Top Exec: J.C. Penney To Cut Catalog Circulation for Web Focus

CHICAGO - J.C. Penney will be reducing its catalog circulation and putting more of an emphasis on its Web site at www.jcp.com in the near future, J.C. Penney Direct vice president David Abbott said yesterday during a session at the Annual Conference for Catalog, Internet and Multichannel Merchants.

The $18 billion retailer's Internet business is its fastest growing segment at 23 percent, Mr. Abbott said. Catalogs, on the other hand, are growing at a rate of 10 percent a year, and that number is declining. He said by next year, revenue generated by jcp.com will outpace catalog sales for the first time.

However, Mr. Abbott cautioned he doesn't foresee J.C. Penney making the same mistake that some other multichannel merchants have made and reduce its direct mail efforts too much.

"We're trying to find the happy medium so we're not cutting back so much we affect sales," Mr. Abbott said at a session titled "Integrated Marketing Comes of Age."

It is a mantra of multichannel marketing best practices that catalogs drive online sales. Direct marketing consultants love to report how such-and-such company eliminated its catalog only to watch e-commerce sales drop dramatically.

Mr. Abbott pointed out that J.C. Penney is currently a prolific mailer, dropping 70 catalogs a year from the direct division alone. The stores division also drops a significant number of mailers to drive store traffic.

"We think we can pull back without adversely affecting sales," Mr. Abbott said.

The company has tested sending less costly e-mails to replace some store mailers, he said.

J.C. Penney's site isn't currently designed to drive sales to the store, but this is something that could change in the future. The site also doesn't match prices in J.C. Penney stores.

Other ways J.C. Penney is embracing multichannel marketing include allocating money for the first time in 2006 to online branding ads, Mr. Abbot said.

Next year, the stores division will also allocate money for the purpose of branding, he said, explaining the J.C. Penney's direct division and stores division are run entirely independently. This, too, may change in the future, however.