Targeting shoppers with the right reading matter and product mix at the point of sale is common retail practice, but not in the highly-charged magazine category.
When it comes to allocation and placement of magazine titles at retail, those that most fulfill shopper demand are too often not available.
A case in point: A dominant Southwest supermarket chain has a store in a low income area where almost 30% of its customers live on government subsidies. On the mainline racks are displayed 24 titles on home building, remodeling and decorating. "These are people who have a hard time getting food on the table, let alone decorating their homes," said the chain's category manager, who declined to be identified. These titles were dumped in the store. At the time, the chain exercised a lot less control than it does today. But dumping titles to satisfy publishers' distribution quotas is just one of many problems that have plagued a distribution system trying to recover from dramatic upheaval over the last several years.
Besides the challenge of doing business within a system still seeking a level foundation, many obstacles to achieving an optimal assortment on the mainline racks and at checkouts are cited. These include initial placement offerings (IPOs), cutbacks in print runs and allocations at retail, self-interest on all distribution levels, lack of competition, use of limited authorization lists based solely on top-volume performers and an ineffective UPC coding system for magazines.
"The entire distribution and allocation process is at best broken," said one frustrated retailer from a major supermarket chain.
Most in the publishing industry will agree the system is far from perfect when it comes to facilitating category management principals at the point of sale.
"We are at a lower point," admitted Bill Bishop, president, Willard Bishop Consulting, Barrington, Ill., who was named earlier this year as facilitator of the New York-based Magazine Publishers of America's Magazine Retail Advisory Council, the publishing industry's retail committee group.
Bishop was asked if he sees any improvements being made within the distribution model. "Sadly, the answer is not yet," he said. "Sell-through efficiency is down. People are allocating less product out there because they are trying to control their costs."
Mike Sullivan, president and chief executive officer of Comag Marketing Group, the New York-based sales and marketing arm of Conde Nast and Hearst publications agreed. "The current newsstand distribution model has come under intense pressure during the past five years, and it doesn't appear close to recovering in the immediate future. Massive consolidation and change in the economic model has put wholesalers under a great deal of stress in today's economic environment. Wholesale distributors are focused on how to take costs out of their system. Oftentimes, we find that this manifests itself at point of purchase."
Business is being conducted, and sometimes hurt, by a series of actions and reactions on all three levels of distribution, some executives point out. "The system," said one retailer, "does not reward efficiency and effectiveness. It's based upon monopolies and leverage."
While retailers acknowledge the many problems and challenges to selling magazines today, they also admit the category is too important and profitable to walk away from.
"Some retailers are segmenting and targeting their offers. The magazine product category has a unique flexibility to help retailers do that. Magazines lead, shape and anticipate shopper behavior. There is also a lot of history for cross merchandising," said Bishop.
Some of the leading chains reportedly surmounting distribution obstacles, and working to get a better mix of products on their shelves to meet shoppers' demands and needs, are Wegmans Markets, A&P, Marsh Supermarkets, Albertson's, Stop & Shop, H.E. Butt and Safeway.
"There are some retailers that are sophisticated in the process and those will win the game in our category. They use the tools and look at the information to make their decisions," noted Gerald Farro, newsstand director, Wenner Media, New York.
The methodology being used is not any different than that used to tailor other assortments -- use of Spectra data and product indexes, sales history of title, shopper POS data and reader profiles.
The MRAC did a series of retail tests several years ago and came up with some best-practice recommendations. Among them were demographic clustering and micro marketing to make sure that, in appropriate markets, Hispanic and/or African-American titles are among the selection. The committee also recommended linking health, nutrition and fitness magazines with prescription drugs and health foods. It suggested that the Internet explosion warranted outposting of computer magazines in those stores with the right demographics. Beauty and fashion magazines are appropriate in the cosmetics and fragrance aisles, especially as the high-impact editorial and advertising content of the magazines help drive business in these categories. In addition, seasonality should be given weight in the category and all related merchandise for holiday and event promotions should be placed in one dedicated, high-profile location.
"Today, more than ever, the right mix of titles are getting to stores. We are getting closer because of the use of demographics and store clustering, matching up the editorial demographics with demographics of the store and tying that into the store marketing program. Although it's not perfect, it's gotten better," said Richard Alleger, vice president magazine division, Rodale Inc., Emmaus, Pa.
"Ziff Davis media's goal is to identify the individual stores that have the highest propensity to sell significant quantities of electronic gaming and computer magazines," said John Fugazzie, director of retail marketing, Ziff Davis, New York.
"With over 4,000 titles to choose from, and the continued segmentation that evolves in the magazine business, it's critical that retailers and publishers spend significant time clustering stores and developing the store-specific authorized lists, and ultimately replenish programs off the point-of-sale data," he added.
All said, most believe the system has to improve and become more efficient. "Yes, it will change," said the frustrated retailer. "You will see industry leaders step up to the plate and deal with the problems. I don't think half of the retailers realized the opportunity that was out there. Clearly, the category's taken on more importance and more retailers are paying attention to it."