Single Copies At the Check-Out and the Mid-Level Publishers: A Solution to a Major Dilemma. A Mr. Magazine™ MagNet ExclusiveJune 16, 2014
In my continuous exclusive analysis with MagNet’s Luke Magerko, this week we focus on checkout acquisition for the mid-level publisher. Last time, we discussed AAM sales results and checkout disparity and received a thoughtful response from an industry veteran and friend to this blog. This is an excerpt of the response:
“I believe you have seriously underestimated what’s required to play at the checkout. Very few titles have the financial where-with-all to purchase checkout racks (where upfront money is a requirement) or support the needed merchandising services. The checkout is only for magazines with broad consumer appeal and nearly always with a female orientation. Relatively low cover pricing is also required to feed the impulse nature of the purchase and help support multiple purchases”
LUKE, THESE ARE ALL REASONABLE CONCERNS. HOW DO YOU RESPOND TO THIS?
Let’s walk through each point of the article and address them one at a time.
READER SAYS: “Very few titles have the financial where-with-all to purchase checkout racks (where upfront money is a requirement) or support the needed merchandising services.”
This was true many years ago when smaller publishers represented only one or two titles, retail prices were low, and existing checkout titles were highly competitive (selling at high efficiencies).
MagNet identified the top 25 publishers at newsstand based on retail sales. These publishers represent 75 percent of all retail sales however but many of these publishers have opportunities to expand their presence further.
Specifically, six of these 25 publishers have little to no checkout exposure. These publishers produce high-priced, high-quality products that generate significant profit for all parts of the supply chain but are underrepresented at checkout.
SO WHY CAN THESE PUBLISHERS NOT MAKE IT TO CHECKOUT?
These publishers have been told they could not afford checkout space but also there are no checkout pockets available. Existing checkout publishers have an advantage as they own the space and defend it though such programs as Pay-to-Stay.
READER SAYS: “The checkout is only for magazines with broad consumer appeal and nearly always with a female orientation.”
At the MPA Retail Conference held last week, Steve French of the Natural Marketing Institute indicated nearly 30% of all shoppers are male*. The purely female-driven shopping experience is changing and the publishing industry must catch up.
We now live in a time where “broad consumer appeal” is not an efficient use of space. The newsstand needs micro-marketed checkouts at the store level, not just a broad coalition of fifty magazines displayed at every store in the United States. We will discuss this micro-marketing at a later date.
READER SAYS: “Relatively low cover pricing is also required to feed the impulse nature of the purchase and help support multiple purchases”
People Magazine now retails at $4.99 and the national weighted cover price is close to $6.00. Time Inc, Meredith and some other publishers have made an extraordinary profit at checkout producing higher-priced, niche titles.
SO HOW DO THESE MID-LEVEL PUBLISHERS ACQUIRE CHECKOUT AND WHAT DO SMALLER NICHE TITLE DO TO JOIN IN?
Publishers but publishers of multiple titles can afford checkout space and should “pack” a checkout pocket like larger publishers; that is rotate as many releases through the checkout pocket as possible.
BUT WON’T ROTATING TITLES THROUGH A CHECKOUT REDUCE ON SALE TIME IN STORE?
Yes, but the consensus from larger publishers is this is acceptable. Here’s why: this is an example of scanned unit sales by week for a top-200 monthly title. Next to the sales, we added four labels using the terms created by the renowned statistician Frank Bass in 1969**.
A consumer makes multiple shopping visits a week so we conclude the consumer will have seen a monthly magazine multiple times in in one month. At some point, the consumer will ignore the issue as they have purchased it (“early adopters”) or decided not to purchase it weeks earlier. By week four, sales drop dramatically when “laggards” finally purchase the product.
Let’s look what would happen if this publisher added five additional issues to the checkout rotation, reducing on-sale time from four weeks to three weeks.
New issues will reengage the early adopters and increase sales in what was week four of the previous issue. This example suggests that week four sales increases from 625 (laggards in chart #1) to 2,200. In this example, that works out to a 252 percent sales increase for the week.
SO AN INDIVIDUAL ISSUE MAY LOSE SALES BUT OVERALL THE SALES INCREASE?
Yes, the publisher loses approximately 8 percent of issue sales but will increase overall sales by 31 percent.
WHICH TITLES AND HOW MANY SHOULD ROTATE THROUGH A CHECKOUT POCKET?
I defer to the publisher on which titles to rotate but the publisher must select their rotation schedule using the same scan data I used above.
IS THERE ANY WAY TO MAKE THIS WORK FOR A SMALLER PUBLISHER?
Yes, we will discuss how a smaller publisher could get into checkout but it is more complicated than a short blurb here.
IF YOU WERE ONE OF THESE POWERFUL BUT UNDERREPRESENTED PUBLISHERS, WHAT WOULD BE THE NEXT STEPS?
• Analyze the data. Make a list of profitable, impactful accounts that might be worthy of pursuit.
• Create a rotation schedule of titles that make sense for these chains.
• Create a P/L on a checkout pocket. Again, please contact MagNet to help with this.
• Present this plan to wholesalers representing these chains and determine when the next line review is scheduled.
• Prepare to meet with the retailer if at all possible.
THANK YOU LUKE FOR THE RECOMMENDATIONS AND THANK YOU READER THE COMMENTS. WE HOPE WE ADDRESSED YOUR POINTS. WE ALWAYS LOOK FOR READER RESPONSE AS IT HELPS US CLARIFY CONTENTIOUS POINTS BUT ALSO LEADS TO A BETTER CONVERSATION. THE INDUSTRY IS CHANGING RAPIDLY, PLEASE JOIN US IN MAKING IT A STRONGER!
* Steve French and Natural Marketing Institute can be found at http://www.nmisolutions.com/
** Frank Bass is the author of the Bass Diffusion Model which presents a rationale how current adopters and potential adopters of a new product interact.
© Samir “Mr. Magazine™” Husni, Ph.D., All Rights Reserved.
Rights to excerpts and links to the blog are hereby permitted with proper credit. Copying the entire blog is NOT permitted and is a violation of the copyright laws.