General merchandise cataloger/retailer J.C. Penney on Jan. 10 announced that it will close its Atlanta fulfillment center as well as its Atlanta and Lenexa, KS, catalog call centers—resulting in 2,000 lost jobs. But Penney plans to restructure the Atlanta warehouse to handle central store distribution, which will enable it to rehire 500-700 employees.
Part of the reason for the cutbacks is that 40% of all Penney’s direct orders now come online, so the company does not need as much call center capacity. But for the most part, the Plano, TX-based Penney is scaling back its catalog business to improve its bottom line. This past holiday season, Penney’s combined catalog/online sales dropped 18.4%–close to its plan that called for a 20% decrease.
“All the changes have been made in terms of [fulfillment] centralization of both the catalog and stores to be able to move more quickly and respond better to customer demand,” says J.C. Penney spokesperson Rita Trevino Flynn. “That was a big problem in the past when we didn’t have centralization.”
The company has already slimmed down the size of its catalogs: The 2002 holiday book weighed in at 532 pages, down from 600 pages in 2001. J.C. Penney also reduced overall annual catalog circulation from 15.6 million in 2001 to 14.0 million last year.
Further, Penney has already or plans to discontinue such specialty catalogs as scouts, bridal, special needs, petites, and tall women’s apparel—that last two of which will be combined into one specialty catalog offering all women’s sizes. Overall, Penney mailed 28 specialty catalogs in 2002, compared to 30 in ’01, 38 in ’00, and 41 in ’99.
As for the merchandising effort, “the business is becoming more fashionable across the board—more trend-right,” Trevino says. “We still don’t have that worked out yet, however. Everything’s not quite in a place yet, but we’re getting there. There’s still a lot of testing to do.”