Firms That Want Strong Web Activity Shouldn't Skimp on Print

Kids playing the Yu-Gi-Oh! card game have been struggling with how to translate such popular pastimes into Cyberspace. One of the highest value-added print jobs on the planet, Yu-Gi-Oh! cards are both collector's items and carefully produced (by Mainline Litho, GAM 12/05) to thwart counterfeiters, since some of the playing decks sell for hundreds of dollars. (Check eBay if you don't believe me.) To play the game well, you've got to possess the actual card. Rare and powerful ones help you vanquish rivals.

To move such games online, publishers have created new decks with 15-digit alphanumeric codes that translate into online playable copies. The fundamental premise of the game remains—valued physical cards establish a player's powers, but now the game can be played virtually as well.

A similar challenge faces every print-reliant business, particularly catalog marketers. Traditional catalogers are trying to balance their presence online with established print branding and distribution. For the most part, direct marketers have embraced the concept of multi-channel reach: print, web and other media (newspapers, direct mail, e-mail, radio, etc.) woven together to keep the brand in front of customers, with plenty of opportunities to take the order online, by phone mail or fax.

A preeminent player is JCPenney, along with Spiegel the last of the U.S. “big book” catalogers, and responsible for some of the longest gravure runs in its catalogs and newspaper inserts. Surprisingly, Penney's is also one of the most successful Web retailers. Having established its site back in 1995, it does almost $1 billion in online sales (out of a total $18 billion). For comparison, Amazon is $3 billion. Penney's management registered great joy as its online orders have reached parity with those made by mail and phone from catalog sales—a category the company calls “Direct.”

With quarterly retail sales up 2.2%, Penney's catalog sales leaped 10%, while Internet orders rose 22%. “Direct” represented about 16% of net retail sales in the first quarters of 2006 and 2005.

Here's the troubling part: Penney's says that as it “continually reviews its catalog page counts and circulation to ensure that print catalogs remain productive,” it is planning on trimming back its print runs, “while planning for a gradual shift toward a higher level of shopping via the Internet.” The Internet now delivers 40% of direct sales.

Among other giant catalogers, the relationship between the master print brand and Internet order bookings is clear. Eddie Bauer, operating 400 retail outlets, ships 100 million catalogs, feeding sales at stores and three Internet outlets. IKEA Systems, the retail world's largest buyer of print, launched its first furniture catalog in 1951 when its owner was delivering goods on the county milk van. IKEA proofing supplier CGS tells us that in 2006 alone, IKEA will produce 173 million catalogs and 650 million other publications, with the trend on the rise. The annual IKEA catalog, with 47 editions in 24 languages for 34 countries, now reaches 100 million households free of charge.

“It's been the experience of most direct merchandisers that the Internet doesn't work as well as a commerce model without a printed catalog,” Kodak CEO Jeff Jacobson told Web Offset Assn. conference attendees. A U.S. Postal Service study found catalog recipients made 16% more visits, viewed 22% more pages and spent 15% more time at retailer websites. When Lands' End trimmed catalog runs and pages, its return was an 18% drop in sales. Sears dampened distribution by charging $5 for customers to get its catalog, just before it killed it. JCPenney is flirting with disaster as big Internet growth obscures from view the driver of online orders—printed catalogs.

For gamers, catalogers and publishers, too, the fundamental premise holds true: Valued brands are sustained by print, feeding sales—or plays—online.

bill.esler@reedbusiness.com