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10% Drop in Response – The Impact of Hurricane Sandy on Catalog Driven Sales
Several of our clients have asked me for my thoughts on the impact of Hurricane Sandy on catalog driven sales over the next few weeks. I sought the advice of Mike Hayden at 4Cite Marketing, and together we offer this assessment of what to expect.
You have all seen on the news how Hurricane Sandy has managed to push the presidential election to the sidelines for the moment, which is a big deal. This is a dominate story for good reason – as I write this, much of New York City is still without power, the NYC subway system is still not fully operating, and over 8 million homes are without electricity.
Most homes are expected to have electricity restored within 10 days. However, that will be devastating to any sales expected from those areas, because those consumers will not only be distracted by the immediate impact of the storm, but once power is restored, their priorities will be focused on restocking of daily essentials, not on buying new apparel or home furnishings from catalogs.
Thrown into the middle of all this havoc is the nationwide election next Tuesday. Most of you planned for the disruption of the election in your holiday circulation plans, but not the added distraction of the storm. This is uncharted territory.
Our best guess is that sales for the next two weeks nationwide, exclusive of the storm-impacted areas, could be below plan by 5% to 10%. In those areas immediately impacted by the storm (New York City and New Jersey), sales could be off by as much as 40% for the next 3 weeks.
We have been informed by several printers with whom we work that mail will not be delivered to the impacted postal centers until they re-open and are able to handle mail. In past instances when this has been done, bulk mail (catalogs) was discarded by the US Postal Service, as they lack the space to store it while they try to open post offices. The USPS has made available a complete list of the ZIP codes impacted by the storm, which you could suppress from future mailings. However, the earliest mailings that this could affect would be those hitting home just after Thanksgiving, and it is our recommendation NOT to suppress those ZIP codes, as we believe mail will be delivered by that time. Also, – and this is a very broad generalization – some of the ZIP codes most heavily damaged by the storm can be described as industrial and lower-end urban communities, which are typically not targets for your catalogs.
The one bright spot to the situation from a retail and catalog perspective is that even in years of tremendous adversity, American consumers have historically rallied around Thanksgiving (which comes early this year on November 22). Response should come back to normal after Thanksgiving, although the sales lost in early November will probably not be recovered. Start making changes to your inventory now.
Finally, many of you are very dependent on 4th quarter holiday sales for your overall annual profitability. I always recommend that clients spread their large holiday mailings out over multiple mail dates in October and November, to mitigate the impact of a national news event – which are always unforeseen. If you had as much as 30% of your season mail volume hit in-home this past Monday, you are probably in for a rocky road this season. Additionally, other mailers that may not have planned on being “promotional” this season, may get panicky and start flooding the emails with special offers. This is why it is important to spread volume out, even if it means missing out on some postal saving from co-mailing – remember this lesson when you start your Holiday 2013 catalog circulation planning.
As we learn more about how sales are performing, we will keep you informed.
By Bill LaPierre, Vice President – Business Intelligence and Analytics