We Have Always Been at War with East Asia…And the Newsstand Has Always Been, Um, Challenging?

If I had made an entry in my diary every time someone told me, in all seriousness, that the single copy sales business was: Terrible, horrible, corrupt, inefficient, outdated, out of touch, wasteful, mobbed up, operated like the mafia, doomed, too busy ripping off publishers, retailers, wholesalers, consumers – to do a good job, that we should all be in jail for taking advantage of publishers…

… Then I would have a memoir considerably larger than a Brandon Sanderson novel.

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That’s a mighty big book! (Source: BrandonSanderson.com

 

Nothing New Under the Sun

There is a verse in Ecclesiastes that says, “There is nothing new under the sun.” Solomon wasn’t being a cranky old cynic when he wrote this. He was talking about the cycles of nature in life, not the rat race of the 21stcentury world. But while the complaints about the newsstand business are often the same year after year, the simple truth is that today’s newsstand sales business is not your fathers’ newsstand business. And my father was in the newsstand business.

Last month industry guru and prophet Bo Sacks released two opinion pieces in his newsletter. One from former Ziff-Davis circulator Baird Davis and another from former consultant and industry leader John Harrington. Take a moment and check them out.

Both articles point out things that are very clear about the newsstand:

  • Sales are down dramatically
  • Sales for leading AAM audited titles are down even more
  • Retailers are cutting back on available space at the newsstand
  • There is continued consolidation at retail, wholesale and national distributor levels

I worked for Baird when I consulted for Ziff-Davis in its earlier print life. He is a good person and not someone I think of as gloomy or full of doom. In fact, I remember him as hard working and rather clear eyed. He succinctly points out the tremendous losses we have seen at the newsstand, especially with larger AAM audited titles. There is no denying the fact that a business that was generating about $5 billion in retail sales before the big crash in 2008 is now generating less than $2 billion. Harrington, who is also on the list of good people, is the former president of the Council for Periodical Distributors of America and a retired consultant. He points out that different participants in newsstand distribution have very different goals when it comes to profitability.

But We Knew This Already, Didn’t We?

Are industry leaders going to get together and “solve” the problem of the newsstand? Probably not because there are still too many competitors vying for space on the publishing side*. Moreover, all publishers, small, medium and large have a lot of other things to focus their attention on these days. Finally, it doesn’t seem like anything will happen without the seal of approval from the major wholesaler, TNG, or the largest national distributor, CoMag.

Captain Optimist Arrives

Earlier this week, fellow consultant John Morthanos tossed a bit of fuel on the fire in an opinion piece in response to Baird’s op-ed on Bo Sacks.  John makes the case that we should look beyond AAM numbers (I heartily agree). He cites the remarkable change in title rankings at chains like Barnes & Noble and Books A Million where traditional top ranked AAM audited titles (Think Cosmopolitan or House and Garden) have been supplanted with recent launches like Magnolia Journal.

He’s right. And as someone who is addicted to publishing stats, I’m endlessly fascinated by the report. But is that the point?

Single copy sales, the sales of print magazines at retail are down. Dramatically.

And,

Retail and wholesale consolidation has reduced a publisher’s ability to be profitable at the newsstand.

And,

If a segment of your business is not as profitable as it once was, and there is little chance of it returning to the same level of profitability, you tend to cut back your participation level and focus your attention on the parts of your business where you see opportunity.

It’s true that new titles continue to be launched on the newsstand. Some, like Magnolia Journal, Pioneer Woman, and the Centennial Media SIPs sell incredibly well. However, they don’t make up for the tremendous losses we see from former market leaders. How often can we rely on high level brand awareness to create winners at the newsstand?

New Industry Leaders

Let’s be realistic. Chains like Barnes & Noble and Books A Million are walled gardens. Their customers are actively looking for something to read – something in print. The B&N newsstand is well run and managed by a terrific magazine oriented staff. So is Books A Million. But that doesn’t mean we ignore the troubling signs that chains like Barnes & Noble have publicly experienced over the past few years.

Captain Skeptical?

It would be nice to think that every time a retailer chops a mainline in half or cuts 15 pockets from a check out that our wholesalers, national distributors and publisher quarterbacks rush in with the latest study from MBR and walk out with even more space. Half of it allocated to new, up and coming indie titles.

Maybe that does happen, sometimes. There are a lot of great people in our business and they do work hard to promote the category and maintain our space and viability.

But facts are facts and we’ve lost space. Despite some very visible, exciting and promising bright spots, sales are down overall.

From where I stand (I have a standing desk these days), these battles will continue to be hard-fought. We will never get away from the fact that store traffic is down. We have to acknowledge that there are a lot of distractions fighting for the public’s attention and money these days. Those of us who work in newsstand have to fight even harder to get the attention of the managers of magazine companies and the affiliated partners in the distribution chain because we are now a part of the magazine “media” business.

So, what to do? That’s easy.

Work hard. Vie for attention. Create your own promotions. Check your data. Prove your worth. Cooperate with others in the distribution chain.

Can you be both an optimist and a skeptic?

Yep.

*I am very much in favor of competition. Just in case you were wondering.

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Things Placed In Front Of The Magazine Rack: Requiem For A Chain

When I arrived in Chicago in the early 1980’s, national chains A&P and Kroger had tried unsuccessfully to penetrate the supermarket arena and been rebuffed by local favorites Dominick’s and Jewel. It wasn’t until the 1990’s when retailers began to consolidate in earnest that these local chains were purchased by national brands.

Dominick’s was first acquired by Yucaipa, and then a few years later by Safeway.

What has happened since, is a business school lesson in why sometimes national brand retailers don’t know better than locals and why economies of scale and consolidation often don’t work as advertised.

The chain, as owned by a Chicago family had a Chicago heart and feel. It was a source of local pride. The chain, as owned by Safeway, was just another “banner”. At least at the corporate level.

There's nothing in front of this rack now.
There’s nothing in front of this rack now.

The buzz about Dominick’s since the Safeway acquisition has been pretty consistent over the years. People still liked the stores, but they just weren’t the “same” nor as “good” as the original owners. Is that fair or accurate? Probably not, but that attitude certainly laid the seeds for what happened last month.

Supermarkets have a way of becoming a part of the neighborhood they serve. Chicago Tribune’s John Kass wrote an eloquent column about this when notice was given about the chain’s closure.

This was certainly true of the one near us. There were two things, really, that made it that way. One was simple, it had been there well before Safeway bought the chain. The other was more personal: The employees. Many of them had worked there for twenty years or more. I knew the cashiers, the produce stockers and many of the stock employees by name or by sight. They are (I say “are” because the store will remain open for two more weeks) friendly, personable, hard-working, and polite. They have roots in the community and many of them live nearby. One cashier spoke about how she went to a seminar to learn how to write a resume. She had worked at the store for her entire career and never needed one.

The regional chain Roundy’s has acquired eleven of the stores for their Mariano’s “banner.” Mariano’s is the brainchild of former Dominick’s executive Rob Mariano. The stores are high-end, very popular, full of fresh produce and unique brands. Our neighborhood store was not one of the lucky eleven. There were 77 Dominick’s stores remaining at the time of closure.

In case you were wondering about magazines, the Mariano’s stores I have been in have beautiful fixtures. But the mainlines are small mainline racks and there is not a lot of checkout space.

Our neighborhood store was supposed to be closed on December 28th. But it has been given a reprieve until January 25th and restocked with what looks like left over stock from other stores. The employees are still there, but up in the air about whether or not the extension means some other company is looking to acquire their space and give them a chance at remaining employed.

In the meantime, for the first New Years in a long time, there is nothing in front of the mainline rack. Nothing blocking the checkout racks. There are no magazines, books, or newspapers in the store at all.

If Heinen’s or Roundy’s or some regional chain like Sunset or Garden Fresh acquires the store, what will happen to the 20 foot mainline and tower racks? What will happen to the new checkouts that were installed last year?

For the first time ever, no Plan-O-Gram snark....
For the first time ever, no Plan-O-Gram snark….

I have no answer to that question.

Things Placed In Front of The Magazine Rack: The Thanksgiving Turkey Edition

It’s the weekend before Thanksgiving. One of the busiest weeks in the supermarket world. In the magazine business, it’s the run up to the very busy Christmas season. Customers are in and out of the stores picking up all of the goodies they need for their Thanksgiving meals. Store traffic is way up.

We’re hosting Thanksgiving this year and the cashier and I had a good laugh when I announced that I’d probably be seeing her at least six more times this week (I’ll most likely break that promise by a few extra visits).

On the one hand, I can understand why stores will place additional displays in the check lanes. They’re temporary, the manufacturer probably paid a lot for the displays, and it’s hard to say no to ready cash when you’re in such a thin margin business like the grocery business.

Of course, we publishers and our wholesalers also operate on a very thin margin and it costs a lot of up front money to be in the check out so…

Magazines, chocolates and pretzels all go together. Just not this way.

This does make it a little difficult to promote the expansion of check out pockets.

You certainly wouldn’t want to catch a cold while you’re bringing your new magazines home.
Higher end chocolates and an empty pocket FTW.

It’s easy to say this is  a long standing problem (It is), and there’s no easy solution (Certainly seems that way), but it also doesn’t say a lot for how the retailers view our line of product. How do we change that?

Things Placed In Front of The Magazine Rack Part 7 0f…The Fully Charged Edition

This just in from our US News and World Report correspondent, Mark White, V.P. of Specialty Marketing. I’ll let his words describe what he found:

The good news is that our new Secrets of the Civil War got placement by checkout that we didn’t pay for. The bad news, of course, is that the retailer committed such assault and battery against its highly profitable magazine business that no shoppers will actually see our bookazine. More bad news: The title is not displayed on the store’s mainline.

Lasts just as long, costs less, and delivers even fewer profits…

Encroachment at the front end has long been an issue for the publications that participate in check outs, with the encroachers enjoying the benefits and the “encroachees” left scrambling to defend their turf. “Things Placed In Front of The Magazine Rack” is part of an informal calculation I now consider when budgeting for check out programs.

Although in this particular case, we’d have to argue that Mark’s “encroachee” title didn’t get much benefit because of the dump display of batteries.

I wonder if there is an algorithm that would define this? Could it be turned into a charge back “Marketing Fee”? Who would have to pay the carrying and inventory costs? I’ll have to get the accounting department on that right away.

In the meantime, Mark should know that I found Secrets of the Civil War on the mainline of my neighborhood supermarket and I thought it was a really good read (I bought a copy).

If you have a good example of “Things Placed in front of the Magazine Rack”, please forward them. Checkout, mainline, specialty rack, all are accepted and appreciated.