TAMPA, Fla. — The decision by Wal-Mart Stores, Bentonville, Ark., to slash 1,000 titles earlier this year was a concerted effort by magazine wholesalers, distributors and the retailer to improve efficiency, according to a consultant working on the project.
“In the Wal-Mart system, for every one magazine sold on the newsstand, three are printed,” said Dave Sherman, partner in Blu Skye Sustainability Consulting, San Francisco, at the Retail Conference of the Magazine Publishers of America and International Periodical Distributors Association here this month.
As part of Wal-Mart's sustainability improvement efforts in several areas, Blu Skye analyzed Wal-Mart's magazine distribution and sales system, and identified the printing waste, as well as other areas where efficiencies could be improved.
In addition, magazine wholesalers, distributors and Wal-Mart executives agreed at last year's Retail Conference to find ways to make magazine distribution to Wal-Mart more efficient.
“The industry came together to solve this, and set some really aggressive sustainability goals. Their goals are to increase comparable-store sales by 5%, improve magazine sell-through efficiency to 50%, and print fewer magazines,” Sherman said.
“Wal-Mart is looking at sustainability as, ‘Can we find a way to increase sales and decrease waste?’ In the past, it was looked at as either one or the other,” Sherman added.
If Wal-Mart improves its magazine sell-through efficiency to 50%, the retailer will save 60 million unsold magazines annually, more than 203,000 trees, and about 2.1 million gallons of diesel fuel, Blu Skye found.
“Waste reduction is the best way to reduce impact and raise profits for single-copy sales,” Sherman said.
To that end, Wal-Mart executives want to ensure that the titles that are cut are not simply shifted through the distribution system to another retailer.
Wal-Mart executives realize that improving efficiencies in the magazine category involves looking at the whole life cycle of the category.
“If you're looking at magazines, you're looking at the growing of the wood, the selling of magazines, and the use by people through to the end,” Sherman said.
As a result, Wal-Mart is involved in several pilot projects to improve magazine efficiency. Cutting 1,000 titles — about half of Wal-Mart's magazine offerings — was just one step toward its efficiency goals.
Some of the barriers to reducing waste in the retail magazine industry involve the way the business has been set up for years.
“The magazine industry is one of the few industries right now that is in a push supply chain as opposed to a pull [supply chain], or replenishment of what the consumer is buying,” Sherman said.
In addition, Wal-Mart and magazine industry executives identified several “innovation projects” — some that will start test projects this year — to transform the traditional industry business model. These projects include: title mix optimization, scan-based distribution, POS replenishment, bottom-up distribution and aligning incentives.