American Society of Magazine Editors

Retail Marketplace: Supply-Chain Leaders on ‘Next Steps’ for the Magazine Category

By Karlene Lukovitz, IPDA Daily Publishing & Retail News 

Magazine supply-chain executives reviewed key takeaways from 2013′s Retail Marketplace and offered their views on next steps for the industry during a panel wrapping up the general sessions, which was moderated by IPDA president Jerry Lynch.

Jay Annis, VP, trade sales, magazines and books for The Taunton Press and president of PBAA, stressed that the facts and statistics presented at the conference underlined that magazines continue to be “a very popular–and even more important, trusted–resource for consumers.”

At the same time, the industry needs to be more innovative in shaping existing magazine products and launching new ones, as well innovate in marketing strategies, he said.

Annis noted MPA’s recent research finding that 41% of consumers buy magazines on impulse at retail if they see something they like, but stressed that relying primarily on consumers’ physical exposure to magazines in stores is no longer enough. The industry can and should employ mobile and social media to push out messages about the exciting content in new issues, to drive consumers into stores to seek out and buy magazines at retail, he said.

“We have to stop thinking the way we’ve been thinking for the past 10 or 20 years,” said Annis. He and other retail marketing executives within publishing companies need to push harder to work with internal digital teams to develop and implement digital initiatives that can cost-effectively drive retail magazine sales, he stressed. He noted that he intends to explore, for example, how Taunton can use geo-targeted digital messaging to its readers to inform them about its brands’ current promotions in stores in their areas, to drive them into stores and take advantage of these offers.

The category also needs to make a point of sharing with retailers success case studies around magazines’ uses of QR codes, social media and other digital initiatives to drive sales of magazines and other products at retail, he said.

Looking at the retail environment, with experts projecting that supermarkets and other key formats, will, in coming years, be more focused on reinventing the footprints of their existing locations than aggressive new-store growth, innovation in terms of relationships with retailers will be more crucial than ever for the magazine category, Annis emphasized.

Magazines “have a great story” in terms of their top- and bottom-line value to retailers, but the category needs to employ new ways to ensure that chain executives and those who design those footprints are hearing that story, he said.

Innovation in magazine display formats–as well as where magazines are displayed in-store–is also key, said Annis.

At the same time, he said that innovation and collaboration among partners to fix the category’s “broken” supply chain must be a primary priority, because all other initiatives depend the foundation of a healthy, effective supply chain.

(Later in the panel, Kevin Dougher, corporate VP sales and marketing for Hudson News Distributors, stressed that all of wholesalers’ key business indicators are down, and that their financial situation is “becoming critical.”)

Mission #1: Driving Consumption
Drew Wintemberg, EVP sales and logistics for Time/Warner Sales & Marketing, generally agreed with Annis’s points, but said that, in his view, driving consumption of magazines has to be the #1 priority, since sales are, in the end, the biggest factor in determining the financial performance of all in the supply chain.

Driving consumption is a mission around which all supply-chain partners can align, Wintemberg stressed. He noted that top publishing executives on a Marketplace panel affirmed the continuing, crucial role of the retail channel and their companies’ commitment to supporting it, and that in addition to its powerful brands and creative talent, the magazine industry has huge marketing assets at its disposal–assets it can use to better compete with large consumer products brands that are spending “tens of millions of dollars” to promote their products, he said.

One area of potential leverage is for publishers and partners to consider how to harness the mobile and social media initiatives that up to now have largely been being used in “silos” by individual companies, he noted. With collaboration, these platforms can be used to achieve greater marketing scale that can help drive magazine category consumption as a whole, Wintemberg said.

He added that today, magazines, like other products and brands, need to think in terms of their essential value proposition for consumers and how all of their assets, across media and channels, can be used to deepen their connections with consumers. Those connections ultimately drive purchases of print magazines at retail, as well as product innovations and extensions that can drive new revenue for all retail-channel partners, he said. He cited Hallmark’s success in greatly expanding its offerings and revitalizing its business by recognizing that its core mission is helping people connect with each other, not just selling greeting cards.  

Hudson’s Dougher observed that two large retailers recently expressed to him their “disconcerting” belief that publishing companies may be “giving up” in the face of the magazine category’s challenges in today’s retail environment. This perception is both untrue and unfair: “We’ve got a very committed, hard-working industry,” in which all channel partners are striving even harder in the face of challenges, he said. However, to correct this misperception, all channel partners clearly need to do a better job at driving home to retailers that, while sales are not at pre-recession levels, the industry continues to approach the retail channel with the same “passion and intensity.”

Hudson’s philosophy, he said, is to “keep swinging”–keep innovating and trying new approaches, knowing that such persistence pays off over time. “Yes, you’re going to have some strike-outs, but you’re also going to have some base hits,” he said.

Mark Peterson, VP of retail sales for Meredith Corp., agreed with the other panelists that driving consumers to the content in which publishers continue to invest so heavily–in both print and digital platforms–is the big opportunity and challenge, and that the industry needs to embrace technology. “We need to use mobile and social media sheparding to push consumers and instigate action at the retail level,” he said.

Better Leveraging Strategic Relevance, Including Content Authority
Peterson also stressed that the category needs to better leverage all of its data to demonstrate to retailers that magazines’ true value goes well beyond just numbers of print copies being transacted–that every magazine sold results in sales of other products relating to the content and advertising provided. Quantifying and conveying this unique magazine-category capability and substantial added value to retailers is crucial, he said.

For all of their promotional investments on their own products, other large brands competing for retail space with magazines can’t drive sales of other products in the stores–but the magazine category has failed to convey its added value to retailers, added Annis.

“We have to change the narrative” with retailers from the category’s emphasis on day-to-day magazine copy transactions to the strategic relevance of the category to retailers, emphasized T/WR’s Wintemberg. He noted that the category has growing, data-based evidence of magazines’ direct ability to produce sales increases of other products in the store–including the Time Inc./Nielsen Catalina Solutions tests that are demonstrating retail sales lifts for specific CPG products resulting from consumer exposure to ads in retail-purchased and subscriber copies of magazines.

“We give ourselves zero credit for that” dynamic or its ROI benefits for retailers, in positioning the category with retailers, Wintemberg said. “We have far more strategic relevance to a retailer than we give ourselves credit for, or than we’ve been able to articulate.”

The category also offers unique relevance in the content arena, Wintemberg pointed out. Today, content and engagement with content are primary sales drivers across categories, and retailers are looking for content authorities at the category level and across categories, rather than authorities around brand-specific content, he said. And magazines, unlike other products, are brand-agnostic in terms of their influence and content authority–”we’re in it for the category,” he said.

Further, as the latest Willard Bishop supermarket retailer performance study confirmed, magazines are “far and away one of the most profitable categories in the store” because of the category’s DSD model and merchandising services, he said.

Wintemberg  challenged publishers, national distributors and wholesalers to find ways to convey these strategic category advantages in a “collective” and “sustained” voice to the executive level within retailers, rather than just focus on company- or magazine-specific marketing initiatives.

“If we’re going to make a meaningful difference to a retailer, we have to be part and parcel of the way they do business, and we have to integrate what we want to do–whether it’s around beauty or health or whatever–into the fabric of the way that they do it,” he added. “And it has to be planned, as retailers do with every other category, [to continue] for a meaningful period of time.”

Wintemberg  also stressed that a paramount focus in conversations with retailers should be addressing retailers’ core question today, which is what companies are doing to support their brands and categories in a retailer’s stores.

“We have to demonstrate to retailers that we are committed in a meaningful way–through content, through consumer connections, through all of the assets at our disposal–to making sure print is vibrant going forward,” he said, adding that  competitive categories are falsely claiming to retailers that the magazine category is not investing.

Peterson agreed with the need for category leaders to convey a collective, sustained message of magazines’ true, strategic value to retailer management. He also noted that Nielsen data can now be employed to demonstrate retailer market-basket benefits driven by magazines. Outposting magazines in synergistic departments in stores consistently drives lifts in other product sales, as well as magazine sales, he said; however, executing outposting initiatives on a sufficient scale, with consistency over time, continues to be a challenge.

Hudson’s Dougher concurred that persuading retailers to continue or expand successful in-store magazine marketing initiatives like cross-merchandising and co-branded displays is challenging, and praised publishers and national distributors for continuing to create and pursue these initiatives despite those challenges. “Again, you just have to keep swinging,” he said.

He added, however, that it would be of great help to the magazine category if more retailers demonstrated motivation and willingness to collaborate with the category on initiatives and innovations that mesh with their own objectives and strategies.