HOLIDAY SALES WATCH;MORE FEAR THAN CHEER FOR CATALOGERS

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This year there's little holiday cheer among the nation's catalog companies.

According to a survey of 86 catalogers by the Direct Marketing Association, 61% feel either pessimistic or neutral about this holiday season, while only 38% feel optimistic.

Although holiday sales are projected to rise 10% to 12%, higher paper and postage costs will gouge profits, said Maxwell Sroge, a catalog consultant with Maxwell Sroge Co., Evanston, Ill.

"The consumer seems to be favoring catalogs more this year than last year," Mr. Sroge said. "The irony of it is that the catalogers aren't enjoying the profits of these additional sales because costs have gone up so much that it has seriously affected their bottom lines."

This year has been tough for the $76.4 billion catalog industry, with paper costs increasing an average of 47% on top of postal rate increases of 10.3%.

Mr. Sroge said sales for the first half of 1995 for publicly owned mail order merchandising companies were up 6.4% to $19.9 billion, but profits were down 27.2%.

For the holiday season, profits are expected to improve but still won't be up from a year ago.

Throughout the year, catalog companies have been making adjustments. Many have cut catalog dimensions, lowered paper weight, eliminated pages and cut circulation.

Holiday catalog mailings are expected to be reduced by 20% from last year when there were very heavy mailings because of the anticipated postage increase.

"This year catalogers are cutting back on the number of catalogs they mail and restricting mailings to those who are proven buyers," said Mr. Sroge.

Most catalogers will be cutting down on prospecting and double mailings to households.

With fewer holiday mailings, catalogers like L.L. Bean and Lands' End are turning to marketing vehicles such as TV and the Internet to boost holiday spirit for their catalogs.

In a unique move, L.L. Bean, Freeport, Maine, will advertise for the first time on TV, hoping to generate more holiday sales. The ads, created by Bronner Slosberg Humphrey, Boston, will run in spot markets this winter.

The cataloger will also try to generate consumer interest through its home page on the Internet's World Wide Web (http://www.ll) which started up in September.

Some catalogs are offering special services for the holidays.

Lands' End, Dodgeville, Wis., is offering courtesies like free monogramming, free gift boxing and free shipping to additional addresses.

Through its Internet site, Lands' End will offer printouts of holiday songs and holiday recipes.

One decidedly upbeat company is food cataloger Harry & David, Medford, Ore.

Although the company has tried to cut costs during the year by using lighter paper weights and trimming catalog size, Harry & David did not trim its holiday book. About 75% of the company's business comes from the holiday season. The cataloger did, however, target its mailings and minimized prospecting.

Unlike most, Harry & David believes that it is not going to be tough to turn a profit this year.

"Fortunately, we are marketing to a niche in selling gift products of food," said Steve Sirianni, VP-direct marketing, circulation. "Certainly our costs are more, but we've done enough to combat those costs."

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