Supermarkets are enriching their total-store performance and raising their image as category destinations by tailoring magazine assortments to individual stores.
In addition, retailers are continuing to outpost titles within areas of parallel interest -- such as Fit Pregnancy and Parenting by baby care, Gourmet and Bon Appetit by fresh foods, Men's Health and Shape by vitamins and supplements.
Such targeting relieves stress on the entire distribution system, cutting return rates of unsold copies from roughly 70% to near 50%. "If you're not returning at least 50%, you're not maximizing your RDA [retail display allowance] payments," said Ray Wallace, GM/HBC director at the 20-store Cub Foods franchise in Atlanta. "We're now running a 51.5% return ratio."
The mainline practice of micromarketing also lessens retailers' idle inventory and improves overall sell-through of single copies. It eliminates clutter of unwanted titles neighborhood-by-neighborhood and increases space for titles in demand within mainline displays. A few examples: Ebony and Black Enterprise in African-American neighborhoods; Spanish-language, boxing and wrestling magazines in Hispanic areas; Fortune, Motor Trend and Cigar Aficionado in upscale markets.
Wallace noted, for instance, that in three consecutive years of micromarketing magazines, Cub has reaped annual sales gains in the high teens-low 20s percent range, "in a flat commodity category. Micromarketing is the main reason, but we've also made our 24-foot departments more visible and better lit to improve customer comfort and ease of purchase."
Meanwhile, Bashas', Chandler, Ariz., has found similar strength in the concept, scoring "a double-digit increase in magazine sales during the first quarter" from its use of the Kaleidoscope micromarketing program offered by Anderson News, said George Fiscus, vice president, general merchandise, Bashas'.
"With the proliferation of niche titles over the past 10 years, we now have over 4,000 titles from which to choose our mix, with an average holding power of 700 titles per store. We've created a different base selection of titles for each of our store formats, tailored to their unique demographics. With Kaleidoscope we narrow the selection from each base list to fit the individual customer profile of each store," Fiscus said. "When a store's magazine selection reflects the individual shopper in the store, we deliver more directly to their unique expectations."
The same is true at Syracuse, N.Y.-based Penn Traffic, operator of 220 supermarkets under the Big Bear, Big Bear Plus, Bi-Lo, Quality and P&C names in six states, and wholesaler to 83 franchisees and 77 independents. "In our urban markets where there's population diversity and micromarketing makes sense, we make sure the right stores [Big Bear in Columbus, Ohio, and P&C in Syracuse] get the muscle, automotive, financial and computer magazines," explained spokesman Mark Jampole.
Penn Traffic relies on five regional distributors to tailor displays to target markets. "They share demographics with us, and we use data from our Big Bear Wild Card frequent shopper program internally to refine what the distributors tell us. We never share any of that information with any of our vendors," Jampole said.
Pratt Foods goes even further to sell publications relevant to customers' health in its newest store in Edmond, Okla., which sells only natural and organic products. "The store hosts five or six instructional classes each week on such topics as stress, wellness, menopause and diet," said Kay Stanfill, R.D., the chain's corporate dietitian and nutritionist, who also teaches at the University of Oklahoma and Oklahoma State University.
"The classes are catalysts to publication sales. Our philosophy is to give people a huge choice of information about nutrition, disease states, cooking, homeopathy, natural and organic food, and more. The store also has a reading center with a copy machine that's free to use. Our approach gives people an information base to making their own decisions about eating, health, everything," Stanfill added.
What Weider Publications aims to do marries the surging self-care movement with retailers' needs to carve productivity from every inch of the store. "Fit Pregnancy may not see the light of day in mainline because it's ranked about 250 out of 5,000 titles, but there's a perfect opportunity for it in the baby aisle with the likes of Parenting and Yoga," said Mike Gillen, vice president, retail marketing, Weider Publications, New York. "Our sidekicks on endcaps create incremental sales for retailers without displacing anyone. Niche titles bring authority to health, gardening, floral, automotive, and food and beverage categories, for example. People look to them for knowledge and ideas, and chains must find the space to satisfy customers.
"We don't go after every store in a chain. Our efforts are targeted and successful. We developed Whole Health fixtures with Rodale Publications for Copps [now part of Roundy's], which drew from our knowledge of titles that sold well in health food stores and chains like Whole Foods and Wild Oats. We saw triple-digit increases in unit sales in our titles," said Gillen.
Weider and Rodale have built the category with cross-merchandising efforts at Wegmans, King Kullen, Giant Food, H.E. Butt and others.
Gillen calls for a new sensitivity to "the benefits of magazines specifically targeted to certain areas. The category's profitability has risen for retailers since industry consolidation in 1995 and 1996, and so is high on the radar screen of supermarket management. However, integrating magazine profitability throughout the store is a challenge."
Internal department barriers within supermarkets often make it difficult to authorize the cross merchandising of magazines -- even though the trend is emerging at Wal-Mart and elsewhere, and can become a competitive threat if supermarkets don't get on board.
Another challenge, sources agree, is the lack of consistent wholesaler service of outpost displays, which wholesalers often view as labor-intensive with nominal reward. "To get that done, retailers must demand performance, and publishers must educate them about the total-store layout and provide fixtures and product," Gillen added.
Commenting on the potential of micromarketing magazines, Bill Bishop, president, Willard Bishop Consulting, Barrington, Ill., called it "huge, an imperative. Studies we've done on convenience stores for the Periodical & Book Association of America show three major points: Consumers are better served by the practice because product they demand will be there and easy to find. Retailers make better use of merchandising space without jeopardizing customer satisfaction. Wholesalers benefit because currently 70% of product shipped to stores is returned and shredded. They receive no compensation for that labor, and micromarketing will lower that percentage."
The dilemma he cited, however, is that "UPC codes on periodicals don't disclose issue-specific movements without further analysis. That's why the trade is embracing scan-based trading. It gives them the data to micromarket, and it allows retailers to eliminate quite a few of the costs of receiving and returns handling, which is now a stone in their shoe."
The Magazine Retail Advisory Council, New York, recently issued a white paper that offers a guide to testing the scan-based trading.
Bishop urged retailers who want to micromarket to collaborate with national distributors such as Comag Marketing Group -- a joint venture between Conde Nast and Hearst -- or Time Distribution Services, or selected wholesalers or publishers that have proven their expertise and interest in improving retailer performance.
Added Cub's Wallace: "We use frequent shopper card data and local newspaper demographics to identify our base and load in appropriate titles. Bottom line, if your distributor is good and you trust them, they'll make the right decisions for you."
Bashas' Fiscus said that Anderson News' Kaleidoscope is even more refined. "Kaleidoscope combines census data and store-level magazine sales to profile each store's customer base. This is a departure from other programs that only look at who lives in the neighborhood. Cluster groups and their media interests are identified and combined with store magazine sales to tailor the store mix to fit our customers' desires. The program constantly evolves as sales and demographics change."