Happy Returns?

Folio: The Magazine for Magazine Management, Jan 1, 2003

Every month, mountains of shiny unsold magazines are removed from retail racks and sent straight to the shredder. The trash heaps have been swelling for more than two decades, but in the past couple of years publishers have been making strides to reduce the waste. In 2001, the overall sell-through rate for magazines at retail rose to 37.5 percent, from 35.4 percent the previous year, according to John Harrington, publisher of "The New Single Copy" newsletter.

In magazine circles, there's been quite a bit of backslapping over this big turnaround. It's not a return to the glory days circa 1987, when more than half of everything that was delivered actually sold, but, hey, it's something. We're getting there, right?

The answer is, kinda - but not really. A lot of the sloppiness has been removed from the distribution system, although this isn't an across-the-board phenomenon. Sell-through numbers are improving, but most of the gains are being made among smaller titles, and the mass-market magazines aren't really contributing to the cause.

Plagued by the need to improve their bottom lines, wholesalers have instituted various programs that penalized lower-selling and more inefficient titles. They've also made it much more expensive and difficult for new magazines to get into mainstream outlets. As a result, many of the targeted magazines have either reduced their newsstand print runs, devoted more effort into targeting their distributions, or just dropped out of the mass-market magazine distribution channel. For the most part, these were the magazines with small circulation - those that sold fewer than 250,000 copies at newsstands.

Because of this wholesaler push, the sell-through needle moved pretty dramatically on titles that are not in the top 100 sellers. Sell-through for these magazines, which represent 40 percent of all sales, went from 27.6 percent to 30 percent, according to Harrington. And, collectively, their newsstand draw was down 500 million copies in 2001.

But the needle stood still for the heavyweight titles. Sell-through numbers for the leading 25 magazines in 2001 was up less than half of one percent. The same held true for the next 75 titles. Therefore, the industry's total efficiency level will probably continue to improve by a point or two annually for three to four years. But it's absolutely unrealistic to expect the overall figure to rise above 45 percent.

The fact is, the leading titles don't have the same incentive to drastically improve their sell-throughs. If People magazine, for instance, jumped to a 60 percent efficiency on a consistent basis, Time Inc. management would almost certainly increase the draw out of fear that they were not achieving their sales potential. And the realities of today's retail environment are just too far removed from those of a decade ago for the numbers to return to the good old days when the industry averaged a 50 percent efficiency.

Just take a look at your local grocery market. Many have graduated into "supercenters" with more than 100,000 square feet of selling space. There may be upward of 20 checkouts - 40-plus is not unheard of. The most well-known titles - People, National Enquirer, Star, Woman's World, and the like - have paid dearly for their space at the checkout and are making damned sure they keep every pocket filled. However, it's a rare shopping day when even half of those checkouts are open at the same time. Still, store management expects the racks to be full at all times. That factor alone may well be responsible for 10 percent of the slip in efficiency over the past 10 years.

SELL-THROUGH NUMBERS FOR THE TOP NEWSSTAND TITLES