HANDLING THE VOLUME

JUDY CORCORAN

At dawn every Monday, a panel truck loaded with bundles of magazines stops in front of a Sloan's supermarket in New York City's Upper East Side. Two men jump out and enter the store. They quickly snatch up last week's TV Guide, National Enquirer and Time magazines, and leave bundles of the current week's issues.

The delivery men from Hudson News, the local magazine wholesaler, don't bother with merchandising. They have as many as 25 retail stops to cram into each Monday morning. Store personnel unbundle the new issues and place them in specially designed racks at the checkouts.

Later on in the day or week, part-time merchandisers hired by several magazine distribution companies arrive at the store to stock, straighten and replenish the magazine racks. Sometimes they set up in-store promotions for the magazines they are distributing, for brand marketers who advertise in the magazines they handle, and occasionally for anyone who wants to hire them out.

The merchandising force in stores today is getting involved with much more than keeping magazine racks in shape.

"The fact that we're in 20,000 accounts a week with our merchandisers and that we have significant relationships with the retailers makes [other in-store activities] a natural for us," says Mike Porche, division vice president of Distribution Services Inc., West Palm Beach, Fla. DSI is a wholly owned subsidiary of American Media, Lantana, Fla., publisher of the National Enquirer and The Star. Its merchandising force of 150 managers supervises a field staff of 850.

While most distribution companies are owned by magazine publishers, they handle more than just the magazines that their owners publish. As contract field forces, they handle competitive magazines, books, trading cards and occasionally other products. With the availability of handheld computers, many have expanded their capabilities to include the information-gathering business.

One of the largest magazine distribution field forces is operated by Time Distribution Services, a unit of Time Warner, New York. This force of 150 full-time and 600 part-time employees distributes all of the Time Inc. magazines, plus others such as Meredith's Better Homes and Gardens and Ladies' Home Journal, and Conde Nast's Vogue, Glamour, Mademoiselle and Self. It also handles Fleer trading cards.

"We're in all stores that sell magazines, but primarily supermarkets and airports," says Richard Lawton, senior vice president of marketing at TDS. "We concentrate the efforts of our part-time people in multiple checkout stores simply because that's where we have the greatest effect."

ICD, another major player, is owned by Hearst Corp., New York, which publishes Town & Country, Cosmopolitan, Popular Mechanics and Motor Boating & Sailing, among others. ICD also distributes magazines for The New York Times Sports/Leisure Group, including Golf Digest and Tennis Magazine, and books for Avon and St. Martin's Press.

According to DSI President Mike Roscoe, his firm's merchandising service began with the need to keep all of those copies of the Enquirer and Star well stocked at the checkout.

"Our role has expanded in the past five years to include the marketing, distribution and promotion for more than just those titles. We handle magazines for Hachette Filipacchi, Grunner & Jahr, Newsweek, Pillsbury and more," says Roscoe. DSI designs front-end checkout fixturing for retailers, lays out the magazines within the fixture and physically puts them in stores.

American Media recently announced two innovative extensions of their distribution services. One is the Paperless Coupon Network, which alerts shoppers to discounts via shelf signs and then records the discount at the checkouts. The other is Entertainment Central, the semipermanent video and CD endcap displays that can cross-promote with grocery items.

DSI also has acted as a third-party merchandising provider for at least one nonmagazine client. DSI's Porche describes an involvement in which his force placed trial packs of Tylenol for Johnson & Johnson's McNeil division at the checkouts a few years ago.

"We're starting to get back to working with brand marketers who aren't advertising in the magazines," Porche says. "We've been concentrating on growing the core business over the last few years, but now we've grown our publishing side about as far as it can go." Glen Griffiths, vice president of strategic promotion at Johnson & Johnson's McNeil Consumer Products division, Fort Washington, Pa., reports that some in-store promotions have worked, and some have been "learning opportunities" for his brands. As for the in-store capabilities of these distribution companies, he calls these field forces "rent-a-sales" and likens them to third-party merchandising firms.

"In any one market," he explains, "there are between one and four companies that hire or keep phone lists of 12 to 1,200 people who are willing to work these odd hours and go to the stores and do this in-store activity. In many cases, two different brokers will contact the same agency and you end up with the same people stocking the product. The only difference between them is the quality of the management and the depth of the field supervision."

One field rep says it's common practice for store service personnel to work part-time for more than one distribution company. While some may dabble in other areas, most distribution services concentrate on setting up promotions for the magazines they distribute and their advertisers.

"We try to keep it as simple as possible," says Ron Murray, director of retail sales at Meredith Corp., Des Moines, Iowa. "Once you start diverting your field representative to do other things, you get confusion. Sometimes they don't know the layout of the store and that takes up valuable time."

Lawton of TDS adds, "Essentially, our people merchandise our magazines at checkout. So if People magazine is sold out at the express checkout on Thursday, they'll move more copies in from another aisle. At that time, they also set up any type of point-of-purchase display, whether it's in support of one of our ad-related-type of promotions or one of our special issues."

Lawton was involved with promoting a special issue of Life magazine for Ralston Purina Co. called, "Life: Best of Friends." Purina used this $4.95 custom issue about pets as a free giveaway if consumers bought boxes of its pet food. TDS put up the displays next to the Purina products.

"This was a particularly successful promotion," Lawton recalls, "because we gave the issues to the retailers and paid a flat fee to the wholesalers to deliver it. If consumers wanted to buy the magazine -- without the Purina products -- the retailer could keep 100% of the cover price. We didn't sell it into the retailer."

TDS handles the in-store aspects of many promotions for Meredith Custom Marketing as well, and participated in a promotion with the Florida Department of Citrus this past spring. It involved placing 450,000 copies of a custom 96-page recipe booklet in Meredith's racks at the checkout counters of some 30,000 supermarkets nationwide. A month or two later, TDS set up 4,500 corrugated freestanding cardboard displays that held an eight-page version of the recipe booklet. Five million of these were given away.

TV Guide, distributed by Murdock Magazines Distributors and owned by Rupert Murdock's News America Corp., New York, is the largest in-store magazine in terms of circulation. Bob Bedor, executive director of operations for TV Guide, explains that the company have two ways of "attacking" in-store promotions.

"We have a large staff dedicated strictly to store-level activity for all of Murdock's magazines. This includes setting up permanent displays, shelf talkers, special displays, fixing racks and merchandising magazines -- anything that has to do with improving the appearance and display of our magazines."

The company also employs a part-time retail merchandising force that is dedicated to merchandising magazines on the front end as well as involved with selling cardboard dump-bins and any other magazine-related or consumer cross-promotions.

Bedor's group leveraged a TV Guide promotion in-store recently with the NFL kick-off issue. Based on the success of a previous test that featured six different TV Guide covers in six different football markets, with the quarterbacks from the specific market on the cover, the company increased the size of the promotion to 28 markets and 28 covers this year.

"What led to the tremendous success was that we tied in a contest with store managers, incenting them to build a display tied to TV Guide and snack products. We let them take Coke, Budweiser, Frito-Lay or other relevant products and build a display."

This group recently set up shelf-talkers and point-of-purchase displays with outside brand marketers such as Feroile Group and "products that were sponsoring the NCAA basketball season," Bedor says. This is an area the company is actively pursuing, he adds.

Most distribution forces report that in-store activity has increased over the past 18 months, with advertisers looking for more direct-value merchandising such as shelf-talkers, sampling and rack cards.

"These promotions have increased over the years because there is more interest on the part of advertisers to become more visible or to support their efforts with point-of-purchase promotions," explains Ray Ginther, director of retail promotion at ICD, the Hearst-owned distribution company. A typical in-store promotion for the company involves conducting a sweepstakes for one of the magazines by hanging a tear-off pad next to a corresponding product. ICD can handle in-store sampling, but does so by using outside merchandising forces.

One direction where ICD is heading is the integration of point-of-sale information with promotion through the use of scanning.

"In general terms," Ginther says, "the industry is looking at using point-of-sale information to get an effective read on the promotion. For instance, if you are using in-store radio, you can measure how much more product was sold during the time the radio spots were running. You can determine not only did the chain sell X number of cases, but which stores within the chain did how much."

Some other distributors don't agree that the use of scanning information is worth the effort, time and money it requires. Murray of Meredith says his company is using scan-down information only on a test basis when a chain or client specifically requests it. "Looking at this information is a new area for a lot of us in magazine publishing, and there are still some problems with it. For instance, scan-down at the register doesn't pick up the extension code on the magazine, so we can't discern from one issue to the next. Then there's the problem of coordinating and reading all that information. And then the technology is changing so quickly that the information you collect today is already obsolete," he says. Bedor at TV Guide agrees there are inherent problems with the systems. "We've purchased scan data from various chains around the country, but they can't separate weekly issues."

DSI has equipped its handlers with Telxon scanners and essentially has entered into the information-gathering business. DSI's Porche says his people can now report on things like in-stock/out-of-stock conditions, pricing on competitive products and display execution, and he adds that they can distinguish between different issues. TV Guide's Bedor says he plans on testing handheld scanners "down the road," and Murray of Meredith agrees that handhelds make sense. "We'll be able to do more on-site data gathers of competitive information," Murray says. "Then we have additional services we can market."

One industry insider points out that the use of scanned information may be new for publishers because they're not traditional product marketers. "They're starting to get involved because of distribution changes. They are, in a sense, being dragged into the modern era," he says. The use of scanners may be able to show what impact a particular promotion has had at a particular point-of-sale. "That puts publishers in a tough spot," the executive says. "They will find that they need to prove whether a free value-added promotion -- which used to include a few shelf-talkers here and some displays there -- actually had some impact. Otherwise, there's no added value. It then becomes very important to design these things to be effective, not just to please the advertiser is some intangible way."