Penney Cutting Back on Catalogs, Again

Discussion
Sep 28, 2010
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By
George
Anderson

Last
November,
when
RetailWire reported that J.C. Penney
would no longer publish
its twice-yearly 1,000-page "Big Book" catalog, most of the comments
on this site seemed to agree with the move.

At the time, Mike Boylson, chief
marketing officer at Penney, said in a statement, "Big
book catalogs have become less relevant as customers have embraced shopping
online, where they have ready access to our entire assortment at any time on
jcp.com, one of the nation’s largest general merchandise sites on the internet.
At the same time, customers greatly appreciate the smaller, more personalized
catalogs we have introduced as well as digital and mobile applications that
make it easier, more convenient and fun to shop with us."

Less than a year
later, Penney has announced it will stop publishing "the
smaller, more personalized catalogs" next year. Instead, the company plans
to mail "look books," which contain fewer products, to point consumers
to the company’s website for product information and current pricing.

This
latest decision takes place even though the chain has admitted it had not fully
factored in the number of people who look at a catalog and then order online
when it made the decision to kill its big book. Penney CEO Myron "Mike" Ullman
told attendees of the Goldman Sachs Global Retailing Conference that sales
were hurt more than expected when it discontinued the catalog, according to
a Dallas
Morning News
report.

"We’re not getting out of the print business. … We’re transitioning
from the catalog, which is essentially a static vehicle," Mr. Ullman
said.

Darcie Brossart, a spokesperson for J.C. Penney, told The Dallas Morning
News
that cutting the catalogs not only saves the company money on printing
and related costs, but that it enabled it to reduce inventory when buying functions
were consolidated across its off- and online channels.

The company has set
a goal of increasing online sales by $5 billion over the next three years.
Sales via jcp.com have been around $1.5 billion a year over the past
three years. The home products category, which represents about half the company’s
online sales, have been particularly hard hit during that period.

Discussion Questions: What do you think of J.C. Penney’s continuing move
away from print to online and mobile? Is there any concern that it will lose
sales again as it transitions from targeted catalogs to "look books" as
a direct marketing tool?

Please practice The RetailWire Golden Rule when submitting your comments.

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16 Comments on "Penney Cutting Back on Catalogs, Again"


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Dick Seesel
Guest
10 years 7 months ago

Sales are migrating rapidly from catalogs to e-commerce and mobile apps, so it makes sense for big retailers with static marketing budgets to shift their resources. Although the catalog business hasn’t disappeared completely (if my mailbox is any indication), it’s threatened long-term by the rise of e-commerce and the collapse of traditional postal delivery. (Just ask the CEO of Netflix what he thinks about the future of the USPS.)

If JCP is smart, it will maintain direct mail as part of its marketing mix but “micromanage” the mailing lists more efficiently to targeted customers or regions.

Charlie Moro
Guest
Charlie Moro
10 years 7 months ago

I would not describe this as a great move, but more of an acknowledgment of reality. With the use of search engines, consumers’ searches for all kinds of purchases seems not to be driven by what came in the mail today. Consumers are more driven by looking for categories like Victoria’s Secret, Eddie Bauer, Wal-Mart and Target, then referencing hard copy catalogs.

The key will be to make these websites more interactive, easy to use, and fast.

Steve Montgomery
Guest
10 years 7 months ago

Given the larger than expected sales hit JCPenney took when moving away from their big book, I find it surprising that they made the decision to move so quickly to make another similar change to a “look” book. Yes, the world is moving to digital but as evidenced by the impact JCPenney already had, there are still people who use print media.

Not the same I realize, but I use a Nook for its convenience when I am on the road, but still enjoy the experience of reading a physical book when at home. Based on what happened, JCPenney still had customers who preferred using a catalog as part of their purchase process.

Carol Spieckerman
Guest
10 years 7 months ago

I think Penney’s transition to Look Books is a prudent compromise at this point. J.C. Penney’s retention of print catalogs and catalog operations turned out to be its killer app against Sears back when online was taking hold. Its catalog media and fulfillment platform is how Penney’s quietly hit the $1 billion mark in online sales while other retailers were still deciding when and if to take the plunge.

Retailers are no longer just reacting to shopper choices, they are attempting to shape shopper behavior and the Look Books are a great bridge that promises to further accelerate the transition to online and seal Penney’s stronghold as others encroach.

Retailers have realized that print pieces are not an “if,” they are a “why” and a vital touch point with shoppers (if only from a marketing standpoint). This isn’t about shoppers mailing or faxing in an order form, it’s about connecting the dots and mitigating jumping off points.

Nice compromise!

Carlos Arambula
Guest
10 years 7 months ago

While the short term effect might be a small decrease in sales, the new format might cause an increase in sales by providing potential customers with a more inviting format.

The catalog big book format is an outdated concept and it might have hurt the brand by positioning it as “old fashion” in contemporary times, instead of helping it.

Gene Detroyer
Guest
10 years 7 months ago
Interesting insight by Carlos Arambula. Yes, the publishing of the big catalog may have in fact hurt the brand image of Penney’s. Catalog = Old Fashioned. Online = New and Progressive. One of the comments that surprised me in the article is the comment that jcp.com sales have been around $1.5 billion over the past 3 years. Is that inferring that there has been no year-to-year growth of their online? If so, they have a serious problem. Now back to catalogs big, catalogs small, and even weekly flyers…The Penney’s flyer is my favorite example of print waste. As I have reported many times in these discussions, every Wednesday or Thursday the USPS delivers with each person’s mail a Penny’s flyer. The mailroom in the apartment building has about 120 boxes. If you pick up your mail later in the day, you will find a pile of Penney’s flyers in the recycle bin. The flyers don’t even make it to the apartments to be thrown away. What is interesting though, on the same day as the… Read more »
Ed Rosenbaum
Guest
10 years 7 months ago

J.C. Penney continuing to cut back on their catalog printing and distribution is a prudent and internal cost saving measure. Most consumers in today’s environment are e-savvy so the sales, while not completely, will begin to catch up and recover some of the losses mentioned.

The catalog business has fallen off for all retailers using it. It is not the same business as it was in the past. My guess is the typical catalog buyer is getting up in years; and will soon not have the need or want to spend as much on those purchases.

Jonathan Marek
Guest
10 years 7 months ago

It is hard enough to get a postcard campaign to pay out nowadays, with mid-market department store price points and margin structures. Much less a 1,000 page book! It’s no surprise that they are going to save some trees on this one.

Ben Ball
Guest
10 years 7 months ago

Carol Spieckerman hit this one; the print piece is not a reason to buy, it’s a reason why–we go looking–usually on the website. Left to their own devices, who knows where JCP shoppers might go if they suddenly feel the need to troll the web for new linens. But if the inspiration to do that online research tonight is a print piece in the mail, that is probably where they will start.

I’m a little less comfortable with the “Look Book” not offering any product info or pricing though. I sort my mail over the recycle bin each evening. And I can’t recall the number of times I have been finally motivated to go to the computer vs tossing the flyer when that item I’d been considering was ‘Only $XXX’.

Anne Bieler
Guest
Anne Bieler
10 years 7 months ago

This is the right move for JCP; the “Big Book” has lost relevance with their target shoppers. JCP online and bricks and mortar stores are the sites shoppers will go to for purchases, not to a catalog sales department, not today. The shift to marketing through Look Books has worked well for IKEA and others–attract shoppers’ attention with popular items, and direct them on a path to explore and experience JCP. As always, execution is key, and integration of online/on site will enhance the shopper experience.

Lee Peterson
Guest
10 years 7 months ago

Charlie Moro says it all above–there’s no question that they should make this move, there’s really no choice: it’s simply reality staring them in the face.

I wonder though, regardless of the format, if JCP can even compete with the likes of Kohl’s and Target on any basis. Both of those retailers do a much better job on fashion and mid-belle curve styling as well as price, leaving JCP in the middle of nowhere. Which, in case you didn’t know, is usually a death knell for a retail concept.

I guess it’s time to ask the age old question–if JCP went away, what about them would you miss??? Right.

Ted Hurlbut
Guest
Ted Hurlbut
10 years 7 months ago

I’m sure Penney lost more sales than they wanted to when they scrapped the catalog, but their move now to an even smaller Look Book indicates that the the economics of print catalogs. The Look Book is an attempt to focus print on pages, items and customers that can be profitable. I’m sure they are loathe to give up on the channel entirely, especially when it’s difficult to quantify the advertising impact alone of those pieces.

Mark Price
Guest
Mark Price
10 years 7 months ago

While I understand Penney’s cutting back on paper catalogs in a more digital world, I am concerned that they have not yet done the analysis to determine the impact of those paper catalogs on customers who purchase in-store and online. In my experience, there is a high degree of correlation between paper catalogs and transactions for specific customer segments. I think that is why Penney’s saw a greater decline in revenue as a result of canceling the catalogs.

It is penny-wise and pound-foolish (no pun intended) to assume that all customers are the same and that the catalog does not add value to any customers at all. Customer segmentation would permit the company to identify which customers value the paper catalog and direct those catalogs primarily to those customers specifically.

Mark Burr
Guest
10 years 7 months ago
One of my favorite ‘catalog’ companies never sends me a ‘complete’ catalog. At least I don’t think they do; if they do, I don’t remember it. What they do send are smaller, targeted and more shoppable catalogs. I ordered from them last week–not online, but on the phone. There was not even a ring on the other end of the line; it was answered before a ring! Can JCP do that? Can they answer ‘Hi, is this Mr. Scanner?’ without skipping a beat? Do they know ‘Mrs. Scanner’s’ sizes and make suggestions? I don’t think JCP’s problem is the size of the catalog. It might be just their experience. Nevertheless, they may be one of the only sources for curtains, blinds and some other things. In my eyes, they might as well have products like Craftsman, Kenmore and Easy Living Paint. For me as a consumer they are about that relevant. Too bad that all the ‘Craft’ names they had don’t have any brand power. So cut the big book–it matters not. Maybe read the… Read more »
Tim Henderson
Guest
Tim Henderson
10 years 7 months ago
Last year when I commented here about the JCP big book demise, I agreed with the move–in large part because consumers who did still use and/or prefer catalogs would still have access via the smaller specialty pubs. I still agree with my statement then, which means I’m not in favor of this latest move. My main concern was actually noted in my comments a year ago. Specifically, some consumers do use the catalogs to peruse and purchase product at the store’s Customer Service Desk. In eliminating all catalogs, it’s imperative that JCP ensure in-store shoppers have access to either free in-store access to the JCP.com site and/or store associates trained to assist those customers. JCP must also beef up its e-shopping experience. Simply nixing the catalog and sending everyone either online or to the store won’t work if the shopping experience in those channels is found to be lacking. There are indeed a variety of issues surrounding catalogs (e.g., publishing costs, mailing costs, locked-in prices, environmental issues, etc.), but I don’t believe the death knell… Read more »
Christopher P. Ramey
Guest
10 years 7 months ago

JCPenney’s migration to the internet is overdue. The only surprise is how long it took them. Their refusal to give up print is analogous to the fashion (or lack thereof) in their stores. The “Look Book” is irrelevant and won’t last long.

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