Q. Recently MAGNET, the U.S.-based data clearing house, released some data highligting the loss of magazine retailers over the past three years. The top line data showed that over 16,000 magazine outlets have been lost in North America, an 11% delcine. Is this cause for concern, and when will the bleeding end?
Magazines remain an impulse purchase, so clearly, the more opportunities to display magazines is the better scenario. Publishers have been battered by the recession ( significant decline in advertising resulting in a decline in the number of titles), the same as retailers ( resulting in less retailers).
We need a better consumer environment to see both titles and retailers come back to the marketplace.
Q. MAGNET suggests that part of the declining dealer coverage can be attributable to the bankruptcy of Anderson News, yet also points out that the same 11% dealer erosion has occurred in Canada, where no such wholesaler banckruptcy occurred. To what can we attribute the erosion in Canada?
The largest component has been the loss of small, independent, mom & pop type convenience stores.
This class of trade has had to contend with the recession, like all of us, but in particular they have seen their tobacco trade shrink, with tougher advertising rules in place, and the growth of illegal cigarettes. As well, many chain type retailers are doing a much better job handling convenience products, putting added pressure on the convenience class. From a magazine perspective, we have seen magazine sales at convenience shrink over the years, with the biggest declining category being the “Men’s Adult” category. What used to be the biggest selling category in convenience, certainly in the 1980’s & 1990’s , has shrunk to almost nothing. The internet has replaced the print media in this category. The combination of the tobacco decline and competition from other retailers has resulted in a significant decline in the number of convenience stores. The surviving mom & pop retailers are doing significantly less magazine business than prior decades.
Q. The data also shows a 12% decline in Bookstores, which are typically higher efficiency accounts…is that a worrisome development in your view?
. Indeed this is worrisome, but the problem that the bookstores face is different from that of the convenience class of trade. 2008 and 2009 saw a marked decrease in the number of titles brought to market. Hundreds of titles disappeared, many of these titles belonging to the “Long Tail “ of the business. Many of these titles did well only in the bookstore class of trade. They were small and obscure, and brought traffic to the bookstores. Indeed, bookstores allocated a fair amount of space to the small and obscure titles. Bookstores benefitted from the consumer who entered their stores, searching for a small title. In many cases, the bookstore was rewarded not only with the sale of the small and unique title, but the consumer generally bought other mass market titles. We are happy to see the erosion in the amount of titles has ended, and in fact we are seeing a small uptick in titles. Hopefully bookstores will see these titles back in the near future.
Q. It’s good to see growth in Grocery, Drug, Newsstands, Super Centers, Mass Merchandisers, Terminals, Newsstands, and Military accounts. To what do you attribute these gains?
These retailers have dedicated prime real estate to the category and are destination retailers for consumers. They all offer great displays of our products, and have remained committed to the magazine business. Consumers have pulled back their discretionary spending, and this might account for less trips to specialty retailers and also convenience retailers. But, people still need food, prescriptions, and clothing, and thus major retailers still see strong sales in our category.
Q. Are we losing or gaining ground in mainline space in Canada over the past three years?
For the past few years, we have seen some erosion of front end space, but we are seeing this alarming development abate, and in fact are adding front end space. Front end real estate is vital to our health. The whole magazine community (individual publishers, national distributors, wholesalers and consultants) need to collectively preserve, and grow front end space.
Q. We know that some publishers have gone out of business, others have cut back on allotments, others have trimmed frequency…how much has this affected business for the magazine category?
We have seen a 12% drop in magazines distributed, due to a combination of less titles coming to market, allotment reductions on surviving titles, and a combination of allotment and frequency reduction. Our sales have not dropped to this degree, which reinforces to us that the category, while somewhat smaller is still vital and well received by consumers.
Q. How important is the continued growth of high quality, beautifully packaged, high priced vertical SIPS in your opinion?
Special Interest Publications, in a sense, have replaced the Adult Category. They are high priced, sell at efficiencies higher than most magazines, and in many cases are not available anywhere else ( not readily available in subscription). This is the perfect scenario for the newsstand! As well, they help promote the “parent” title, perhaps drawing the consumer to purchase a title they typically do not, but have been impressed with the SIP. The SIPs have a long shelf life, and the higher cover prices make them especially attractive to our retailers. The extended shelf life of the SIP, is helping to make up for the erosion of many titles on the mainlines.