WASTE NOT

DAN ALAIMO

Keeping an eye on profits and sustainability, retailers are taking a closer look at efficiency in the magazine category.

This became big news earlier this year when Wal-Mart Stores, Bentonville, Ark., said it would trim 1,000 magazines — about half — from the list of titles approved for display in its stores.

With a multitude of magazines available, and display space at a premium, many saw this as a precursor to similar moves at other retailers. However, industry experts told SN that while Wal-Mart is moving aggressively on improving efficiency in magazines, as well as in other categories, this was a relatively small part of the process, as it involved mostly slow-selling and even defunct publications.

“The titles that they kept probably represented 97% to 98% of all their sales,” said consultant John Harrington, partner, Harrington Associates, Charlestown, R.I. “Many of the supermarket chains have lists that are about the size that Wal-Mart cut their list to, so I don't think it has much meaning for other chains.”

Most of the popular titles cut by Wal-Mart, as cited in news stories at the time, such as Better Homes & Gardens, were from one publisher, Meredith Corp., Des Moines, Iowa, and part of an unrelated dispute that's since been resolved, Harrington said.

Efficiency in the magazine category depends in part on list management, but as much or more on other factors, such as good merchandising practices, adept inventory handling at the front end, store-specific selections, scan-based trading and, most important, increased sales. The key is to reduce the number of magazines returned to the publisher, and this will generate more money for all, while reducing the waste of paper and trucking fuel.

“We are always looking for opportunities to improve efficiencies,” said Mike Isom, director of general merchandise at Bashas', Chandler, Ariz.

Like other retailers, Bashas' pays attention to its approved list. “We are always paring our title list with our management partner to make sure that we have the right titles in the right store at the right time, and efficiency is the key to that,” Isom said.

Bashas' is exploring scan-based trading, also known widely as SBT and pay-on-scan. “We need someone to help us handle that inventory and take it off our books so we can reinvest our dollars in other categories,” he said.

SBT in turn contributes to improved data processing, which helps create store-specific assortments, something very important to a retailer as diverse as Bashas'. “We may accept a title that will only go into 10% of our stores, because it is the right 10% for that magazine,” Isom said.

Harrington said there have already been significant increases in efficiency, with magazine sell-though rising from 33% five years ago to around 39% last year, the equivalent of 350 million copies.

“Efficiency in the magazine category has increased substantially over the last few years, driven in part by more sophisticated use of data,” said Jeremy Koch, executive vice president/consumer marketing, Magazine Publishers of America, New York. MPA is holding its annual Retail Conference in Tampa this week.

“As far as we've come, there's clearly still room for improvement. If the supply chain can work more effectively together, there's no doubt that we can make even greater strides in improving retail efficiency in the future,” he said.

Trimming the approved list, as Wal-Mart did, was one logical strategy for improved efficiencies, “but the jury is still out on whether that strategy will work. People will be watching the results at Wal-Mart very carefully,” Koch said.

Demographic data may be vital in building store-specific selections, but there's more to it, said Jerry Lynch, president, International Periodical Distributors Association, New York, and a former Wegmans executive. Beyond ethnic heritage and other factors, retailers need to ask, “What are the qualities of the shoppers of that store?” For example, if the clientele is made up of “heavy foodies” who are into cooking, that would call for one set of publications, while a store in an area where hunting is popular would require another. “Getting the right magazine in the right store at the right time for the right customer — that is the opportunity that lines up,” he said.

“Assortment is just one of the tools that a retailer's merchants and other members of the supply chain can look at when trying to increase productivity. The magazine categories title list is very diverse and reflective of the varied interests of readers. Attempting to maximize the benefit of that title selection by syncing it with the unique consumers in a chain and eventually down to a store requires a serious and continuous effort,” Lynch said.

Although issues surrounding magazine efficiencies can be complex, the solution to many can also be simple. “Productivity gains can come in many different forms, but the ones I always liked best were those that started with increased category sales,” Lynch said.

“To improve efficiency, you actually need to sell more,” said a nonfood executive with a Northeast retailer. “Sales will cure a lot of inefficiencies in magazines,” he said.

Or as Bill Mansfield, president and chief executive officer, VIP International, Garland, Texas, said, “Let us sell our way into greater efficiency, not control our way into it.” Mansfield is a consultant who was a longtime retail nonfood executive.

This is especially true at the checkouts, where most sales — and most waste — occurs, the Northeast executive said. For example, most if not all registers will have magazine racks, but only a few will see constant traffic; the rest will be closed during slower periods.

“In supermarkets, the best way to get efficient is to make sure magazines are in the checkout lanes that are open,” the executive said. If a store is serviced on Monday, by the end of the week some lanes will have few magazines, while others will be full. “It's enlisting the help of the front-end people to move magazines from the registers that aren't open down to the ones that are,” he said.

As quoted in Newsstand Forum, a new online publication of IPDA, Richard Castardi, president, Curtis Circulation Co., Pennsauken, N.J., said 70% of the magazine industry's returns come from about 50 large titles.

“Assortment is, and will remain, a key component of the magazine category,” said Bill Fishking, category manager, entertainment, Bi-Lo, Greenville, S.C. “We have to review each genre to assure that we maintain the depth required to match the demographics. An efficient assortment will help our sales in the future, because it will create an easier-to-shop planogram in our stores.”

About half of Bi-Lo's authorized list accounts for the vast majority of sales, he said. “We are looking at the other half title by title to decide if there is some special reason — regionality, special interest, etc. — that it should remain active.”

“We keep the number of magazines on file at a bare minimum, and have always kept our selection very streamlined,” said an East Texas nonfood executive. “If an item does not move for a couple of months, we cut it and move on.”

A key to increasing efficiency for retailers is, “in concert with the supply channel partners, managing allocation levels over a long period of time,” said Richard Alleger, senior vice president, retail, Rodale, Emmaus, Pa. Also, there needs to be “more promotion of the category, and modern signage and lighting in the store,” he said.