WMT Walmart Inc

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

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(END) Dow Jones Newswires

August 18, 2015 21:00 ET (01:00 GMT)

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