Where Is The Newsstand’s Bottom? Down There, Somewhere…

Update 08/03/15: In the post below, I discussed the impact of the closing of the Dominicks Supermarket chain (a Safeway banner) on the availability of mainline and checkout space by describing the magazine display that replaced the large mainline in a store that I used to shop in.

Below are some photographs I found in my files that show what I was discussing. First is the spinner rack (a 16 pocket rack, not as originally posted, a 24 pocket rack) that is in the new store. Below that are two pictures of what used to be the same store.

Dominicks replacement
Here is the replacement for the old mainline rack. The new store is beautiful, but months later, I still find it hard not to see check out racks and a mainline. Note how the spinner is up against a display. There’s no way to walk around it.

Below is what the mainline used to look like when the store was a Dominicks Supermarket.

This is view of the right hand side of the tower display. The REZ tower and poster displays were a big committment from Safeway and have worked well in new title launches and special issues.
This is view of the right hand side of the tower display. The REZ tower and poster displays were a big committment from Safeway and have worked well in new title launches and special issues.

When Safeway announced that they were closing the doors on Dominicks, the wholesaler pulled the magazines off of the mainline and out of the checkouts. For the next few weeks, as supplies in the store dwindled, the mainline was barren of product. The picture below should give you an idea as to how extensive the rack was.

Let not let this be the future.
This would not be a good future.

Where Is The Newsstand’s Bottom? Down There, Somewhere…

The Alliance for Audited Media will release their “Snapshot” report very soon. What are the odds that we will see a flood of articles posted to the industry trades raising the alarm over continued declines in print magazine circulation? Pretty good, don’t you think?

There is no doubt that the magazine media industry continues to struggle to remake itself. Likewise, there is no doubt that twenty years into the breathtaking upheavals that completely changed the landscape of the newsstand distribution industry we continue to struggle with the realignment our business. There is even less doubt, perhaps less hope, that the “bottom” of the newsstand industry’s decline will show up soon.

Why is that? How could a business, an admittedly small piece of the circulation world, but a profitable one (one that used to generate $4billion in retail sales), continue to flounder for twenty years without resolution?

Pieces of the Puzzle

Much of what I’m writing about below has been covered by others who have written about the newsstand. However, let’s lay it out piece by piece:

1. The loss of key category leaders: The newsstand world no longer has high volume “Must Have” check out titles like TV Guide. The whole category of women’s service check out titles, the famed “Seven Sisters” has shrunk significantly. For awhile they were replaced by celebrity titles, but that category has struggled since mobile computing and celebrity blog sites have become ubiquitous.

Today's TV Guide sells well on the newsstand, but it is not the check out powerhouse that fueled the single copy industry thirty years ago.
Today’s TV Guide has OK sales on the newsstand, but it is not the check out powerhouse that fueled the single copy industry thirty years ago.

Consider this: Since the second half of 2008, sales for industry leaders like Oprah Magazine have declined by more than 330,000 copies. The last report for Playboy, a title that used to sell a few million copies per issue shrunk to less than 40,000 copies. There used to be wholesalers who distributed 40,000 copies an issue. The adult category barely exists these days and nothing has replaced it.

2. The loss of retailers and shelf space: Back in the day, the Meijer’s discount chain here in the Midwest was known as very “magazine friendly”. Their stores had a long authorized list of titles and large mainline racks of 20 or more feet.

While still a magazine friendly chain, this spring it was announced that the ten new stores the chain will open in 2015 will have 12 foot mainlines.

Here’s another example: The Dominicks Supermarket banner of Safeway was another ”magazine friendly” outlet. Most stores had good-sized racks and participated in the Safeway “Feature Pocket” and “REZ Tower” promotions. Safeway closed the chain last year. That began a scrum of local chains rushing in to re-open and re-badge the stores.

The Dominicks store near my home used to have a 20 foot mainline with two “REZ” towers. There were ten checkout stands, eight with full checkout fixtures, the other two with smaller waterfalls. The new owner of the store has one 16 pocket spinner rack. Good luck finding it.

Very few of the stores that replaced Dominicks had the same size mainlines or same number of checkouts.
Very few of the stores that replaced Dominicks have the same size mainlines or same number of checkouts.

Think about that for a moment.

3. The loss of partners: You can find articles all over the web about how there used to be 300 magazine wholesalers and now there are two controlling most of the mainstream retail market.

There are some on this side of the fence who are pretty angry about how we got here and how the survivors conduct their business. Frankly, I’m not angry or surprised at how we got here nor how our trading partners conduct themselves. If you think your business is viable, you do what it takes to stay in business. If you have the ability to set terms with your partners because the balance of power has shifted, then do what you must.

The economics of our business have changed so it’s possible that if a key trading partner now wants additional discount, distribution fees or new accounting procedures so their handling of your title becomes profitable for them, it may make newsstand distribution unprofitable for you.

One of the new realities of the business, Scan Based Trading (SBT) means that the retailer no longer has to wait for his returns to be counted so his invoice balances. Some publishers do wonder what the holdup is in getting money from the retailer to the wholesaler so the wholesaler can pay the national distributor on a more timely basis.

That leads us to this awkward dance….

4. The lack of cohesion in the distribution chain: What makes economic sense for thee retailer, may not make sense for the wholesaler who ties and delivers the magazine, and even less sense for the publisher who produces the product.

This is something we’ve known for some time. But we have not fully addressed it as an industry. What has happened is that as the market has shrunk, retailers and wholesalers have addressed the issue by consolidating and adding discount and distribution fees to cover their losses. Publishers who remain on the newsstand address the added costs and declining sales by raising cover prices, cutting print orders or reducing rack promotions.

Meanwhile, the way the reader shops for product changes, a few publishers play around the edges of this new paradigm and the market continues to shrink.

5. The lack of volume: Industry consultant Baird Davis and former New Single Copy editor John Harrington have rightly pointed out in past pieces that the lack of “hit” sales magazines have hurt the industry. They have a point.

But at the same time we do see a steady influx of new magazines and book-a-zines hitting the newsstand with little decline in those numbers. Take a few minutes to visit Dr. Samir Husni ‘s “Launch Monitor” page to get a feel for the vibrancy that can be found in many of these new titles.

With the notable exceptions of big launches from major houses like Dr. Oz and HGTV, many of the regular frequency launches are low volume.

Book-A-Zines don’t repeat themselves. They are one shots. In other words, a publisher drops 100,000 copies into the market at $12.99 a copy and sell 35% of them. That’s great for the retailer. Not so hot for the wholesaler who holds the inventory because of Scan Based Trading (SBT). It’s fine for the publisher if production costs are low and the accounting department will wait for payment. But those 35,000 copies are one time only. Do I have to point out that 35,000 copies sold on the newsstand is nothing compared to what a Cosmo sold back in 1995 over the course of twelve issues in a large metropolitan wholesaler serviced market?

Has The Publishing Community Given Up on the Newsstand? Or Is It Just Baffled About A Solution?

All of the above has driven me to this question: Have we just given up? I’d like to think not. The newsstand business is the poor country cousin to the much larger, better funded and highly discounted subscription business. There are bigger numbers and the bigger rewards to be found in the subscription game.

Think about this: The newsstand industry entered a period of significant consolidation in 1995. It suffered some additional upheavals a few years later. It continued to consolidate throughout the first decade of the 21st century up until a point where there were four major wholesale players. One of them exited the business in 2009 taking down upwards of 40% of the market temporarily.

In early 2014 a major independent wholesaler left the market, a key specialty distributor went bankrupt and left the market. In June we had the Source Interlink debacle.

No, 2014 was not a good year.
No, 2014 was not a good year.

And in all this time, what has been our response? We’ve adjusted our print orders, re-aligned our priorities, said good-bye to friends and business partners as they were laid off, put our heads down, and gone back to work.

Have we given up on the newsstand? Did the publishing community give up back in 1995 but neglect to tell anyone?

Or could it simply be that the newsstand was never all that important to begin with?

It would be unfair of me to not acknowledge a fair leavening of hyperbole to what I just wrote above. Throughout this period, industry organizations like the PBAA and IPDA have worked hard to try to mitigate the industry’s issues.

But here we are.

This  is what I tell my clients about the newsstand:

The newsstand has value in that it is another source of paid circulation you can’t get anywhere else.  Anyone who buys the magazine is paying retail for it. That’s a powerful endorsement of who you are.

Newsstand is still relatively cheap as compared to direct mail. Newsstand is very public. You can tell your audience, and your advertisers, that your magazine can be found in the Kroger store on Grand and 25th. It’s right there for them to see.

The newsstand is a great test bed for editorial. You are going to find out, pretty quickly whether or not your audience is as devoted as you think they are. Why? Because they are paying money for your content. Our data is sophisticated enough where we can pretty much figure out where and why an issue sold well, or didn’t sell well at all.

However, the world has changed. People still go into stores. But they often have their noses in their smart phones. So why are you printing 100,000 copies an issue, twelve times a year, and tossing them out there and hoping that someone walking through that 200,000 square foot Meijer’s store will happen by that 12 foot mainline rack and see your title peeking out of tier 3, row 2 and say, “Yes! By Jiminy! I really wanted to buy Aquatic Golfing Monthly for $5.99!”

As an industry, we seriously need to change how we market the newsstand. We need to ask the question: Are we truly an impulse buy anymore? Can we depend on being an impulse buy anymore? How can we reinforce the readers’ desire to go out, find, and pay retail for what we offer?

We need to ask questions. We need to test. We need to experiment. We need to hope.