of 6.5%, according to a study released by the Direct Marketing Association. Sales were $47 billion in 1990. Consumer sales will be $63.8 billion by year end, compared to $39.7 billion in 1995. Business-to-business sales will total $40.5 billion, compared to $24.5 billion five years ago. By 2005, consumer sales are forecast to reach $86.4 billion at a compound annual growth rate of 6.3%, and B-to-B sales will total $56.4 billion with a 6.9% annual growth rate.
Catalog industry employment is also expected to grow between 2000 to 2005. In five years, 523,900 people will be employed in the industry compared with 463,600 this year, an increase of 2.5% per year. Catalog advertising expenditures will also rise and are expected to reach $17.2 billion in 2005 compared with $13.3 billion this year.
In addition, 76% of consumer catalogs are conducting online transactions and of those, 73% reported turning a profit. B-to-B catalogs showed higher gains. While only 43% accept online transactions, 80% earned a profit.
DMA president H. Robert Wientzen told a crowd at the opening session of the 17th Annual Catalog Conference & Exhibition held in San Francisco that the next impact study will for the first time expand internationally to include five other countries: Argentina, Australia, Brazil, New Zealand and Canada. Figures from those countries are not expected to be available for several months. Wientzen also said that catalogers face tough issues including privacy, use tax and the looming postal rate hike.
He said that while the Internet has stoked the privacy bonfire, the issue of data collection for marketing purposes – regardless of the marketing medium – is “pure political dynamite, and this is not lost on policymakers scouting for a sound bite.”
The DMA continues to attack the issue, most recently by joining the newly launched Privacy Leadership Initiative, an industry coalition working to address consumer concerns about privacy, he said.
As for the use tax issue, at stake is whether or not the 7,600 U.S. state and local tax jurisdictions will be given the authority to tax all cyber sales. Wientzen reminded the group that after eight months of public hearings, the members of an Advisory Commission on Electronic Commerce in March failed to reach the two-thirds vote needed to back any formal recommendations. He said the DMA is not straying from its position of “no nexus, no sales tax.”
He cautioned that the proposed 6.4% postal rate hike, expected to take effect early next year, will be “small-fry” compared to increases in the not-to-distant future unless Congress takes action to reform antiquated laws that have governed the U.S. Postal Service since 1970. He reiterated the DMA’s support of postal reform bill HR22, which he said does not look good for passage before the fall elections.
Wientzen added that only 60% of Americans have purchased products or services through direct channels and that the industry must work hard to increase that number.
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