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Hopes ride on new catalog
by Jeff Horwich, Minnesota Public Radio
November 11, 2002

It has been six months since the last customer placed an order with Fingerhut. The catalog and Internet retailer shut down this spring and laid off almost all of its Minnesota workforce, which numbered 4,700 at the start of the year. But Fingerhut has returned, this time as Fingerhut Direct Marketing. After one buyout effort failed, Twin Cities businessmen Tom Petters and Ted Deikel bought the Fingerhut brand, its customer databases, and its distribution center in St. Cloud. This weekend the company got back in business as the first new catalogs went in the mail.

St. Cloud, Minn. — The 216-page catalog is on the way to former Fingerhut customers around the county. The website Fingerhut.com could also spring to life again any day. A spokeswoman for the Deikel-Petters group says the new Fingerhut's product line and selection closely resemble the old one's.

A skeleton crew is on hand at the St. Cloud distribution center to handle the first incoming orders. The Fingerhut parking lot, nearly empty through most of the summer, now holds dozens of cars each day. Company officials wouldn't comment on how quickly and how large the new Fingerhut may grow. But Ted Deikel recently told the St. Paul Pioneer Press the company may initially hire up to 60 employees as operations get underway.

St. Cloud Mayor John Ellenbecker has been in regular touch with company officials. He says this first catalog is an important trial balloon. "This is the first step," he said. "They have to get the catalog out and going, and if there is the kind of response we expect, they could see a ramping up fairly quickly."

As much as Ellenbecker wants the jobs for St. Cloud, success is hardly inevitable. Fingerhut is launching its new catalog at a time when consumer confidence is at a nine year low, and analysts worry consumers will hold back in the key holiday shopping season. Competition among catalog and Internet retailers is fierce.

But catalog industry consultant Coy Clement says he likes Fingerhut's chances. Even though Fingerhut has been out of action for six months, Clement says competitors have not claimed Fingerhut's traditional customer base.

"The customers that Fingerhut has always served, which are lower income customers who want credit as well as the merchandise, really aren't being served all that well by retailers or others right now," Clement said. "So I think there's a place in the market for a concept like Fingerhut. And in fact, the fact that the economy is not terribly strong right now could end up being a positive for a company that offers credit."

The St. Cloud area lost 2,700 jobs when Fingerhut closed. St. Cloud State University economist Mark Partridge says other local retailers and service companies felt the blow.

"Before Fingerhut closed, back say a year ago in late 2001, we were kind of struggling, but we were hanging in there," Partridge said. "But afterwards, we've gone into a local recession. It was our first one here in more than 20 years, and right now we're one of the laggards of the upper midwest. So Fingerhut's had a real impact."

Workers from the biggest batch of layoffs are just reaching the end of their nine-month unemployment assistance. Of 800 former employees who enrolled in the local Workforce Center, only 217 have found jobs.

Part of this may be psychological. The Workforce Center's Kathy Zavala worries the new catalog may only hinder the former employees' motivation to move on.

"We continue to have people coming in for service who are waiting for a call-back," Zavala said. "And as much as we continue to explain that their previous employer is gone, and this is a different employer who is just beginning, there are still folks who would really like to continue doing what they did because they liked it and they felt good there."

Still, Zavala says the Workforce Center is ready to serve as a clearinghouse if the new Fingerhut needs to fill jobs and fill them fast. And the president of the former warehouse workers' union at Fingerhut says she has been talking with the new owners. But whether the revamped company helps nudge St. Cloud out of recession depends mainly on whether Fingerhut can win back customers during a holiday shopping season that some analysts say may be the weakest in years.

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