New B. Dalton policy: more pain than gain?

Folio: The Magazine for Magazine Management, May, 1989 by Jean Marie Angelo

N.B. Dalton policy: More pain than gain?

Minneapolis--Having sliced out up to three-quarters of the titles it carried last year, B. Dalton, the bookstore chain with 800 stores nationwide, claims its magazine profits are still holding steady. Industry observers, however, say otherwise.

"The numbers I've seen from the wholesaler community say that [Dalton's] dollar volume is down 15 percent to 20 percent," says Jim Brunkhardt, president of the Mid-Atlantic Periodicals distributors Association, a wholesaler organization. He acknowledges, however, that his numbers do not take into account those magazines that now enter B. Dalton through direct distributors.

Even so, the wholesaler community believes Dalton's program is not working according to plan. In the Kansas City market, Dalton's magazine sales are off 29.8 percent this year, while sales for Waldenbooks, a rival chain with more than 800 stores, are up 7.8 percent in the same market, notes Mark Caldwell, executive vice president, Magazine and Paperback Marketing Institute. In Chicago, Dalton's sales are off by almost 53 percent, according to Caldwell.

Rick Kenyon, B. Dalton's merchandise manager for magazines, refutes this analysis. "Our sales are up marginally for comparable stores," he says, without revealing any numbers. "Our profit is up and our margin is up." The chain, he adds, does not plan to change its new policy.

Bigger discounts

What is clear is that Dalton is carrying fewer magazines these days. Each store carries 150 titles on an authorized list, and is free to carry an additional 150 titles delivered through direct distributors, like Ingram Periodicals or Eastern News. Before the 1988 cutbacks, the chain carried as many as 800 titles.

Dalton cut its authorized list to gain more control over sell-through, says Kenyon. The chain now receives 40 percent overall sell-through, compared to about 15 percent prior to the cutbacks.

Dalton is also getting bigger cut from each magazine sale. The titles still serviced through the wholesalers come into Dalton with a 20 percent discount, plus a 10 percent Retail Display Allowance. But those titles serviced through direct distributors contribute a 40 percent discount off cover price, simply because Dalton has cut out several "middlemen" like the traditional wholesaler and national distributor.

Dalton's new emphasis on percentage sent some titles, including New Age Journal and Mother Jones, running into the arms of direct distributors like Ingram just to get back into Dalton's. "The effect, in essence, is that we are getting the same distribution as before, except it is costing us more," says David Assman, associate publisher, Mother Jones.

Under its former national distributor system, Mother Jones received a 52 percent remit on its cover price; with Ingram, it only receives 50 percent.

Before the cutbacks, New Age Journal had only 5,000 copies in Dalton; now, just 1,000 copies are delivered through Ingram. The remit through Ingram is 50 percent, compared to the 54 percent the publisher had received through its national distributor.

After Dalton made its move, some observers were concerned that Waldenbooks would also cut titles, a charge the company flatly denies.

"We are not going to de-authorize titles just to force the publisher's hand," explains Ray Ginther, director of magazines. "I want to maintain a full-line magazine program." Waldenbooks carries 525 magazine titles.

Moreover, he says, "According to the information I've received through the wholesaler community, Dalton's sales have suffered significantly. It is presumptuous to sit in one location and judge the product mix for every location."

Ginther is concerned, however, that his competitor is obtaining a better discount. "We're going to attempt to get that discount," he says.

PHOTO : Dalton's tough cutbacks have sent many titles out the door and forced others to pay bigger discounts to rejoin the racks.