Penney's online sales rise 50%
By Carole Sloan -- Furniture Today, February 23, 2004
PLANO, Texas — PLANO, Texas — JCPenney's Internet sales, with furniture as an important piece, jumped more than 50% in 2003, topping $600 million.
"We're at pace or slightly earlier than plan in our Internet business growth," said John Irvin, president of JCPenney Direct.
Meanwhile, the retailer's more traditional direct-sale business — its catalogs — also recovered with a sales increase in 2003 after struggling with a dramatic drop in revenues over much of the last decade. Irvin, who also manages the catalog business, said those revenues grew to more than $2 billion last year.
"We stabilized the big books and added monthly and bimonthly specialty catalogs. We're now very profitable," he said.
Home goods are the biggest piece of the catalog business and are "doing a fabulous job," said Allen Questrom, JCPenney chairman and CEO.
Irvin said a change in catalog strategy led to the recovery.
"Three years ago when I joined the company, the page size had been trimmed, the quality was taken out of the paper, and photography was moved from location shots to the studio for cost reasons. And the merchandise was all a handoff from the retail assortment and priced as the retail program with lots of promotions," he said.
Irvin improved the paper and photography, "with a more aspirational environment across the board, and we developed a more current seasonal color statement. We also moved to show product as it would be used in a home."
He also ended "the high/low game" in pricing. "We find value with products in the market and have them on sale."
Circulation also was reduced somewhat, and has stabilized at 10 million-plus. The number of pages also dropped, from about 1,400 in spring 2001 to 1,072 in this spring's edition.
This year, Penney also has launched Home Editions, a 600-plus-page book mailed separately from the big catalog. It shows home product also included in the big book but has its own cover and introductory pages.
The catalog includes about 90% of the in-store product assortment, but about half of the goods in the book are special catalog assortments. Irvin said Penney is in stock on catalog items and has "separate open to buys and packaging" for the products not also available in the stores.
Furniture in Home Editions is "a little lower in price point" than the in-store selection, in part to take into consideration costs for assembling and shipping, he added. While it has been a challenge across Penney to earn a profit from furniture, Irvin said the furniture catalog business is profitable.
"It's a more casual product. Our $488 sofa is checking out like crazy," he said. Other key items this season are beds — with a wide selection of metal styles — barstools, a six-piece Mission dining room and kitchen furniture. "We do a lot of item merchandising," Irvin said.
While catalog sales and profitability are improving, the business has changed, he said.
"Productivity per page has dropped. It's become a place to shop and act as a reference for the Internet." One reason is that the catalogs contain more references to Web sites, noting that readers can find additional options and product information online.
