The state of the newsstand - newsstand market statistics

Folio: The Magazine for Magazine Management, Annual, 1994 by Bob Alexander

Much is changing at the retail sale level, as the marketplace demands more service and better data.

Shaken by years of copy sale declines and for the first time, dollar sales erosion, the specter of change appeared in all levels of the newsstand distribution chain during the past year.

Retailers flexed their muscles in all categories of trade. The costs of check-out displays in supermarkets reached all-time highs, while non-publishing categories of products made substantial inroads at check stands, taking space from areas previously devoted to publications.

The difficulties the publishing industry has had in producing timely and accurate sales data for retailer review manifested itself across all categories. Wal-Mart led the way in its insisting on being provided with useful data. The company's aggressive sales goals and thirst for information was stated in industry-wide meetings and necessarily grabbed the attention of publishers, wholesalers and national distributors.

Additional outlets sought

Retail bankruptcies in categories formerly strong performers, left wholesalers scrambling not only for their money, but for additional outlets for certain classes of magazines. The desire to concentrate a more limited number of titles in display space affected book stores. So did their willingness to accept product from non-traditional sources, such as direct distribution, a continuously growing supply category.

Special interest publishers increasingly turned to these non-traditional sources for title distribution into "specialty" retailers, and some of these specialty distributors entered into the mass retailer categories as well. As publishers sought a larger base of retailers through which they could bring their products to market, several wholesalers acquired or started up similar businesses to the specialty distributors, enabling them to serve retailers whose weekly dollar volume did not, at least initially, allow them to serve the retailer via truck.

At newsstand: Dollar sales up, unit sales down

1988-1992

Magazine Sales                           17%
Cover Prices                           18.8%
Unit Sales                             -1.8%

Share of Business:

Magazines                              79.8%
Books                                  12.9%
Other Product                           7.3%

Return Rates

Magazines                              12.4%
Books                                   5.8%
Other                                    15%

1978-1992

ABC Titles

$1.1 to $2.7 billion                  151.0%
1.9 to 1.7 billion units              -13.9%

Check-out Titles

$850 million to $1.5 billion           74.8%
1.7 to 1.2 billion units              -30.7%

Source: Council for Periodical Distributors Associations

Several major publishers, caught between declining sales and increased costs of doing business at retail, initiated lower discounts with incentives to be earned by wholesalers based on service and performance. The negotiations between these publishers and the wholesalers is still going on. The message has, however, been delivered; the environment is by no means business as usual.

Barriers to entry raised

New publications continue to hit the newsstand market place. The barriers to entry have, however, been raised. From slotting fees at mass merchandise accounts, to placement fees in terminal accounts and wholesaler new title promotions fees, a new publication has to pay its own way to achieve a reasonable level of display and distribution.

The wholesalers are clearly caught in the middle of changes at the retailer and publisher levels. Retailer bankruptcies, delayed payments, low sell-through percentages, declining dollar sales, and the need to invest in their own businesses has caused them to sharpen their business skills. The retailers will not allow wholesalers to decrease services, and so many wholesalers have taken advantage of technological advances to pare internal labor costs. The larger wholesaler groups have become proficient at using their data and created marketing departments aimed at the major retailers. They are becoming skilled in creating and implementing promotion plans for retailers.

Individual wholesalers, not part of a larger chain, are bonding together, sometimes on a regional basis, to form their own marketing groups. Both retailers and publishers stand to benefit from this attention at the point-of-purchase.

Consumers are being provided with multiple newsstand promotions. Couponing, both on individual titles and as part of a group of titles is now an accepted sales promotion device; along with polybagging special inserts, lower cover prices and seasonal local promotions, these devices are causing newsstand magazines to attract attention formerly reserved for subscription promotions.

The need for timely and accurate data to feed retailer needs as well as allow newsstand people to compete within their own companies for circulation promotion dollars was manifested in the creation of PRIM (Periodical Retail Information Management). The data-gathering service started processing last summer, and will begin providing information regularly to its members this fall.