JCPenney goes back to the future
What’s old is new again at JCPenney (JCP).
The retailer that’s turning 113 this year is reviving its catalog after a five-year hiatus.
The catalog-- which first appeared in 1963-- was ended in 2010 as JCPenney decided to focus instead on Internet sales. Now the retailer is finding that print ads actually drive more traffic and purchases on its website.
Yahoo Finance Senior Columnist Michael Santoli says this shows that not everything in retail has to be “new and improved.”
“It says a lot about catalogs and why they endure,” he notes. “It’s a business that sort of still has a purpose to service the new way of buying.”
Santoli points out that catalogs fill an important role for retailers trying to reach a key demographic.
“Better, more active customers really like to get a fuller picture of the full range of products,” he says. “And as great as most companies-- including JCPenney-- are for facilitating online sales, I don’t think you necessarily get that full effect of looking at the full breadth of products. Somehow it’s easier to browse a catalog.”
Santoli says certain niche publications are already taking advantage of that fact.
If you think about fashion magazines and home magazines, the ads are integral to those magazines,” he notes. “And they’re going to be the last things that are still printed on paper, and I think there’s a reason for that-- you kind of get in front of people’s eyes every day or almost every day in the mail.”
Santoli thinks the catalog trend will continue.
Last year, there were more catalogs mailed than the year before,” he points out. “Now, we’re well below the peak, but it shows this business still has something to it at the core.”
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The new JCPenney catalog is smaller than the old version (now just 120 pages) and will be shipped in March. It comes as JCPenney continues to make strides to recover from the disastrous tenure of ousted CEO Ron Johnson, the former Apple (AAPL) executive who failed in his efforts to overhaul the company. JCPenney got a boost over the holiday season when it reported a solid 3.7% increase in same-store sales.
Santoli feels the catalog can help with the company’s turnaround efforts.
“Maybe what it means is JCPenney can be ‘stickier’ with the better customers-- that they know where they live, maybe they have a JCPenney card,” he says. “I think it does say that the business has kind of gotten to a point where they’re no longer at the brink, they’re no longer worried about financing themselves, and they can look at areas where it makes more sense to try to get a little closer to their customers.”
And Santoli feels bringing back the catalog should help those who are worried about the company’s survival breathe at least a small sigh of relief.
“I don’t think it’s necessarily a make-or-break bet for JCPenney,” he adds. “But it’s something that tells you the company is thinking about better ways to do things in the here and now and not necessarily stave off failure.”
