Catalogs and Paper

When many Americans open their mailboxes today, they find a thick stack of catalogs. U.S. catalog circulation topped 17 billion in 1998, or about 64 catalogs per person. Catalog sales in the United States exceeded $85 billion in 1998 and are expected to top $125 billion in the next five years. The industry?s predicted compound annual growth rate during this period, 6.1 percent, is nearly twice that of overall retail sales. Paper is the medium that enables this rapidly growing industry to function. Catalog paper use is expected to reach 3.35 million tons in 1999, more than 12 percent of the printing and writing paper produced in the United States. Indeed, the growth of catalog retailing is one of many reasons that the United States, with 5 percent of the world?s population, consumes nearly 30 percent of all paper used globally ? far more than any other nation. The average American used 739 pounds of paper in 1997, almost twice as much as in 1960.

With the advent of the Internet and the rapid growth of electronic commerce, one might think paper catalogs were an endangered species. But as online ordering becomes more common in the catalog industry, many companies are actually using their websites to expand their mailing lists, thereby increasing the circulation of paper catalogs. E-commerce will represent an environmental gain only when electronic media replace the printed page as a means to promote and sell products. While there is hope for change in the future, right now paper remains the primary marketing vehicle for catalog retailers.

Paper and the Environment

The use of so much paper comes at a significant environmental cost. Paper production is the fourth most energy-intensive of all manufacturing industries and one of the most polluting. Table 1 shows the environmental impacts of making, using, and disposing of 3.35 million tons of catalog paper. As paper consumption rises, these impacts will only increase.

Table 1: Environmental impacts of manufacturing, using and disposing of catalog paper, 1999

In the last decade, many large paper purchasers have recognized the environmental impacts associated with paper and changed their practices accordingly. Whether driven by consumer demand, government purchasing directives, cost savings, or management commitment, these companies are using less paper, buying more recycled paper, and encouraging their suppliers to adopt cleaner manufacturing and better forest management practices. This report is intended to help catalog companies take similar action to improve their own paper practices.

Survey of Current Paper Practices

The Alliance surveyed paper practices among the top ten catalog retailers with titles in the industry?s largest segment ? apparel. Because several companies publish multiple titles ? some in segments other than apparel ? the survey looked at a total of forty-two catalog titles (see table 2). The total 1997 revenues of the companies surveyed were $7.7 billion, more than 15 percent of the consumer catalog market in that year.

The Alliance?s survey contained questions about circulation policies, including delivery frequency and e-commerce; use of recycled paper; and dialog with suppliers about pulping and bleaching processes and forest management.

The following companies returned the survey: Spiegel Inc.?s Newport News catalog, L.L. Bean, Hanover Direct, Blair Corporation, Coldwater Creek, and the Cinmar titles of Cornerstone Brands.

Table 2: Catalog Companies Surveyed by the Alliance

The Alliance?s survey showed that environmentally preferable paper practices are more the exception than the rule in the catalog industry. The following are the principal findings of the survey.

1. Leading catalog companies are not using recycled paper despite its wide availability, comparable performance, and pricing at or close to parity with virgin paper. Only one of the companies surveyed reported using recycled paper: L.L. Bean, and only in its order forms. Catalog companies do not consistently leverage their power as large paper purchasers to promote cleaner manufacturing and better forest management. More progress has been made on forestry issues than pulp and paper manufacturing: four of the six respondents ask suppliers to report on forest management practices, while only two knew what bleaching process was used to make their paper. Catalog companies can take further measures to reduce unwanted mailings. Only eight of the forty-two catalog titles in the Alliance?s survey allow customers to specify how frequently they wish to receive catalogs, and none allows customers to substitute electronic promotions for paper catalogs, as firms in other segments of the industry have begun doing.

Table 3 summarizes the companies? responses to the survey (see section 3 for details).

Table 3: Summary of Survey Results

The Case for Action

The good news is that better paper practices often cost no more and sometimes even save money, both now and in the longer term. Catalog companies would also be wise to address an issue that is of real concern to their customers.

• Study after study shows that the majority of Americans is concerned about the environment. Public attention to the environmental impacts of paper in particular runs in cycles, but the issue has regained prominence with a recent campaign against taking timber and pulpwood from old-growth forests. Major paper purchasers can therefore expect the public?s continuing scrutiny of their paper practices in the years ahead.
• There is growing evidence that consumers expect companies ? at least as much as the government ? to be part of the solution to environmental problems. Participants in a 1998 Cone/Roper poll ranked the environment as one of the top three challenges they want business to address.
• A company?s environmental reputation is closely correlated to its overall reputation, which in turn is tied to customer retention. Several recent studies demonstrate that along with other "social" issues, the environment is an increasingly important element in brand switching.

Most catalog companies have yet to respond to their customers' general environmental concerns with concrete action. Specific steps that catalog companies can take and communicate to their customers are summarized below (for the detailed action plan, see section 2 of this report).