Changes at retail: the impact on magazines

The magazine market is in low growth, driven primarily by new launches. Without them, the category would be down. The retail landscape is generally bleak with many retailers hoping that Christmas will drive consumers back into stores with money to spend, although, of course, performance varies group by group. The grocers are battling for every shopper and every fraction of market share. Shoppers are constantly bombarded with price and value propositions at retail and interestingly, non-food is emerging not only as a key customer offer but as a group of categories which can drive serious footfall on the back of low prices.

Today’s shopper is looking for convenience and value. This is driving footfall into large supermarket and convenience outlets and changing the shopping habits of the nation. These changing shopping habits, along with general retail consolidation, are shifting share to a relatively small group of multiple retailers. The top ten retail multiples now account for over 51% of all magazines sold at UK newsstands and the rate of share shift is accelerating (source: Marketforce).

However, investment by magazine publishers in trade marketing within the independent retail channel is at an all-time high through sales clubs such as NFRN Blockbuster and those operated by wholesalers. The PPA Selling Magazines initiative has been focused on supporting and developing the independent channel for over five years. But we do now require a new approach.

A new approach for the independent retail channel

According to the NFRN, 458 of its members ceased trading during the first nine months of 2005. Whilst we may not be able to stop all of these closures, the challenge for magazine publishers and distributors is to identify the best local independent retailers and provide energy and support to protect and grow sales of magazines, especially specialist magazines. This creates an opportunity for many independent retailers to be range specialists.

However, with around 35,000 independent retailers who are all, by definition, different, the only way to support, develop and grow sales within this channel is through segmentation.

This is a terrific opportunity for the industry to work together to transform our approach to the independent channel. We must identify the best range retailers who provide the slickest customer service, a convenient shop-save offer and an efficient home news delivery operation for magazines - not just newspapers. Over time, we should look to develop our segmentation model to support more sophisticated sales development work in this important retail channel.

The new agenda for retailers

We are now working with retailers who are relentlessly focused on driving cost out of their businesses and making the supply chain more efficient to fund low price strategies or support bottom line profit growth.

In a changing role, the major multiple retailers are looking to influence supply chain strategy and are looking for help and support to improve in-store operational standards.

At these retailers, we are working with highly skilled, commercially aware buying teams focused on driving more efficient category growth for their business.

Our category is complex and different to others in which buyers may have previously worked. Publishers must work together, where possible, to help retailers understand the category. Work has started at the PPA, where the Retail Marketing Group is meeting with retailers to improve knowledge levels of, and enthusiasm for, our exciting and dynamic category.

Today, retailers are focused on:

1. Simplifying in-store processes and improving the effectiveness and efficiency of the supply chain.
2. Making the category more profitable for their business.
3. Driving magazine sales through promotion and delivering some form of uniqueness for their shoppers.

To succeed in today’s retail environment, magazine publishers must understand each of these objectives and identify ways in which to support them. A focus on these category issues, in addition to your own titles’ development, enables publishers to engage more fully with retailers.

Explore ways to align strategy with retailers to grow sales

To create the best chance of success at retail, publishers will have a plan which, predictably, includes a promotional strategy but also a supply management strategy which is aligned, where possible, to the retailer’s strategy.

Additionally, an understanding of how your plan supports the retailer’s strategy for the magazine category is crucial. Remember that, yes, retail buyers are interested in growing sales of specific magazines, but they are entirely focused on the performance of the category in terms of sales growth, availability and operational efficiency.

Keep promotional ideas simple to execute in-store and you’ll have the best chance of having those ideas accepted and ultimately achieving compliance at store level.

Most of us are focused on hitting business goals, delivering growth and out-performing the competition. To achieve this, we require a product which has a competitive advantage and an effective marketing strategy to support it.

But, in today’s retail environment, take time to think like the retailer and think ‘category’, for example:

* Does my product fit within the range strategy?
* Am I targeting shoppers who actually shop in this group?
* Are these shoppers important (eg: will they become loyal)?
* Is the promotion attractive to the target shopper?
* Is the promotion simple to execute in-store?
* Do I have a supply management strategy to meet shopper demand?
* Will this promotion grow sales of the category?
* Do I know what success looks like - what are the measurable objectives?

This way you have the best chance of success. And to create the most effective plan, it must reflect who the retailer’s shoppers actually are.

Put the shopper at the heart of your strategy

Shoppers have more choice than ever in terms of where and when to shop. To create a winning newsstand strategy we must understand the different shopping behaviour and create a plan by retail channel, retail group and, where appropriate, retail format.

This is not as difficult as it may sound. Whilst publishers have varying degrees of consumer research available, one thing for sure is that it need not take a lot of time or money to build a level of consumer insight to drive a newsstand strategy.

Most publishers have a very clear picture of their magazine’s core reader. However, it is true that further research quickly reveals multiple consumer segments that may share the same interest or passion but buy the same magazine for very different reasons.

To gain a clear insight into how consumer segments differ may only require the addition of a few extra questions on the end of a reader survey. Reasons for and frequency of purchase can differ dramatically between segments. For example, someone may run one marathon in their life and buy just four issues of a running magazine, whereas a regular runner, who belongs to a club and competes regularly, will be more inclined to purchase every issue.

By segmenting and understanding intimately our own consumers, we have an opportunity to help the retail customer understand which of their shoppers we are targeting, why these shoppers want to buy our magazine, what else they may buy during their shopping trip and how we, potentially, can enhance that shopper’s basket spend. This is likely to be different by channel, group and format.

By being focused on who our consumers are, their different motivators to purchase and, consequently, what promotional activity is likely to convince them to purchase, we begin to move to a consumer oriented strategy. This will consist of promotional activity which the shopper is more likely to respond to and begins to shift away from simply buying promotional space.

Being open with retail customers is the most effective way to engage and influence them. Help them understand that your readers are their shoppers, by sharing your customer segmentation work and creating promotional activity tailored to a specific consumer segment.

Understand your return on investment

Objectives for trade marketing activity will clearly differ but it is crucial to understand ‘return on investment’ to identify where to invest valuable trade marketing budget: which groups, which formats, which promotional vehicles provide the best return, in terms of volume and profitability, on trade marketing investment?

It is relatively easy to book a promotion. But it is the result that matters. So focus on buying a result, not simply buying space.

With magazine sales shifting to the top multiples and independents’ share being eroded, we can act differently in today’s retail environment to grow magazine sales.

Key steps to creating a newsstand strategy with a competitive edge include:

1. Understand the retailer’s agenda
2. Explore ways to align strategy with retailers to grow sales
3. Put the shopper at the heart of your strategy
4. Understand return on investment