LATE RUSH TO FUEL DOUBLE-DIGIT CATALOG JUMP

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Improved consumer confidence and a looming postal rate increase in 1995 will boost catalog mailings and revenues to record levels this year.

Consumer catalog revenues are expected to rise 12% to 14% to an estimated $76 billion for 1994, says Maxwell Sroge, president of the catalog consultancy bearing his name. This compares to an 11% gain the previous year, according to his figures.

Catalog companies, which are offering faster delivery, better service and prices competitive to retail, are gaining acceptance from consumers looking for more convenient shopping alternatives, Mr. Sroge says.

Revenues also should increase due to increased mailings in 1994 to beat an expected postal rate increase next year.

"Casual apparel is doing extemely well," says Mr. Sroge. Indeed, he adds, three such marketers recorded double-digit sales gains in the first half of the year: Lands' End (19%), Spiegel (27%) and Talbot's (19%).

"It's a dress-down kind of work situation, rather than dress up as we had 10 years ago," he says. "Also, clothes are less expensive."

J.C. Penney Co.'s catalog business is up 13% through August.

But not all is bright.

NPD Group estimates total catalog apparel volume is off by 5% for the first half, to $4.7 billion. That is due primarily to the exit of Sears, Roebuck & Co.'s Big Book from the catalog business last year.

"I would have expected someone to come in and plug the gap of that business," says Peter Simon, sales and marketing director for NPD Group, which conducts consumer panels.

Also, spending for apparel has dropped among men and women in the 35-to-44 age group, Mr. Simon says. That's the only age group to decline.

Consumers seem to be especially sensitive to value, causing Bloomingdale's By Mail to add more value offerings for the remainder of the year.

"We're not super confident about consumer confidence," says John Hayes, VP-marketing and catalogs for Bloomingdale's by Mail. "We see weakness, especially at higher price points."

Mr. Hayes says its business in the spring was "disappointing," as sales in apparel and home products were below expectations. He adds that fall business improved but still failed to reach projections.

At Spiegel, private label continues to do well as people remain value-conscious and less wedded to brand names, says Debbie Koopman, corporate and investor relations director.

Spiegel has seen stronger growth in home furnishings than apparel, which Ms. Koopman says is being affected by "lack of fashion direction or newness."

The home furnishings category is being driven by aging baby boomers having families. The recent drop in mortgage interest rates appears to have accelerated business as people buy new homes or have more money to furnish and decorate their homes.

"People are staying home more and going out less," Ms. Koopman says.

Baby boomers also are buying educational toys and wrinkle-free clothing, says Nancee Dixon, PR coordinator for Penney's, which also continues to benefit from consumers' value-consciousness and the demise of the Sears catalog.

Catalogs continue to divide into more specialty niches.

The Sharper Image, which says its first-half sales were up 50%, in September began testing Healthy Living, a catalog with skincare, vitamins and exercise equipment meant primarily to appeal to women. And Sears this fall rolled out four new niche publications.

Sears, which reentered the market largely through partners, also is testing eight others. That could bring its total number of specialty catalogs to 21. Its specialty books could help fill the void left by the closing of the money-losing Big Book.

The four new Sears catalogs are Workwear, a men's catalog; Big & Tall, a large-size men's book; My Team, offering licensed athletic apparel; and Leather Connection, selling leather garments and accessories.

Aside from the fact that it's the holiday sales season, year-end catalog volume is expected to be high thanks in part to marketers trying to beat a proposed postage rate increase of 10.3% for early 1995. The rate hike is still pending at the Postal Rate Commission; the effective date is expected to be either January or February.

Some catalog companies may mail some of their 1995 books in December to beat this increase.

"I expect a record number of catalogs to be mailed after Christmas to beat the postage rate increase," Mr. Sroge says.

December will be a particularly heavy month as more catalog companies, like Lands' End, L.L. Bean and The Sharper Image, offer expedited delivery. That service allows orders to be taken up to the few remaining days before Christmas-and extends the holiday sales season, which used to end in November and early December for catalog companies.

"As consumers tend to buy later, you'll see more catalogs arrive in late November and early December than ever before," Mr. Sroge says.

Despite the looming rate jump, some observers recommend holding off on sending more catalogs this year. A better strategy may be to wait in order not to get lost in the glut, says Al Schmidt, president of consultancy Schmidt Group International.

Looking long-term, several catalog companies are experimenting with online services, CD-ROM, and cable shopping channels.

Spiegel has teamed with Time Warner for the launch in five markets of Catalog 1, an upscale cable-TV channel featuring merchandise from Spiegel, Crate & Barrel, Williams-Sonoma, The Sharper Image and others.

Spiegel also plans to help Time Warner create a video shopping mall on its interactive Full Service Network to debut in Orlando, Fla.

Already this year, J.C. Penney has begun tests offering merchandise through Prodigy and interactive networks being tested by Bell Atlantic, IT Network, and U S West.

Lands' End is testing several approaches. It's talking with cable shopping channels and was part of Apple Computer's CD-ROM catalog.

These represent "another avenue of service [for] our customers and enhance our customer base," says Ms. Dixon of Penney's.

However, these services "are too early in their life to be of any great significance," says Mr. Sroge.

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