Off the rack

Grocery remains a significant source of single-copy magazine sales. Consumers may be absorbed in all of the reading material available on digital readers, but do not write off the magazine category in grocery just yet. Industry observers say as consumers become more able and eager to make impulse purchases, retailers can enjoy strong sales in the magazine category, and not just in the checkout lanes. “The category is challenged, but that is not the whole story,” says Jerry Lynch, president of the New York-based International Periodicals Distributors Association (IPDA). “In terms of a vehicle, 97% of circulation remains in print. The medium still resonates and it still has value.” The value, according to IPDA research, is that magazine single-copy sales generate $70 million per week and more than $3.5 billion annually at retail. Those numbers are for all outlets, and by comparison, the news for grocery is less rosy. According to New York-based Nielsen, for the 52 weeks ended Nov. 24, sales of magazines in food, drug and mass outlets totaled $1.3 billion, down 10.2% compared to the same period the previous year. Unit sales were down too, to just over 350 million, a decrease of 12.1% compared to the same period the previous year. Blame the slow economic recovery—meaning fewer shoppers and shopping trips—not digital readers. “We get impacted by traffic,” says Lynch. “When you lose a few shopping trips, you lose exposure and your sales are going to be impacted.” Still, supermarkets are the largest channel for magazine sales. According to Magazine Information Network, known as MagNet, supermarkets have a 34% share of magazine sales, followed by supercenters, with just over 14%. William Romollino, vice president, shopper insights for Time Warner Retail Sales & Marketing, based in Parsippany, N.J., agrees that decreased store traffic had a negative effect on print magazine sales. “The magazine industry has a big hole to come out of,” he says. “We do see some progress.” Romollino says so far, much of the progress has been in increased sales in mass market titles such as Food Network, In Style and National Geographic. Magazine publishers are also seeing success in bookazines, the special editions that cost more than regular issues and are strong impulse purchases. “High-priced special interest magazines are still growing,” says Romollino. “Those titles have the most differentiated content that is not easily replaceable by other media channels.” For example, many magazines offered special cookbooks and baking editions during the winter holidays. Consumers who purchased those bookazines knew the new recipes would be different from the perhaps dozens of cookbooks they had at home, and more importantly, better than the free recipes they could find on the Internet. “If you are on a quest for knowledge you can never quite get enough,” says Romollino. This year, People and US Weekly published a variety of successful bookazines, including some featuring Britain’s young royal couple. Other titles include Time’s special edition about Abraham Lincoln, Life’s icon special about Betty White, and Life’s special edition on Clint Eastwood. Bookazines that offer health information also do well. Rodale, the Emmaus, Pa.-based publisher of Prevention and other magazines, offers Outsmart Diabetes, a guide that contains food and fitness information. “We have several issues throughout the year of Outsmart Diabetes, and it usually does very well,” says Dick TerlaakPoot, senior national marketing director for Rodale. The company also publishes digest-sized guides on breast cancer, heart health and walking, among others. The diabetes digests do well partly because the content is important to many shoppers and also because Rodale has developed a display rack that accentuates the smaller format publications, say company officials. “The whole key behind impulse sales is you have to see the cover,” says TerlaakPoot. “We developed a ‘booster’ seat that lifts up magazines, so you can see the cover better in mainline, in the in-aisle section of the store.” The booster seat also allows retailers to feature four magazines in one space. The strength of the bookazines is evidence that the magazine category is still viable, says IPDA’s Lynch. “If the theory is that magazines are dying, then why are products of high quality selling for more than $10 doing so well?” he says. “The medium still connects with consumers if it is the right product.” Opportunities for self-checkout The right product is important, as is the right display. When industry insiders talk about magazine displays, they usually refer to the front of the store. Romollino says 70% to 80% of magazines are sold at checkout, but in some stores, the self-checkout is missing the opportunity for these sales. That is why Time Warner collaborated with the technology company NCR, magazine publisher Source Interlink Cos., and Coca-Cola to develop a display rack for the self-checkout area. The fixture features high impulse, frequently purchased items, including magazines and beverages. The display offers an easy solution for stores that want to encourage consumers to buy those impulse items, without cluttering the area. “In some self-scans, either there is no merchandising or there is temporary merchandising,” says Romollino. “Shoppers feel like it’s an obstacle course and they get frustrated.” Cross merchandising is another tactic for boosting magazine sales. TerlaakPoot says Rodale is working with some retailers to feature Prevention magazine and the Outsmart Diabetes digests under the counter in front of the pharmacy to encourage impulse purchases. Other cross merchandising includes putting magazines in the wellness sections. For example, retailers might display Women’s Health, which TerlaakPoot says saw an uptick in sales in third quarter 2012, with the vitamins and supplements. Rodale also offers off-shelf displays including power wings on end caps. The displays hold eight to ten magazines and do not take up floor space. Seasonality also plays a role in magazine sales. TerlaakPoot says sales of Men’s Health, Women’s Health and other Rodale titles increase 30% to 60% in January, presumably as consumers make New Year’s resolutions. This year Rodale partnered with the San Antonio, Texas-based grocery chain H-E-B to offer the New Year New You promotion. Shoppers who buy a copy of Men’s Health or Women’s Health and a copy of Prevention get a free six-pack of H-E-B private label water. TerlaakPoot says H-E-B created the signage, which the magazine distributor will place in the bottled water section and near the magazines in the mainline aisle. March Madness Lynch suggests other seasonal cross merchandising opportunities, such as sports-related promotions. If a local college team plays in the NCAA basketball tournament, stores can merchandise sports magazines next to the chips for example. “If you have a store theme during March Madness, you can include magazines as part of it,” he says. The mainline aisle remains an important area for magazines, even though the front of the store gets more attention from consumers and industry experts alike. In fact, Time Warner conducted a Magazine Mainline Best Practices Study with the IPDA, Dechert-Hampe Consulting, and others. Among the key findings: high performing stores enjoy magazine sales that are 60% higher than average performing stores, successful mainline magazine aisles measure 12 to 15 linear feet, mainline magazine aisles perform better in the back part of the aisle, and successful cross aisle adjacencies include greeting cards, paper products, and seasonal products. The research included 760 stores in North America. IPDA has an ongoing campaign, Magazines: Power in Print. The campaign includes ads and direct mail pieces sent to retailers, highlighting certain plusses of the category, such as that 93% of U.S. households read magazines and that the magazine category’s true profit per unit is $0.56. That figure is higher than for general merchandise as a whole ($0.21), as well as HBC ($0.39), grocery ($0.35) dairy ($0.38), and frozen ($0.50). Magazines deliver 12% of general merchandise’s profit, while using only 4% of GM space. “It’s important not to lose sight of the positives the category does bring, along with new opportunities,” says Lynch. “Retailers that are connected and really managing the category are having success.”