Publishers seek competitive edge by servicing titles at check-out; Hachette hires outside "muscle" to service magazines in supermarkets

Folio: The Magazine for Magazine Management, Feb 1, 1991 by John Masterton

Hachette hires outside "muscle" to service magazines in supermarkets

NEW YORK CITY-The pecking order in magazine distribution is being changed by publishers such as Hearst and Hachette. These companies have recently brought in "front-end marketing service companies" to coddle their titles in the jungle of supermarket check-out racks.

Front-end service companies give client publications the tender loving care large wholesalers can't always afford. Staffers visit stores regularly to straighten and restock display racks, seeing that competitors don't edge into their space. These front-end companies include Distribution Services Inc. (DSI), TDS and Globe Marketing Services.

Such "touch-and-feel" attention is becoming a real competitive edge for some publications, experts say.

"Front-end staff will work on weekends, when it's often needed most," says single-copy sales consultant Ron Scott. "They can also follow the traffic by moving copies from a full rack at a closed check-out to an empty rack at an open counter. Wholesalers often can't or won't provide this extra push."

In a highly publicized deal last year, Hearst's distribution unit agreed to pay DSI $2 million to give its check-out titles extra attention in 20,000 supermarkets. (See FOLIO:, October 1990, "Should Hearst's competitors be worried?" on Page 34.) Later, Hachette signed the company, a unit of National Enquirer and Star publisher GP Group, to service three titles.

Efforts paying off:

The efforts of DSI's 750-member field force are already paying off for Hearst in reduced costs, claims Frank Herrera, president of ICD/Hearst. "We don't have to support the large field force required to get this kind of special treatment," he says. "I think it's a big plus.,, Front-end clout also opens up new markets. Since the deal, DSI has convinced thousands of Wal-Mart stores to carry Hearst's Cosmopolitan.

"Hearst scored a big coup by striking early," Scott says. "It takes a long time to build that kind of structure, so Hearst bought a battle-tested operation. Front-end service is becoming a vital cog in the distribution system. "

Hachette faced a delicate internal situation in its decision. By contracting with DSI, the French conglomerate passed over Curtis Circulation, the distribution company it bought in 1986. Some Curtis executives were miffed, worrying that accounts would wonder why the parent company overlooked its own subsidiary.

"It reflects badly on us among our customers," gripes one executive who asked not to be identified.

But Curtis' strength is not at the check-out counter, argues David Pecker, chief operating officer at Hachette. "Curtis is an excellent mainline distributor, but we wanted check-out muscle for these titles," he explains. "Since 85 percent of Woman's Day sales come at checkout, we went to the company that controls 37 percent of the check-out counter marketplace."

Hachette hopes the move will shore up two titles that are under close scrutiny. Since the unsuccessful Woman's Day auction, Hachette has been spending heavily to improve the title's market position (with a possible eye toward selling it in a stronger magazine climate sometime in the future). In addition to the seven-figure DSI agreement, Hachette recently lowered Woman's Day's cover price from $1.09 to 99 cents (see FOLIO:, December 1990, Briefings). DSI also handles Elle, whose publisher recently defected to rival Vogue, as well as Elle Decor.

Such deals are the wave of the future, experts say. "Large publishers who live on check-out sales are starting to realize they need front-end protection," claims Michael Boylan, vice chairman and COO of DSI's parent company.

Indeed, Curtis had already planned to develop a front-end service unit, but Hachette didn't want to wait.

"Women's service magazines right now are paranoid, says Jim Borth, vice president of customer relations for Curtis. "They fear they may be left behind unless they affiliate with a major marketing entity. When 10 titles get better positions, 10 others get worse positions. It's becoming very important to be among the first 10."