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  • Many Lessons from the Return of Penney's Catalog—from Tapping
    spacerPast Strengths to Using Data
  • J. C. Penney is bringing back the catalog, after discontinuing it five years ago, according to the Wall Street Journal article "Catalog Makes a Comeback at Penney" by Suzanne Kapner, January 20, 2015. I see some valuable lessons not necessarily stated explicitly in the article, but that the article definitely illustrates, such as:

      •  There is value in tapping past strengths.
      •  Older technologies--in this case print, rather than online--can still have advantages, and can even serve as a conduit to greater use of newer technology.
      •  It is important to think about what the data really means, since it may not mean what it appears to mean on the surface.
      •  If you later discover that the data actually meant something different than previously thought, take the appropriate steps to get the business in sync with what the data really means.

    I've said it before—the path to success in the future ties in with a business's past strengths. According to my 25+ years researching business success and failure patterns, companies that build on past strengths are generally the most successful. So, companies striving for business revitalization should not overlook the importance of past strengths. This applies to Penney, as the company continues its recovery from the steep sales declines brought on by its bold, but ill-fated, transformation attempt, which tried to remake Penney to be more like the spectacularly successful Apple Stores.

    The catalog is a past strength of Penney. And for Penney, connecting with past strengths can be especially appropriate since the company is trying to reconnect with past customers who defected during the ill-fated transformation attempt. Tapping viable pillars of strength from the past can be an effective approach for a company that is striving to rebuild what it once had.

    Furthermore, Penney's tapping of its past strength in catalogs illustrates that there can still be advantages in pursuing older technology. In this case, print is the older technology, while online is newer. Just as the older technology of bricks and mortar is still very successful for some retailers, putting greater emphasis upon print--even in today's digital era--can also contribute to success for some companies. And, Penney may very well be such a company.

    After evidence emerged that the discontinued Penney's catalog might still have advantages, the company decided to bring it back. As the Wall Street Journal article points out, Penney has data from which it learned that many of its online customers bought after initially being enticed by what they saw in print. Thus, Penney recognized that, when it eliminated its print catalog five years earlier, it essentially shut the door on a valuable opportunity to get the attention of consumers and influence them to go online to buy.

    So, there are key lessons here. Rather than viewing print catalogs as something old fashioned that should be shut down, print should be integrated with online, as might be appropriate. Print can be a conduit for encouraging more consumers to shop online. And, print can also induce more buying from those shoppers who do not necessarily prefer to shop online, but might make print catalog purchases. Furthermore, print catalogs can be a source of valuable data about those shoppers who might not necessarily prefer to buy online. This can be particularly important for Penney, as it strives to lure back shoppers it lost during its ill-fated transformation attempt.

    The transformation attempt increased prices and took the retailer in a trendier direction. This raises the question of whether and how much the shoppers Penney lost were alienated by the trendiness. If they were, might they also have a reduced interest in the trendier, most up-to-date ways to shop, and perhaps not have a strong preference for shopping online, and thus, be receptive to buying from print catalogs? If so, how can data from print catalog transactions help Penney to better understand this segment and learn more about what it might take, aside from price discounts, to win them back? While striving to rebuild lost business, these are the kinds of questions a company like Penney needs to answer. At the same time, however, attention must also be paid to the role of print in the buying process for those customers who do prefer to make purchases on line.

    Moreover, Penney's experience bringing back its catalog serves as a crucial reminder in today's era of greater emphasis upon data and analytics. Penney's experience reminds us that it is ever so critical to understand what the data really means. This is important because the data may or may not mean what it appears to mean on the surface.

    For example, the Wall Street Journal article explained that, when Penney saw an increase in online buying several years ago, the company thought this data meant shopping was shifting to online, so catalogs would no longer play a significant role. But, years later, Penney discovered that its online buying is often driven by shoppers first seeing something in print. So, Penney realized that sales were being lost by not exposing consumers to off line print material, such as catalogs.

    As I see it, this is a classic case of the data not meaning what it might appear to mean. On the surface, it looked like the data indicated that shoppers' preferences were shifting to online buying, so print catalogs would no longer play much of a role. In reality, however, it meant that the final transaction was moving online, but print still played an important upfront role in the buying process.

    That's why it is so important not to become overly enamored with one particular metric before ascertaining whether or not that metric really is a good indicator of what you are trying to measure. Digging deeper to understand what a metric really means can be a valuable step for alleviating possible adverse consequences of misinterpreting the data.

    As a practical matter, however, there may be times when, for whatever reason, a company cannot or does not unearth the true meaning of a particular metric. In those situations, if a better understanding of the metric does eventually emerge, the company should take the appropriate steps to bring the business in sync with what was newly learned.

    This is what Penney did. According to the Wall Street Journal article, when Penney discovered that increased online shopping was not eliminating print's role in the buying process, Penney took appropriate corrective action. Penney's CEO was not deterred by the fact that the catalog had been discontinued on his watch several years earlier. Admirably, he was willing to reverse that decision when new evidence indicated that print still played a valuable role. So, Penney is bringing back a catalog--not the same thick catalog of yesteryear, but a catalog nonetheless.

    In summary, the return of Penney's catalog highlights several valuable lessons. Learn from them, and think about how they might apply to your business.

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