J.C. Penney Quitting Catalogs

A year after halting its Big Book, J.C. Penney is getting out of mail order catalogs altogether. Following comments made by chairman/CEO Mike Ullman about a shift in its direct strategy earlier this month at Goldman Sachs’ Global Retailing Conference, the general merchant confirmed that it would stop mailing specialty catalogs next year.

Spokesperson Darcie Brossart says J.C. Penney will instead distribute “look books.” These resemble catalogs but carry less merchandise, have no catalog item numbers and refer customers to Penney’s website for information about styles, sizes and colors.

Like the specialty catalogs, which included titles like “Little Red Book” for women and “Matter of Style” for men, the “look books” will be mailed to customers interested in specific merchandise categories.

Brossart says J.C. Penney mailed just 25 specialty books since the titles were activated to replace the big book last fall.

“This transition is designed to drive sales both in stores and on jcp.com, rather than to continue investing in a legacy business that has been diminishing over the years as customers have migrated to shop online,” Broussart says.

Neil Stern, a retail analyst and senior partner for retail consultancy McMillan Doolittle, says this major move by J.C. Penney “definitely represents a tipping point of sorts as we move to an inevitable progression toward web driven commerce and away from more traditional forms.”

Stern says J.C. Penney may not see the value of the catalog to drive sales beyond just the mail order channel.

“The economics of the catalog need to be re-evaluated to understand the impact on the whole business, not just on the ability to independently drive sales,” Stern says. “Given their heavy media spend in other areas, a catalog simply became less important for them.”

While Penney’s big book sales had been slipping prior to its closure, the company admits that ceasing the big book hurt total sales more than it had expected in the second quarter of 2010. And some in the industry take that decline in sales as a sign that J.C. Penney should not abandon its traditional direct mail strategy.

“The assumption that their customers are more web savvy is a big risk,” says Lois Brayfield, president of catalog consultancy J. Schmid & Associates. “Savvy or not, they are still making customers work to find the item they want” by not including the item numbers in the look books, she notes.

Stuart Rose, managing director for investment firm Tully & Holland, is also skeptical of J.C. Penney’s decision.

While the J.C. Penney image may be enhanced by the look book format, “I believe traffic will be significantly reduced as selection on print is narrowed and SKUs and details eliminated,” Rose says. “How they can say that traffic diminished more than anticipated by the elimination of the big book, and then eliminate the specialty catalogs, mystifies me.”