Retailers Cut Back on Newspaper Circulars
August 18 2015 - 9:15PM
Dow Jones News
By Suzanne Kapner
Retailers' love affair with print circulars finally may be
coming to an end.
Several large retailers, including Wal-Mart Stores Inc., Kohl's
Corp. and Sears Holdings Corp., significantly scaled back the
number of newspaper circulars they distributed this summer,
according to the companies and data compiled by research firm
Market Track.
Wal-Mart published half as many circulars in June, compared with
the same month last year, according to Molly Blakeman, a company
spokeswoman. For the three months to July 31, Wal-Mart reduced its
circular count to four pieces from 20 a year ago, Greg Foran,
Wal-Mart's U.S. chief, said on Tuesday in remarks discussing the
company's earnings.
Retailers have remained wedded to the brightly colored
advertising inserts that spill out of Sunday newspapers, even as
shoppers make more of their purchases online. That is largely
because they are one of the most successful ways to get customers
into stores. Despite their expense--costing up to $1 million for a
single run--they have proved more effective than banner ads, search
marketing and digital circulars, retail executives have said.
But that dynamic is starting to shift as retailers are being
forced to rethink their marketing to save money.
Wal-Mart's decision to reduce its reliance on circulars stemmed
in part from a strategy earlier this year to ratchet up pressure on
suppliers to cut the cost of their products sold in the retailer's
stores. As a result, some of the money that suppliers had
previously contributed to defray the cost of circulars should go to
lowering prices, according to Mr. Foran.
Kohl's has been testing ways to target consumers who are most
likely to shop with the retailer. In one test this spring, it sent
circulars only to ZIP Codes with the highest concentration of loyal
shoppers.
"We have shifted investments from preprint to other channels,
like digital, social and radio," said Will Setliff, Kohl's
executive vice president of marketing. Mr. Setliff said the
approach allowed Kohl's to tailor its marketing to customer
preferences and local tastes.
Even with the circulation declines at major newspapers, inserts
still land in about 50 million households, according to Borrell
Associates, a market-research firm. Publishers have a lot at stake
to keep it that way, since circulars account for about one-fifth of
newspaper advertising revenue, according to Borrell.
Making a break with circulars isn't without risks for retailers,
either. Market Track found that 75% of shoppers use circulars to
find deals during the back-to-school shopping period, which occurs
over the summer.
"Some retailers appear to have missed an opportunity to
communicate their deals during the second biggest selling season of
the year," said Traci Gregorski, Market Track's vice president of
marketing.
Wal-Mart, Kohl's and Sears each reported sluggish sales for the
second quarter. Kohl's said last week that the back-to-school
season was getting off to a later than expected start, in part due
to a shift in state tax-free holidays.
Kohl's distributed 19 circulars from June 1 through Aug. 14,
compared with 27 circulars in the same period a year ago, according
to Market Track. The total number of pages Kohl's circulated
declined nearly 27%. At Sears, total pages were down 44% for this
period. A Sears's spokesman declined to comment.
Wal-Mart, Kohl's and Sears were among 14 large retailers whose
circular distribution was tracked by Market Track. All told, the
number of circulars fell 24%, while the number of pages mailed
decreased 27%.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 18, 2015 21:00 ET (01:00 GMT)
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