Whither the Holiday Catalog?

Dec. 20, 2004 -- -- When the makers of the popular Power Ranger dolls told JCPenney in 1994 they could not make enough dolls for the holiday season, the retailer axed the toy, expected to be one of the hottest gift items of the year, from the JCPenney holiday catalog. A month later, the toymaker recanted, saying there were plenty of dolls to meet the huge demand.

With more than 11 million catalogs already in mailboxes across the country, JCPenney officials wrangled over how best to publicize the toy to their shoppers. A decision was made to post a photo of a Power Ranger on the company's fledgling Web site alongside the 1-800 ordering number. And so began the boom of Internet retail.

Today, American consumers are avoiding shopping mall crowds in record numbers, preferring to order holiday gifts with keyboard and mouse clicks rather than braving checkout lines. And though catalog sales -- most shoppers use the 1-800 number -- still outpace Web orders, the explosion of Internet retail has some experts wondering about the future of the Web's shop-from-home predecessor, the mail-order catalog.

Internet retail sales have nearly quadrupled during the past five years, growing to an expected $52 billion in 2004, according to statistics from the Direct Marketing Association, a New York-based trade group. Catalog sales have also grown during that period, but at a much slower pace.

"It's primarily a shift in dollars from off-line to online sales," said Graham Mudd of Comscore Networks, an online tracking and research firm. "This is the beginning of what I assume is a long trend."

Comscore forecasts shoppers will spend $15 billion online in the November-December holiday season, up 25 percent from last year. And the DMA projects overall Web-based retail sales will jump 27 percent this year compared with a modest 6.7 percent rise for catalog sales.

But that doesn't mean catalogs are going the way of the Betamax. Retail experts say catalogs remain an important component of marketing. Companies believe catalogs are often the first place consumers see merchandise and therefore serve as a valuable tool in motivating people to buy. The sharp rise in Web sales may have taken some dollars away from the catalog business, but catalogs continue to drive customer interest and generate Internet, phone and even in-store sales.

"The print catalog is far from being a dinosaur," said the DMA's Amy Blankenship. "Companies will tell you that when they send out their catalog, Internet traffic and orders spike. Some of those Internet sales are driven by catalog shopping."

The DMA projects 2004 retail catalog sales at $143 billion, still nearly triple Internet sales. But the growth of Web sales suggests that disparity will shrink in the future.

JCPenney has printed a catalog for more than 40 years, the first appearing in 1963. The circulation has varied during that time, from 2 million issues of the original to about 10 million of the 2004 edition. Since the Power Rangers experiment 10 years ago, the company has watched Web sales skyrocket.