PROFITS AND PANACHE

Dan Alaimo

PHOENIX -- Bolstering the front end while enhancing the mainline is a key strategy for success in the magazine category.

That's part of the story the magazine industry has been telling retailers in its efforts to boost sales in a category that can be beneficial to both sides of the supply chain. The advantages of magazines and the ways to successfully merchandise them will be on the agenda at this week's Retail Conference of the Magazine Publishers of America here.

A prolonged decline in single-copy sales has soured some retailers on the category, while the proliferation of self-scanning lanes in stores has reduced opportunities for impulse sales at the front end: the lifeblood of magazine vendors and a lucrative source of sales for retailers.

However, many have renewed their focus on front-end merchandising, finding new ways to bring magazines and other products to self-scanning lanes, and creating new opportunities in mainline sections. In some cases this means creating reading centers -- one new Kroger Marketplace store ties the category in with a Starbucks kiosk and tables -- or combined entertainment sections, taking advantage of the natural synergy of magazines, books and DVDs, and occasionally other products like music CDs and video games.

Increasingly, retailers are coming to see magazines as an entertainment product and responding to the challenge to bring the print show to customers.

"Magazines is a large category for us: very important, and consistently very profitable," said Bryon Roberts, vice president, general merchandise, Bashas' Markets, Chandler, Ariz.

At Giant Eagle, Pittsburgh, where the magazine category is handled by the same department that oversees videos, Doug Roe, entertainment category manager, said, "The magazine category will continue to have a strong presence in the supermarket industry. Magazines are high-volume and profitable item[s]. The challenge facing retailers is to continue to remain innovative while evolving merchandising fixtures to grow front-end, checkout performance."

"In my mind, magazines are entertainment. They are so dependent on the cover image and the content," said Tony Pooler, director of GM/HBC, Save Mart Supermarkets, Modesto, Calif.

Like other entertainment options, prices on magazines are up, he said. "So wherever discretionary income is high, magazine sales tend to be up. When discretionary income is tight, magazines and other entertainment products tend to decline," Pooler said.

"Magazines are still a great sales and profit area in a grocery store," said Steve Paul, director of nonfoods, Affiliated Foods, Amarillo, Texas. Trends like reading sections that started in the late 1990s are continuing today, he noted. "I think you see people buying as much in magazines and books as ever. They have a constant appetite for the printed media."

While industry-wide single-copy sales were down 6% to 8% last year, "we were actually showing positive numbers," said a nonfood executive with an east Texas retailer who asked to not be identified. "That is the result of working with the publishers and trying to get some displays out in front of the customers at the right time." The executive cited examples of seasonal displays of hunting magazines and titles relating to the South Beach Diet. The retailer also plans a promotion where it will sell People magazine at cost for 60 days.

"People are not walking up and buying magazines. You have to put them out in front of the shoppers. With 400 television stations now, as well as the Internet and everything else they have to read, magazines aren't the priority they once were to consumers," the executive said.

Outposts of magazines at Giant Eagle have tied into seasonal and holiday periods, as well as themed displays, such as wine, health and beauty, food and temporary price reductions, Roe said.

Meeting the challenge of getting placement at self-scanning lanes has been a priority for the magazine industry and supermarket category executives. When these lanes were first introduced, no effort was made to merchandise the usual front-end products, although this is starting to change.

"With the continued emergence of self-checkout lanes, we are faced with the task of maximizing a smaller amount of front-end selling space," Roe said. Giant Eagle recently installed new front-end fixtures, including those for self-scanning lanes, chainwide. The displays include merchandising space for other front-end products like confectionary and tobacco.

"These fixtures have allowed us to further communicate our magazine offering to customers, resulting in a growth in front-end magazine sales," Roe said.

"All of the self-scan that's going on at grocery, as well as other channels, has hurt magazine sales dramatically," said Jeff Manning, managing partner, F&M Merchant Group, Lewisville, Texas. "When you lose that [impulse] magazine sale, it's not purchased anyplace else."

While there have been some attempts to merchandise magazines at self-scanning lanes, "it doesn't turn the amount of sales that a full service front end does," said John Harrington, partner, Harrington Associates, Norwalk, Conn.

With supermarkets representing 45% to 50% of total magazine newsstand sales, addressing the self-scan lane issue is a priority. "When they first went to self-scan, there were no magazines because there was no rack. The retailers are trying to repair that now," said Dan Capell, president, Capell and Associates, Washington, which publishes the newsletter, Capell's Circulation Report.

Another challenge has been magazines merchandised in lanes that are closed. Some retailers, like Bashas', have addressed this with magazine racks that swing out to serve as a lane blocker, while presenting product to passing shoppers.

Supermarkets are paying attention to front-end displays now, noted Peter Kreisky, chairman, Kreisky Media Consultancy, New York. Cross merchandising and mainline sections are in need of the same focus.

"There's always been a big dispute over cross merchandising, such as putting cooking magazines near the service deli or meat department, or beauty magazines in the HBC area, because of turf issues within supermarket management," he said. Focus groups with supermarket customers "unanimously" concluded that shoppers prefer such an approach, as it makes their shopping trip easier.

"Hands-on management is the major component to magazines' success in supermarkets," said Anne Finn, senior vice president, consumer marketing, Magazine Publishers of America, New York. "Magazines provide tremendous potential in providing excitement to the shopping experience, which in turn will help define the retailer's image," she said.

"Magazines draw consumers back to the center store -- a major challenge facing supermarkets today -- and provide a strong catalyst for additional sales within the store, Finn said.

Save Mart has been able to hold the line against declining single-copy sales with a category management program from Anderson News Co., Knoxville, Tenn., which helps the retailer define assortments for clusters of stores, Pooler said. "We take into consideration the economics, such as the ethnic make-up of the customer base, and [build] our assortment on what their profile shows would be the most popular titles for these various neighborhoods. That seems to have stemmed the tide of declining sales, at least temporarily," he said.