Independent retailers perplex most publishers. On one hand, the independent sector still holds a massive share of both newspapers and magazines - maintaining a strong independent route to market in the face of growing retail multiple power is on most publishers’ strategic wish-lists. Also, a good independent can offer a range and a level of service that few multiple outlets can match. Yet on the other hand, many publishers feel that it is a channel that is very difficult to manage in a coordinated way and there are frequent complaints of poor compliance during promotions. Add it all up and for many publishers, engaging with the sprawling independent sector simply seems to be too big and demanding a task.
Menzies Distribution deals with more than 13,000 independent outlets on a daily basis. These stores account for 57% of total newspaper sales and 29% of all magazine sales. So, we think that we fully appreciate both their importance and how they operate. We can slice and dice them in all kinds of different ways – the size of their magazine range, newsbill, outlet type, location and so on. Yet these metrics all seem rather cold and mechanical. So, we recently commissioned some focus groups among a selection of our retail customers to get under their skin a little more.
Four very different attitudes
The research project underlines just how different each retail outlet actually is. This stretches beyond the standard trading metrics that go into the normal copy allocation process and into much more fundamental attitudes. The research suggests that there are four distinct groups:
* Smart Entrepreneurs. Many are single outlets, but a significant proportion are actually multiple shop owners with typically 2 to 5 shops, often with a spread of outlet types and locations which means that they have a wide range of retailing experience. They are pragmatic business people, often operating very successfully close to a multiple outlet, carving out a niche through service and customer-responsive ranges. They do not feel that they need help from the supply chain, but they are always looking for better ways to do things and will pick up tips and tactics from wherever they can get them. As a result, they belong to everything – symbol groups, NFRN, wholesaler promotional clubs like Superleague, Federation of Small Businesses and so on. They are wearily resigned to the day-to-day operation of the newspaper and magazine supply chain, but they are prepared to cut out the category if they felt that they would have a better or more profitable business by doing so.
* Pressured Traders. These are usually single shops and they lack the resource and critical mass to make the impact that they know they could make in their vicinity. They know what they want to do, but do not have the time or the money to implement it. They are emotionally wedded to newspapers and magazines, but are massively frustrated by the industry and feel “at the bottom of the food chain”.
* Struggling Amateurs. “With hindsight, I wouldn’t have got into this business.” Or, “I would have done things very differently. But I’m stuck now.” They are keeping their heads above water, but only just and only with a massive amount of commitment in terms of time and energy. As a result, they are very weary and on the verge of desperation with the newspaper and magazine supply chain. They need and would welcome more help in running their businesses.
* The Impenetrable Undergrowth. Very difficult to engage with for a variety of reasons. Most do not really understand newspapers and magazines – they handle them because “we always have done”. They simply do not comprehend the working of the supply chain.
How all indies are the same
Behind the apparently hard-bitten cynic, most independent retailers seem to be united by quite an idealistic view of what they are doing. Most feel that they are creating something unique and distinctive in their area, something that reflects their personality and has their fingersprints on it. They also believe that they are reflecting what their community wants in terms of their range and their personal service – hence their frustration when the supply chain does not deliver what they feel their shoppers want.
In addition, most independents speak a common language – and that is cash! “Balanced ranges” and “consumer offers” fade into the background behind the realities of cash flow and stockturn. That is why unsolicited boxouts and the speed of crediting returns and vouchers are such big issues. In the absence of being able to control their N+M stock levels themselves, they have two blunt instruments they can use to reduce their exposure to too much magazine stock - early returns or simply reducing the magazine range itself.
Yet perhaps the most important factor uniting these retailers is their view that news and magazines represents a core category that defines what their shop is. The value of N+M to their shops varies massively, from 10% to over 50% of their total turnover, but selling N+M defines what they are.
Finally, most independents are constantly looking at their businesses and are tweaking them week by week. Displays, ranges, new products and services – each area is being thought about constantly as these owner-operators have daily and direct contact with their customers. Yet many of their decisions are being made, certainly as far as magazines are concerned, with limited information at their disposal.
How all indies are different
* Size + Type Of Outlet. The research picked up a range of traders from small corner shops to significant transit points with a lot of neighbourhood outlets in between. Each shop has its own demographic peculiarities and its own balance between impulse and habitual sales.
* Business Background + Experience. There is no typical “independent retailer”. They each started in the business for all different kinds of reasons which shape their whole perspective as to how they run the business in the way that they do.
* Knowledge Of How The Supply Chain Works. Their understanding of issues that most publishers and distributors take for granted – copy allocation, penetration exercises, waste and availability targets – ranges from absolute zero in some cases to the very sophisticated.
What indies think of News + Magazines
While N+M remains a core category for the independent, it is not the only category they handle - they are trying to create a balanced consumer offer for their local community and that is a complex business especially as the major grocers continue to push into the convenience sector and into the indies’ own backyard. N+M space is under pressure from the constantly shifting product mix that the indie outlet handles.
The general perception among the retailers seems to be that N+M is a declining category, certainly as far as the retail channel is concerned. This is compounded by the publicity that publishers themselves put out about the growth of digital and subscriptions. The indie’s conclusion is that publishers are simply letting the retail channel slide down and that when investment in retail does come, either in terms of promotion or product availability, that it is unfairly skewed to multiple outlets and to the grocers in particular.
To place all this in perspective, retailers see other categories – notably confectionery, snacks and soft drinks – putting very visible investment into the independent sector through range advice, display tips and, on occasions, funded fixturing. They see N+M giving little support along these lines.
What do we do next?
In one sense, there are few specific insights from the research that are new to us – it would have been worrying if there were too many! Also, the results have made for some painful reading on occasions, as wholesalers often get the blame for what are, in fact, more fundamental and structural issues that the whole supply chain is grappling with.
Yet what the project has done is to bring all the pieces of the independent jigsaw together into a more holistic overview of what drives this whole sector and what we need to do to engage with them better than we have done in the past. Central to that is segmenting retailers in much more detail and with much more sensitivity than we do at the moment and tailoring the service offer to each outlet. The segmentation goes beyond simple measures of size and deeper into their attitudes and their level of commitment to the news and magazine category.
There are no easy or quick solutions to making the most of the independent sector, but better communication, more education, more advice on range and display – these are all at the core of the service that Menzies is shaping. Yet the full cooperation of all the links in the supply chain is required to make things happen more quickly.
A key theme of the whole research feedback is urgency. Time is ticking away as the multiples accelerate their penetration into convenience and neighbourhood retailing and as other product categories push for more space in-store in the independent channel. The pressing need is for the whole industry to engage with the committed, passionate and demanding individuals who are independent retailers.
The Indies Consumer Offer for N+M
“What people can’t get in Tesco. When people don’t want to commit to having 12 issues in a subscription. A personal service where people can ask for a specific title or talk through what they want.”
“We offer a slower pace. A more relaxed shopping trip.”
“Newspapers and magazines are the same price wherever you go. So, what’s our USP? It’s got to be range. It’s got to be ordering what our customers want even though that’s often a hassle. A warm personal service is also important.”
“We’re just fooling ourselves if we think that the staff in a Tesco Express can’t smile or be pleasant. We’ve got to be much more than just nice people.”
What makes N+M difficult to manage
* Displays easily become messy. They need regular tidying and replenishment.
* There is a massive and confusing range of products to choose from.
* Orders need constant attention and tweaking in response to changing consumer demand.
* Order changes initiated by the retailer are not always actioned.
* Too much of the poor sellers and too little of the best sellers.
* Returns procedures are very time-consuming.
