Reality: The magazine category not only delivers exceptionally high profits for retailers; it continues to perform as well or better on sales than many other categories — when allotted sufficient display space and visibility for a curated, data-based assortment of titles.
That’s the crucial point demonstrated by these charts.
They show first-half 2019 magazine category scan-based sales data for 10 of the country’s largest supermarket, mass merchandisers, and drug chains, supplied by American News Company, LLC (ANC), the country’s leading wholesaler.
As you can see, among the five major retailers that simply maintained their 2018 levels of space and visibility for magazines, three saw category sales increases: +2.4%, +0.8% and +0.2%.
Two others saw small declines: -1.6% and 2%.
In stark contrast, all five of the major retailers that reduced magazine space during the period saw double-digit percentage declines suggestive of creating a self-fulfilling “prophecy.”
In addition, early analysis of fourth-quarter 2019 SBT sales are also showing magazine category sales gains at several leading retail chains (again, ones that have maintained category space).
“In recent months, some retail customers have acknowledged that too-deep cuts in front-end and/or mainline magazine presence have affected sales and customer engagement, and some are working with us to right-size the category’s space,” reports ANC President and CEO David Parry.
“Our category is well prepared and eager to work with retailers as they address the impulse-purchasing challenges that accompany the more self-checkouts and cashier-less payment technology, as well as to right-size and optimize each retailer’s mainline performance.”
More than ever, given today’s intense retail competition and downward pressure on profit margins, the supermarkets and other retailers that are winning are basing category decisions on bottom-line profit and performance data, not uncorroborated “perceptions” of various categories.
When it comes to the magazine category, a fact-based assessment starts with sales performance as reflected when best display practices are in place, but also several other key factors, including:
*The magazine category’s exceptionally high profitability at retail has been confirmed time and again by industry studies.
With cover prices now averaging an impressive $6.56, a DSD model that minimizes retailer costs, and additional dollars from category trade and display allowances, every magazine sale is generating higher-than-ever profits for retailers.
At supermarket checkout, the category has over the years consistently been one of the top three “power categories.”
For instance, the supermarket Front End Study conducted in 2018 found magazines to be the #2 most profitable checkout category, second only to beverages. (A summary and charts of that study, based on Willard Bishop Super Study and Nielsen class-of-trade data, with analysis by Dechert-Hampe & Co., is available
online.)
Magazines’ appeal and traffic-drawing value at mainline — again, particularly when best display practices are in place — have also been amply documented. (One example: Miller Zell’s in-depth
shopper insights study.)
*Magazines sell other products in stores. Studies have shown that basket rings for customers who purchase magazines are more than 70%.Most magazines include ads and promotions for your customers’ favorite products, and scores of editorial content pages featuring recipes, fashion, cosmetics, health and wellness and other products.
*Data-based resources for right-sizing magazine category display space and allocating the right mix of titles to maximize sales and profitability, are readily available to retailers. For instance, to determine an optimal assortment, ANC puts its resources and expertise to work for retail customers by analyzing store capacity against deep sales history data (including class of trade, category and title/comp title sales), demographics and title frequency. Seasonal adjustments are made as appropriate.