Newsstand Challenges
There are a number of challenges facing the single copy portion of the magazine business. Among the most important are: Profitability of the wholesalers, Challenges from other commodities, and Sluggish unit sales (is flat the new up?) leading to a
push for increased profitability/productivity from retailers
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Wholesale Landscape Has Changed
Willingness to cut discounts or withhold incentives to retailers
Refusing to distribute products due to cover price and/or discount (e.g., Bauer’s Cocktail)
Confronting publishers over low cover prices on existing, high unit volume titles (e.g., OK)
Cutting titles to be distributed based upon efficiency, discount, etc.
Moving to once/week delivery and geo-routing Reviewing delivery methodology (hybrid of truck and DSD
via 3rd party carriers such as UPS and FedEx) Reviewing pre-weekend and galley delivery approach
Key Retailer Themes
Checkout racks Threats from other CPG companies as well as the
retailers themselves Wrigley going after Over-the-Belt for gum/mints only Soda Coolers at more than every third checkout Gift Cards Self-scan roll-outs Other merchandise such as Slim Jims
Retailers reducing the # of checkouts for magazines and/or going to lower profile racks
Key Retailer Themes
Rack Charges Traditional $22.28 per pocket moved to $25.00 as of 3/3/08
Large retailers seeking - and getting – SBT (scan-based trading)
All retailers are looking for margin improvement and are seeking it from Wholesalers AND Publishers
Retailers looking to reduce their authorized lists and go to more full-faced mainlines
Gum/Mints Over-the-Belt
Wrigley’s acquisition of such brands as Lifesavers and Altoids has them pushing retailers to dedicate space OTB for gum and mints at the expense of magazines Bill Wrigley Jr. making
account calls on retailers’ senior management teams
Soda Coolers
Acquisitions such as Glaceau (Vitamin Water) by Coke, as well as a retailer’s desire to increase gross margin from Private Label water, are driving retailer to place their own coolers at more lanes to try to capture sale in this stagnant category Funding from Coke and
Pepsi as well as the high GM from water (60% or more) is driving this push
Self-Scan
Self-scan continues to rollout at retail with new configurations and new players Magazine community working to “actively”
merchandise this space
Front-end Configuration
The impact of other commodities, self-scan, coolers, etc., lead to a major loss in real estate
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= magazine fixturing= other products= coolers
= possible opportunities (very limited pockets)
Mainline Initiatives
Retailers starting to take back control over mainlines as well “Wholesaler-controlled” Source of inefficiency
Best Practices include: Planograming some portion
of mainline e.g., Wal*Mart, Target, CVS,
Walgreens, Safeway, etc.
More full-faced product Demographic clustering /
Limiting # of SKU’s Space-to-sales by segment Signage
Source: TWRSM Research
Other Retailer Themes
Scan-based Trading SBT can be a good thing for the category as it reduces check-in
and check-out time. However, high shrink rates and the cost of absorbing store-level inventory can lead to less profitability to wholesalers
Growth of store perimeter and kiosks impacting display As “fresh” becomes more important, retailers grow produce,
bakery, etc. that forces mainline space to become smaller Retailers adding in-store kiosks and services – Starbucks, etc., -
“squeezes” the front-end and results in less merchandising space at checkout
Little to no growth in traditional retail outlets Most growth at retail coming from chains with no magazine
programs (such as Kohl’s, Trader Joe’s, etc.) or those with small programs (Walgreens, Target, etc.)