Pandemic Publishing Roundtable: One Source Magazine Wholesale – Front End Merchandising With a Twist

Article by Linda Ruth

Last week, at the Publishing Pandemic Roundtable—Bo Sacks, Gemma Peckham, Joe Berger, Samir Husni, Sherin Pierce, and me— spent our hour with Gregg Mason of One Source, the distributor to major Natural Food specialty retailers, discussing the unique nature of the One Source checkout program, the changes that the pandemic has brought, and what we might anticipate for 2021. 

Joe: Can you give us some background on One Source and your role in the company? 

Gregg: One Source is a traditional direct distributor, in that it orders its product from publishers and ships to one location for pick and pack. We service primarily the natural food segment, with close to 2000 retailers nationwide. Our largest chain is Whole Foods, with 500 stores, followed by Sprouts with 365 locations. We also service a small sports retail segment.  One Source started small when the chains were small and grew along with them.  Our approach to magazine merchandising is unique—we don’t have mainlines. We are front-end focused with pockets at the checkout-only, and with non-logo’d pockets. Without logos, it allows dynamic movement of magazines which caters to the impulse buy of shoppers. We can sell more of what sells and the fixture presentation changes often.    When our retailers wanted a magazine program and looked at what traditional grocers had, they wanted something different, something fluid and dynamic. Something that would appeal to both new and returning customers; something that had the ability to drive high efficiencies. This fluid checkout was the solution. 

Bo: Does the fluidity you exercise with different titles in the pockets create a better sell through?

Gregg: Having the titles move around drives greater sales and sell through as they do stay in store but get shifted. Older product moves down, newer product comes in at the top of the rack. Titles with enough product at release for two pockets consolidate down to one over time. In this way we can extend shelf life for high-selling magazines. Our best-selling regular-frequency titles are all either bi-monthlies or quarterlies, we’re able to give them their full on-sale period.

Joe: Traditional retail stores don’t always follow their so-called “fixed” planograms; you can spend a lot of money participating and find you’re not in the program you paid for. In the One Source program you have opportunity to show if you’re capable of performing; though, on the other hand, these efficiencies can regulate a title out in the end. 

Gregg: Yes, it’s somewhat Darwinian; we look for not only high sell through but high sales per store. As draws come down, it’s hard to maintain the volume needed to stay in the stores, which can be frustrating to publishers. On the other hand, we don’t charge for the up-front placement; so if a title can perform, it will do well. For example, city titles can be the highest sellers in their home markets; so we created a city magazine placement at the front end.   Recently the efficiency rates have come down somewhat with the shift to high-priced, low-frequency bookazines. It’s amazing how the migration from regular frequency magazines to the bookazine model has dominated the business direction. With high-frequency mags, a normal order regulation system works; but with bookazines, different topics on same bipad can have widely different sales. For every single bookazine we order, we create an individual distribution for it, from the ground up.  

The Pandemic Publishing Roundtable from top left: Linda Ruth, Joe Berger, Gregg Mason (of One Source Distributing), Bo Sacks, Sherin Pierce, Gemma Peckham. Missing: Samir Husni.

Joe: Isn’t that considered bipad packing? 

Gregg: It would be in certain circumstances. What I’m referring to is a loose overarching editorial focus with different subjects under one brand. It’s literally a full-time job, managing these releases; but it’s necessary to garner volume sales.   

Joe: What changes did you see as a result of the pandemic? 

Gregg: We were lucky; our retailers stayed open. Sales were hit hard in the spring; since then it’s been a climb and partial recovery—creeping up, flattening out several times over. People have been gradually returning to more normal patterns. Our largest category is food and cooking; and those titles did well during the pandemic. We all cooked a lot more this year and turned to titles that can help. And publishers stuck with us. The children’s category, almost non-existent before the pandemic, took off like gangbusters. We found that the product couldn’t be too educational; it had to have a fun presentation.  We partnered with a publisher who collaborated with PBS kid shows—the product was just educational enough, just fun enough. Also the Highlights bookazines were hugely successful.  Shelter was a pleasant surprise. Domino took off, along with other shelter titles, primarily lower frequency titles and bookazines.  One area that has continued to lag are the city titles. They have not come back yet. Our stores are firstly suburban, secondly urban, and the urban stores are slower coming back. The commuting stores that cater to the people who work in the area have yet to come back; the residential area stores have.  

Joe: How are the indies and smaller chain stores doing? 

Gregg: We service Fresh Market and Natural Grocers, 160 stores each, they carry narrow edit, mostly just food, cooking, and health. Because they’re primarily suburban, they came back pretty well. And the independents have very loyal customer bases, so they also held up well. 

Sherin: Can you tell us a little more about Sprouts, what sells well? 

Gregg: They are located overwhelmingly in California and throughout the southwest. Their shoppers tend to be more price-sensitive, although certain higher-priced titles do very well, such as Willow and Sage at $14.95. Sprouts also tends to do very well with the vegetarian and Vegan titles. 

Sherin: What about getting their magazines on drop-down menus for online shopping? 

Gregg: We’re exploring and looking to move in that direction. 

Joe: MBR has started an initiative where they are talking to retailers about including magazines with electronic orders. You should be in that discussion. They’ve signed an agreement with an electronic platform, all the wholesalers should be at the table with this. 

Bo: Home delivery is not going away. We’ve retrained the consumer on how to shop, and that’s going to continue. Magazines need to be involved in this system. 

Gregg: Agreed, grocery was a last bastion of retail where people went to the store. Now many more people are getting delivery, and that won’t go away. And yet, although sales haven’t returned to where they were, they’re better than we expected, one year later. But you can’t make up for lost foot traffic.  

Joe: How do we get people back into the stores, or encourage them to find and buy the magazines? 

Gregg: We encourage our publishers to promote on their sites and social media platforms, to let them know we have their product, that it is available. In the stores, our biggest challenges are maintaining our pockets and keeping them open. The product that blocks the checkout are often at lower price points, lower profit. The migration to bookazines has helped show the financial impact of magazines, and what they bring to the retailer. 

Sherin: The Old Farmer’s Almanac has listings online of where to buy; we have robust PR when we go on sale; and we provide floor displays to appeal to consumers. 

Joe: What are you looking forward to in 2021? 

Gregg: We’re hoping to avoid a repetition of 2020’s peaks and valleys—and that the distribution of the vaccine will get people back in the stores. We’re prepared for an uptick in the city stores.   We’re poised to respond to changes as quickly as we can.

Things Placed (Yet Again) In Front Of The Magazine Rack

There are admittedly many advantages to the way the newsstand sales business is organized these days. For example, if I have a decent wi-fi signal I can quickly find out exactly where my magazine is selling. And where it isn’t. With a few mouse clicks I can download sales history, competitive sales history, class of trade data, top performing stores and more. With a few more mouse clicks I can send off a note to a distributor or retailer and make a presentation about why my ranking should be changed or a certain issue is being promoted.

On the other hand, there are few compelling reasons outside of curiosity or a desire to travel, for me to get into a car or board an airplane and jet off to Louisville, KY (Once the home of a decent sized wholesaler) to see what the displays in that town look like.

So I was pretty thrilled a few weeks ago to get in my car and drive for a few hours to meet with a regional publishing client face to face. In fact I was so happy to get out of my oddly shaped office that the day before the appointment I did something I hadn’t done for years outside of my own home base: I set up a retail check-up route, left hours before the appointment and spent the morning checking stores.

The trip had some nostalgia to it because this town was once home to one of my favorite wholesalers. To be fair, the wholesalers who now manage the retailers in this town do a good job. Most displays were perfectly fine.

But….

Got milk. But got no magazines!

And then there was this:

No whining just because you can’t get to your favorite magazine now…

And a few others I didn’t capture very well on camera. To be fair, most displays were perfectly fine.  But the ones above are memorable and they occur far too frequently for comfort in an industry that is constantly under assault.

A few weeks ago, fellow consultant John Morthanos put up a post on Publishing Executive where he argued for expanding the title mix at checkout. He posited, correctly I think, that the checkout was dominated by seven publishers. Most of these titles had experienced significant circulation declines so wouldn’t it make sense to experiment? Try out new titles, new categories? Shouldn’t we make the checkout more, well, democratic and meritorious (my interpretation)? He went so far as to suggest, to the apparent horror of some of our colleagues, that one checkout in each store should be designated for these up and coming titles.

John is on to something. Without diving deep into the data, it’s probably fair to say that the crash of newsstand sales over the past seven years has come mostly from the checkout. The celebrity weeklies are the biggest culprits. The uptick we see in the sales of book a zines, adult coloring books, and niche titles like The Backwoodsman and so many regional city books, guns and survivalist titles  can’t make up for the hundreds of thousands of lost units in weekly celebrity and women’s service magazines if these trending titles are relegated to the back row of a twelve-foot mainline.

There are opportunities opening up in some chains. Over the past few years, most Kroger owned banners have either re-racked their stores or opened them up to a program called “Pay to Stay”. For the record, that title, “Pay to Stay” is not nearly as ominous as it sounds. “Pay to Stay” or PTS for short, is a one-year checkout program where the retailer does not install new racks, but does ask all the titles on the rack to pay for a relogo program – or give up their space. Open pockets are then offered to other titles – often titles that are growing and ranked highly on the mainline.

The cost for this program is significantly less than a new rack program. In the last cycle, I was able to move a client who had a national publication and multiple regional titles into many markets where in the past we were relegated to the mainline and could only dream of putting the titles onto the checkout.

The program is managed by TNG’s RS2 division. It is interesting to note that the program is billed in quarterly increments and publishers can opt out if they give notice one quarter in advance. This was a huge plus in gaining the participation of my client. And no, they didn’t opt out.

Since then I have come across more programs like this. You don’t always get in. You don’t always get what you want. But it’s a small step in the right direction.

I am seeing more and more requests from retailers for publishers to be more active in promoting their titles on the newsstand and partnering with the retailers to promote their magazines in their stores. A recent letter from the Costco buying team comes to mind.

For my part, I have always encouraged the publishers I work with to announce the on-sale dates of their titles, feature their cover images and stories and promote the availability of the magazine in national and local retailers in their social media feeds and e-blasts. Why wouldn’t you try to make a sale?

Of course, we can and should do more. No matter how wonderful home delivery, drone delivery and and driverless cars may be and become, people are social animals. We need to interact. We like to get out of our homes from time to time. Anyone who works from a home office can tell you about that.

In the meantime, a recent tour of some local retailers over the July 4th weekend showed that we still have a long way to go.

While Whole Foods, has and always will get props from me for their unlogo’d checkouts, last weekend they popped a bunch of mobile carts in front of their checkouts. On the one hand, you can’t blame a retailer for wanting to boost impulse sales over a busy holiday weekend. But to me, it’s a chilling reminder of how tenuous our hold on the checkout is. It also makes you wonder why our industry didn’t approach them with an idea for the busy holiday weekend.

The local Jewel Supermarket was selling t-shirts at their checkouts.

Go Cubs Go!

As bricks and mortar retailers come under increasing pressure from on-line retailers and changing customer patterns, our industry would be wise to continue to reinvent how we do business. John happens to be right. We need to experiment more.

But we also need to make sure that there are fewer things in front of the magazine rack.

 

A Bounty of Book A Zines

We’ve seen numerous reports of the remarkable growth of the Book A Zine category since the beginning of this no longer new decade. Most of the reports marvel at the tremendous elasticity of the category, the unit sales growth and the wide variety of titles that publishers are pumping out.

But unless you really go and look at a magazine rack today, you wouldn’t really see and feel the impact of what this “new” category is doing to the rack.* Oh you can talk about it and read all about it, but until you really go and look and see, you might not understand it.

As our former Secretary of Defense and eloquent wordsmith Donald Rumsfeld once said:

When there were more wholesalers to visit, distributions to work and territories to see, I always made it a point to spend a few hours at retail. Unlike some of the traveling pooh-bahs of the time, my goal wasn’t to find an issue to use as a cudgel on the local rep. I really wanted to see and know the town. It was the only way I felt that I could know, understand and own what I was working on. The only way to know what I knew and know that I didn’t know what I didn’t know.

If you know what I mean. Because otherwise it was just a bunch of numbers.

We don’t have that today. When was the last time someone other than the local merchandiser was in the Martin’s on Route 20 in South Bend, IN?

The other day I spent some time getting acquainted with a new supermarket in the wake of my neighborhood store closing. While I still go out to retail, these days I’m usually just looking for one or two client titles. It was good to really stop, look, absorb, and spend time at the rack. It’s a great way to learn a store.

And look how these “zines” have taken over the rack:

Who said “General Interest” is dead?

Cooking, cowboys…and ice fishing? Well, it is January, this is the Midwest.

Maybe there was nowhere else to drop the bridal mag?

While this part of the market is doing well, they can strain the distribution chain. If the store is part of chain that has “SBT” (Scan Based Trading), then the wholesaler owns that merchandise. These are annuals. Those are high cover prices and a long on sale. That’s a lot of inventory to own.

There are fewer turns on the rack unless the publisher is pumping out a bunch of ‘Zines. And while some publishers are (cough, cough) pumping out a ton of ‘zines, it’s not enough to replace the lost sales we see in the higher volume categories.

Lastly, not all magazine categories are naturals for these “Zines.” And, more importantly, there are some economic issues to be concerned with. Without some existing clout behind you, a brand that is well established and has a significant newsstand presence, these aren’t that cheap to produce nor are they that cheap to launch in the blind.

In the comments section of Dead Tree Edition’s post about Book A Zines, industry guru Bo Sacks wondered if we would get too greedy and kill the category. I’m inclined to think not. Unlike a regular frequency title, you don’t repeat a special edition if it doesn’t work. It’s just too costly. Unlike a monthly, you’re not going to leave it on life support because there’s no ad or subscriber revenue to prop it up.

Where will the category go? I don’t know. But it was nice to stop and look, really look at the rack.

*For the record, back in the day, we called them annuals or SIPS. There just weren’t as many of them, and they didn’t have good press.

Join, Or Die

Editor’s Note: Over the holiday break, I spent a few millennia sitting on a plane reading articles about the Tea Party and looking at photos of some of their paraphernalia. While you don’t want my opinion about the current state of their union, the images they used, especially the “Join, Or Die” flag, got me contemplating Walter Issacson’s excellent biography, “Benjamin Franklin-An American Life”. Somehow, that led me to this image which  I offer  to you readers.

Illustration by E. Berger

There are enough writers now who scoff at the notion of print magazines going the way of the dinosaur that we can drop the whole “going the way of the dinosaur” or “buggy whip” analogy.  In any event, while there are no dinosaurs around these days, they are a pretty big business. And, while there aren’t too many horse drawn carriages rolling around major American cities, there are still buggy whip manufacturers.

The current state of the newsstand distribution business is an altogether different nest of dinosaur eggs.

In theory, the consolidation of the newsstand distribution business should have been a good thing for everyone. For publishers, piecing together a print order became much simpler because there are fewer wholesalers of wildly varying sizes and fewer people with wildly different agendas to negotiate with.

For wholesalers, the elimination of some nearby competitors and the consolidation of their presence in key regions should have made life easier. It also provided a chance to create firmer relationships with major national retailers. There was the possibility of breaking into new national markets.

Retailers were finally able to consolidate their service levels, streamline their invoicing and payments and bring magazine distribution up to levels comparable to their other DSD delivery agents.

Some of that happened and whether or not any of it is a good thing most likely depends on which side of the table you sit on. Are you a glass half full or half empty kind of person?

What more than fifteen years of consolidation has not done is streamlined how we measure success in our business. All the links in our distribution chain look at it differently.

For an SBT retailer, a 35% sell through should be meaningless because they only paid for what they sold and they never carried the other 65% on their books (Although the savvier ones should wonder what could have sold in the space where those returns came from).

For a publisher, a 35% sell through can mean a profit if their production costs were not too high. It can also be a break even point. Or it can be a loss. It all depends on those pesky printing and shipping costs. Plus whatever else the wholesalers, retailers and national distributors tack onto the final bill. Those add ons can add up.

For a national distributor, selling a magazine at 35% is pretty much the same as a national distributor that sells it at 55% or 15%. For them, the only difference in many cases (Unless the contract is creative and has efficiency tied in) is the volume of sales. A publisher client with a 15% sell through is either on the way out of business, or about to get a lot of hand holding if they still have a stack of cash and the will to fix what is wrong. Hand holding a publisher can be expensive. On the other hand, a lot of hand holding for a +50% client at least means there’s money coming in, and the potential for more.

But in the end, what about the reader? After all, our goal here, in this little brackish, increasingly shallow tidal pool of the publishing industry is to sell as many copies of as many magazines as possible. Isn’t it?

Is the solution to meld the national distributors (ND’s) and wholesalers together? I’ve heard this idea kicked around. Ideally the goal of  the ND’s is to market and advocate for the publishers to the wholesaling and retailing community. If ND’s are not there, who advocates for the publisher? Wholesalers should be invested in the success of the products they market but it often seems as though it’s simpler for them to push a button and say “No” than to dig in and try to understand what is presented to them. To be fair, many on the publishing side still don’t really understand what is involved in wholesaling magazines.

And distributing magazines to the newsstand, in spite of all of the technological advances we’ve seen over the last twenty years is still very labor intensive. We don’t see as much local knowledge of the stores and markets serviced as we should expect.

There’s no denying that readers have not been picking up newsstand copies in the quantities that they used to. Sales have been declining for many years. We’ve seen some positive trends like the successful launches of HGTV Magazine and Food Network Magazine. There’s great news on the specialty front as Book A Zines and specials bring in high cover prices and high sales. Mr. Magazine ™, Samir Husni counted 242 regular frequency magazine launches in 2012.

At the same time, we have seen the declines in traditionally strong categories as well as the near elimination of some categories that were traditionally industry leaders in the last two decades. These declines wipe out the gains that have been hard won.

Maybe we’ve lost our way. In all of our obsessing over consolidating, efficiency, will we or won’t we survive, we’ve forgotten that this is a hand sell, one at a time, get the people into the stores kind of business. There don’t seem to be any short cuts to achieve that end. There are a lot of great tools these days that should make our job more efficient. But we still have to get readers to find the rack, stop in front of the rack,  pick up a magazine and then make the decision to buy the magazine. We know people like magazines, we just have to get them to buy them.