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A challenging slow-growth economy, a shift to Web self-service commerce and stiff competition from big box and specialty retailers have been buffeting department retailers. To survive and prosper, they have had to make tough decisions including closing contact centers and stores.

J. C. Penney announced Monday that it is doing just that to bolster profitability. It is shuttering its Grand Rapids, Mich. and Albuquerque, N.M. contact centers and consolidating all activity supporting its department store and online customers into three existing facilities in Columbus, Ohio, Pittsburgh, Pa., and Milwaukee, Wis.

Further reducing the need for the contact centers, J.C. Penney has completed winding down its legacy catalog business; it is the last American department retailer to offer a print catalog. (Sears Canada still maintains one.) The catalog closure also includes boarding up its 19 catalog outlets that carry a significant amount of catalog merchandise; this will take place in 2011 and 2012.

At the same time, the retailer is closing stores in Morrow, Ga.; West Dundee, Ill., Des Moines, Iowa, High Point, N.C. and Culpeper, Va. and one home store in Duluth, Ga. It will be consolidating its furniture outlet business, closing one store located in Rancho Cucamonga, Calif. It is also reorganizing its custom decorating business by closing its Sacramento, Calif. Custom Decorating Fabrication facility, leaving one remaining facility in Statesville, N.C., where it will increase its staffing to support customer demand. It will also shrink the number of in-store studios from 525 to 300 in key markets.

“We are focused on increasing profitability and accelerating our growth,” said J.C. Penney chair and CEO Myron E. (Mike) Ullman III. “To achieve this, we undertook a thorough evaluation of our operations to ensure we are managing costs and allocating our resources to the strategies that will best drive both our top and bottom line, with the objective of delivering enhanced returns to shareholders.”

The closures come though at a difficult time for individuals and families. WOOD-TV Channel 8 in Grand Rapids, Mich. reports that 370 employees will be affected, the majority of which are part-time; the center will close April 2. Observers note that in the downturn many individuals have had to take multiple part-time jobs because they are few full-time positions available.

WOOD-TV also reported that Grand Rapids made Newsweek’s dubious top 10 list of cities “that it believes are dying”: those that have the steepest decline in population since the last U.S. Census where the numbers of inhabitants 18 years and younger are also dropping.

Wall Street has applauded J.C. Penney’s actions. Bloomberg carried an AP story that reported that the retailer’s shares leapt seven percent following the announcement.

“It is always difficult to make decisions that impact our associates, and we are committed to treating them fairly,” said Ullman. “As we continue to position our company for the future, we determined that these steps are necessary to capitalize on the growth opportunities we see ahead while we ensure we are managing costs appropriately and continually enhancing the profitability of our operations.”