The new value-driven consumer and changing retailer strategies pose challenges for many retail product categories, including magazines.
The upside: They also open new opportunities for magazines to partner with retailers to achieve specific chain objectives, as well as boost magazine sales.
That was the core message from two speakers in a print-focused session during this year’s Publishing Business Conference & Expo: Jay Annis, VP trade sales, books and magazines for Taunton Press and president of the Periodical and Book Association of America (PBAA), and Jerry Lynch, president of the International Periodical Distributors Association (IPDA).
Annis and Lynch summarized factors that have contributed to declining magazine retail sales since the recession hit. These include consumer cutbacks on impulse-driven products of all kinds, and grocery retailers’ greater focus on necessities/perishable items, which has resulted in reduced space or less favorable locations for magazine mainlines (and other general merchandise products) in many supermarkets and supercenters.
Those two retail channels, they pointed out, continue to account for nearly 50% of all magazines sold (about 34% and 14%, respectively).
But their emphasis was on ways to leverage magazines’ unique strengths at retail. Some of their key points:
Design Programs That Support Retailer Objectives
What do retailers want? Programs that can drive sales and traffic and, importantly, given the heightened competition for the grocery dollar from retail channels ranging from club stores to drug and dollar stores, ways to differentiate themselves and create customer loyalty. “The core point is to engage the retailer around serving and exciting our mutual consumer,” stressed Lynch.
To do this, publishers need to understand individual retailers’ specific priorities, and build programs around those. Some possible approaches include magazine coupons that tie in with retailer loyalty programs, point-of-purchase displays for hot issues, new formats and items like bookazines and themed spin-offs/SIPs; and special events like editor appearances and coordinated seasonal tie-ins cross-promoting magazines and related products in the store.
“Research shows that about 60% of magazine buyers will also buy a product based on something they saw in the magazine,” said Annis. “We need to leverage this and magazines’ loyalty-building opportunities more aggressively. Why not give retailer rewards members a dollar off a product advertised in an issue when they buy that issue? Or give loyalty members who buy X Magazine 10% off that issue? We can use QR codes and other new technologies to drive sales of our magazines while also tying in our advertising to drive other sales for retailers and get their basket sizes up.”
Reinforce the Category’s Profitability, Growth Potential
To set the stage, magazines need to reinforce the category’s true profitability and growth potential with retail executives at all levels. Willard Bishop studies have confirmed that magazines are among the top contributors of both sales and profits at supermarket checkouts. They also generate 11.9% of the all profits across general-merchandise categories, Lynch pointed out.
“And given that magazines have 85% to 90% penetration in U.S. households, but currently represent at most about half of one percent of total grocery-store sales, that certainly seems to point to strong opportunity for growth,” said Lynch. “Increasing sales from a quarter percent to a half percent or more translates to major sales profit growth for a retailer.”
With all of the media focus on coverage about magazine digital initiatives, the industry also needs to reinforce the continuing importance of retail sales to publishers’ business models, as well as magazines’ well-documented importance to grocery retailers’ customers.
“Retailers are concerned that these new platforms could mean magazines going the way of retail categories like music CDs and video DVDs, or traditional photography,” said Lynch. “It’s important that they understand that publishers rely on the retail channel for revenue, profits and brand awareness, and will continue to invest in it.”
More group or industry-wide investments in consumer-oriented promotions that reinforce the value of print magazines and literacy would serve to demonstrate publishers’ commitment to print and the newsstand in particular, as well as help drive newsstand sales, said the speakers.
Karlene Lukovitz is an independent business journalist who edits IPDA Daily Publishing & Retail News and writes for MediaPost Marketing Daily and other publications.