Page Turners
Consumers continue to read books and magazines in traditional formats, and several segments of those categories are showing growth in supermarkets.
“There are challenges in the category, but there is also plenty of opportunity,” says Jerry Lynch, president of the International Periodical Distributors Association (IPDA). “A recent study from Mequoda group showed that nearly 70 percent of adults read 2.9 magazines in the last 30 days.”
“E-mags have taken away some of our thunder, but they are never going to replace magazines,” asserts John Cowley, president of Jefferson City, Mo.-based Cowley Distributing, a book and magazine distributor covering eight states and nearly 4,000 stores. According to Cowley, research shows that sales of e-readers are down and consumers are returning to traditional books.
A 2014 study by Barrington, Ill.-based Willard Bishop revealed that the magazine category continues to be highly profitable for grocery retailers. The study compared the category with 38 other general merchandise categories and found that magazines rank fourth in true profit, 13th in weekly sales, and 23rd in category movement per facing. “Magazines deliver an adjusted gross margin of 34 percent, and true profit margin or bottom-line profit of 22 percent,” notes Jackie Gray, director at Willard Bishop. “On average, magazines in center store generate $439 in weekly true profit, more than two times that of the next most profitable front end category, meat snacks.”
Eyes Front
The front end is also crucial to books and magazines, since 70 percent of magazine sales are generated at checkout. “At the front end — where retailers are, of course, focused on maximizing profit on every inch of impulse space — magazines deliver the highest per-unit profit when compared to candy, single-serve carbonated beverages, and salty and meat snacks,” says Gray.
“Retailers need to get the checkout right, since that space generates the highest percentage of magazine sales,” advises William Romollino, VP of shopper insights at New York-based Time Inc. Retail. According to Romollino, retailers frequently block primary end cap displays with secondary displays, a practice that detracts significantly from sales.
“Magazines deliver 16.5 percent of the checkout sales through 18.4 percent of the space,” adds Romollino. “That said, retailers are all trying to reduce the clutter at checkouts, and we’re working on new concepts that will frame the checkout area.” He notes that a tapered arrowhead end cap design allowing consumers to shop both sides of the checkout has seen success, and that the industry is experimenting with features such as compartmentalized sections, signage and text that help to present a unified, sleek checkout area.
While there’s been growth in demand for celebrity and beauty titles at checkout, retailers are also differentiating themselves by adding more specialty titles, puzzles and, in some cases, even hardcover books to the front end. “Retailers are keeping some pockets unsold to make room for different titles and to take advantage of titles that are hot,” says Jay Addis, a consultant in the publishing industry.
For example, Fred Meyer, a Pacific Northwest division of Cincinnati-based Kroger, devotes one checkout end cap to discounted best-selling hardcover books in some of its stores. In a nod to independent bookstores and Barnes & Noble, the Portland, Ore.-based chain also features a section of books it recommends. Bestsellers at the chain are discounted 25 percent.
Penny Publications has had success with its checkout program. “Puzzles can be an impulse as well as a destination item,” observes Bruce Sherbow, SVP of the Norwalk, Conn.-based publisher. Puzzles are an important part of the assortment; research from the company shows that 73 percent of customers surveyed said they would go to another store to purchase a PennyDell puzzle magazine if they couldn’t find their favorite titles in the store.
Beyond Checkout
At the same time that retailers are experimenting with how best to merchandise books and magazines at checkout, many chains have faced pressure on their mainline general merchandise sections. “One retailer had to downsize books, so we created a 16-foot section near the pharmacy and created a seating area in the back of the section where people could wait,” says Cowley. Creating a reading center near an in-store Starbucks can create a busy boutique area.
Niche and special-interest titles, including those with regional interest, have continued to flourish, according to Cowley. “Regional magazines have really taken off,” he affirms. “We’ve seen growth in titles such as The Backwoodsman, Auta Buy and Wheeler Dealer, Off the Grid, and Mother Earth News.”
Taking advantage of seasonality in the front end or in thoughtful outpostings can provide new opportunities for the category. “Merchandising football titles and bookazines near beer or snacks, or near the checkouts during football season, can be a good opportunity,” advises Addis.
“Reasor’s Foods, an upscale Tulsa, Okla.-based chain, is doing some innovative things with outpostings in a number of departments, including a sidekick with cooking titles near the meat department, and a sidekick with Rodale health titles near HBC,” notes Cowley. “Supermarkets are evolving as an industry by micromarketing, and the magazine industry has to do the same. When the main section gets downsized, it’s a chance to capture impulse sales in other areas of the store, where the likelihood for purchase might be far greater. One retailer has seen a big uptick in titles like Cat Fancy and Dog Fancy when those magazines are displayed in the pet food aisle.”
Kid Stuff, and More
Recently, Cowley helped one Hy-Vee location create a 4-foot children’s book section. “When toy and diaper sales are down, it’s hard to justify a 24-foot diaper section,” he explains. “We created a section of books [ranging] from 99-cent board books to $9.99 Dr. Seuss titles.”
Kiddie lit, according to Cowley, has been a bright spot in the category. “Children’s book sales are up 80 percent for us, with titles from Little Golden Book popularly priced at $3.99 to $4.99 doing phenomenally well,” he pointed out. Cowley has also had much success with a 10-for-$10 program from Ashland, Ohio-based Bendon Publishing that includes licensed characters from such hot properties as “Minions” and “Frozen,” many with movie tie-ins. “We did a great cross-docking program with Schnucks, where we brought in pallet stackers of Bendon coloring books,” says Cowley.
“Printed kids’ books have had double-digit gains in the last two years, with licensed products particularly popular,” affirms Addis. “Grocers had actually been growing the overall book category a few years ago, and we’re seeing an uptick again as sales of e-readers flatten.”
Hybrid bookazines continue to be one of the fastest-growing segments in the category. “Bookazines, particularly those retailing for between $10 and $15, have seen very strong growth for the magazine industry,” says Romollino. “There’s still growth because the category is relatively new,” notes IPDA’s Lynch. “With retail prices as high as $15, the success of the category indicates that consumers still value printed content and are willing to pay for it.”
Another emerging trend is the sales explosion of adult coloring books. “These books have intricate design patterns, and are being used as a method of relaxation for individuals, and sometimes even as part of social gatherings,” explains Tom Cox, VP of mass and distributor sales at New York-based Penguin Random House. “Sales in this category have skyrocketed across many retail segments, with prices ranging from $6 to $18 per book.”
According to Cox, young-adult titles that have crossover appeal to adults, and books connected to films, such as “The Girl with the Dragon Tattoo,” “Fifty Shades of Grey,” and “Gone Girl,” have propelled the book category.
“The good news for book sales is that movies provide an enormous marketing moment to connect with a whole fresh group of readers,” he notes. “Often, a more casual reader will discover and purchase a book once the marketing and trailers for the film begin to circulate. ‘The Martian,’ ‘In the Heart of the Sea,’ ‘Miss Peregrine’s Home for Peculiar Children’ and ‘The Danish Girl’ are all highly anticipated films with great track records as books.”
“At the front end, magazines deliver the highest per-unit profit when compared to candy, single-serve carbonated beverages, and salty and meat snacks.”
—Jackie Gray, Willard Bishop
“The good news for book sales is that movies provide an enormous marketing moment to connect with a whole fresh group of readers.”
—Tom Cox, Penguin Random House