Retailers still flip for catalogs.

They may be smaller, but publications are useful for companies

Dec 3, 2006, From Wire Reports

The Neiman Marcus Christmas catalog is legendary.

But this year, for the first time, customers are doing more shopping on Neiman's Web sites than through its catalogs. Likewise, J.C. Penney Co. expects its online sales to exceed its catalog volume this year or next.

Both chains have mature catalog operations that were in place long before online shopping took hold. They're finding younger shoppers and new ones online. Still, neither company is ready to stop publishing paper catalogs.

"The way we view print and Internet is that they work together. If someone has a catalog at home, she may flip through it and then go shopping online," said John W. Irvin, president of J.C. Penney Direct, the Plano, Texas-based retailer's catalog and Internet division.

"Having a catalog in her mailbox and in her home is important to us, but we don't have to publish them as big anymore," he said.

More catalog retailers such as Penney's and L.L. Bean are moving toward the day when the bulk of their sales are made online. Yet the number of catalogs mailed to U.S. households has been climbing during the past couple of years.

Some catalogs will get tossed, but retailers are counting on consumers thumbing through enough of them to drive sales. L.L. Bean expects to ship 50 million more catalogs this year than it did two years ago when it shipped 200 million catalogs.

"It is the best way for us to get lasting impressions in front our customers," spokesman Rich Donaldson said.

The days of people questioning the future of catalogs are long gone, and more and more companies are using them. Even brick-and-mortar stores such as Toys "R" Us and Circuit City Stores Inc. have begun shipping out catalogs in recent years.

Those who predicted the demise of catalogs as online sales took off overlooked a key fact: You can't make sales if you can't reach your customers. Thus, catalog retailers can't afford to cut back on catalogs.

"You're not supposed to rely on the customer to contact you. You need to contact your customers," said George Hague, senior marketing strategist at J. Schmid & Assoc. Inc., a catalog consulting company in Mission, Kan.

Neiman Marcus sees its catalogs and Web sites as selling and marketing tools that generate store traffic. Those customers shopping its stores, Internet site and catalog spend more on average than those customers who use just one source for shopping -- 3.6 times more in its last fiscal year.

About 22 percent of offline sales are influenced by the Web, according to Shop.org, an online retailers association.

Dallas-based Neiman Marcus "has found that mailing catalogs leads to those people placing orders online," said Susan Jansen, a Lehman Brothers analyst who follows Neiman Marcus. "The best way to look at it is as a combined business, and what is encouraging is that, overall, the direct business is growing rapidly."

The luxury retailer also is finding a new customer base online that it's calling "the emerging elite," said Burt Tansky, chief executive of Neiman Marcus. And they are younger, about 39 or 40, versus the retailer's average store customer age of 48, said Brendan Hoffman, president and CEO of Neiman Marcus Direct.

Neiman Marcus catalog and Internet sales, which include those from Horchow and Bergdorf Goodman sales, generated revenue of $655.3 million in the last fiscal year, up from $592.1 million in the prior year. Online sales rose 32 percent.

Penney's Christmas catalog is shrinking.

It's 336 pages this year compared with 440 last year, and every page has a reference to more merchandise available at www.jcp.com. Penney's fall and spring Big Books also have been losing pages, with the current edition at 970 pages, down from 1,090 a year ago and 1,390 in 2000.

Penney's online sales increased 28 percent last year to $1.038 billion, and catalog sales were $1.8 billion.

Irvin, president of its catalog and Internet operations, is confident sales will increase because Penney's installed 35,000 new cash registers in its stores with direct links to its Web site. That means that at the register, shoppers can order items not in stock.