Magazine unit sales fell in 72% of newsagencies in the second quarter of 2010 compared to the same period in 2009 according to data from the latest Newsagent Sales Benchmark Study. Of the 72% of newsagencies reporting a decline (from a study pool of 120), 59% experienced a decline of 10% or more.
This steep decline is on the back of a significant decline in the same quarter a year earlier. It continues the trend of a 7% decline reported in the first quarter of 2010. Magazines, a key traffic generator for newsagencies, are in trouble.
Curiously, the decline for women’s weeklies titles (New Idea, Woman’s Day, Famous, NW, OK!, That’s Life and Take 5), was lower than the overall average for the category.
In almost every newsagency reporting decline, sales in the food segment increased. This is the Master Chef, and for many, ACP Women’s Weekly Slow Cooker impact.
So why such a steep decline in magazine sales in newsagencies? Outside of leakage from newsagencies to convenience, I put the decline down to economic conditions – more so than the impact of the Internet or mobile technology. Money is tight. You see it the way people shop. We see fewer sales today with two and three magazines.
I expect the decline to get worse before it gets better.
Outside of the loss of sales, the impact is magnified for newsagents as they continue to receive volume for most titles at 2009 levels. The cash-flow drain is unsustainable for some newsagents. This is compounded by shop rental increases of 5% and more year on year, labour cost increases of 10% and general operating cost increases of 10%.
I would like to see magazine publishers, magazine distributors and newsagents respond to the magazine sales crisis by meeting to discuss the situation and possible solutions. Something has to give, and very soon! Publishers and magazine distributors need newsagency businesses to be strong. Another few months of this and the channel will start to shrink
The Newsagent Sales Benchmark Study relies on accurate sales data from a pool of 120 newsagencies spread across shopping centre, high street, regional and rural situations. I have been conducting the study for years and the results have been borne out in audit and other results released.
I will publish the full results of the latest Sales Benchmark Study on Monday.
The 1,700 Newsagents using the Tower Systems newsagency software can easily check their own year on year performance using the Monthly Sales Comparison Report.
I would not underestimate the impact of the internet, particularly on trader, adult and business mags.
I AGREE $$ is tight even in my upper middle class area
Just out of curiousity how are the superdraw sales going- i’ve not running as many syndicates as usual.
Also speaking to other self-employed, they are selling assets to keep business afloat or to pay off business loan (like i did) and my sales are down about 10%.
Cheers and good trading 🙂
Mark, you say something has to give and I suspect it will be range. More and more newsagents will bite the bullet and decide that they cannot afford the current space allocation to magazines. More profitable lines will take their place. We will carry only the top selling weeklies and monthlies, as supermarkets do. Some will say that will be a sad day, and it will, but it is being forced by the distribution channel – and just maybe this is the long term future for magazines in retail.
I agree with Shayne, the future will be less magazines and appearing in a different way.
Publishers have facilitated the situation by nurturing other retail channels for amagzines. Magazine distributors have refused to engage in commercial discussions on range. This leaves newsagents cutting magazine space and possible killing the golden goose.
Smart publishers and distributors would engage in commercail dialogue on this matter.
Theo, I would agree that I am not selling as many syndicates for superdraws as I used to but I think that the financial burdens of many people are so great that people want to win that large sum of money on their own.
we should get higher margin for stocking a wider range of magazines instead just a mere 25%.
We have replaced 60% ( or 1200 pockets)of our mag space with higher margin products that move just as fast, apart from the headache of still getting oversupplied with crap and having to early return all the slow selling titles we are making more $$$ per sq meter of shop then ever before.
I agree with Mark that this is in part the publishers own doing because they are the ones that had to get into supermarkets , convenience stores and servo’s at our expense but what they didn’t expect is that these big boys will not tolerate crap titles and will only sell fast movers.
It made me smile that the supermarkets now understand that mags are low margin/high labour products and are starting to pull out, maybe the publishers should remember they are the one’s that ditched us during deregulation..
Mark
As a publisher I’d like to meet with you and newsagents who want to start change. I feel publishers can do more to keep the distribution channel healthy for all. I have no doubt 1 meeting would achieve a great deal for all.
Dirk,
I think that you are right.
Dirk it is great to see someone wanting to make changes .
Dirk, was it not you that stated earlier in the month “The current distribution model is solid. The only issue is when people on all sides abuse the distribution channel”, why would you want to change something that you feel is solid?
Mark I do not use Tower Systems in my newsagency how can I compare my figures with these?
Thanks for doing this for us all.
Luke The model I feel is solid. Not perfect. Lets make a start to get rid of the abuse. If publishers work towards providing newsagents with magazines that sell I believe that would be a great start. I’m no expert on the distriubution side but I,ve had a gut full of publishers flooding newsagents with crap to gain market share.
After a conversation with Mark yesterday about sales of magazines in my own newsagency i have been reflecting on a few things…..and this is merely meant to stimulate discussion….when did the distribution model become flawed?…why do (some) publishers want to embrace change but distributors dont?…why dont distributors understand cash flow? (i could send a cheque on time, but better to send it 2 days late rather than bounce)…why do distributors want to know me when i`m going well but dont when things are tough?
We are all in this together and for the same reason….lets sell more magazines without the constraint or burden of simply carrying MORE magazines.
David, get a report of your magazine sales, unit sales, from April through June for this year and the same report for a year earlier. Compare the number and calculate the increase or decrease. Compare this to what I have written in the blog post.
This is just another reason we’re (regrettably) getting out of the newsagency business as It’s yet another point of difference we’ve lost to many other business’ over the years. It wasn’t so long ago if you wanted a magazine the first place you’d think of and go to is a newsagency. If you wanted a paper the first place you’d go to was a newsagency. If you wanted a card the first place you’d go was a newsagency. If you wanted school/office supplies the first place you’d go is a newsagency but for all of those things it’s not necessarily true anymore because people can get all those things from any number of different places these days.
The last thing we have that seperates us (for the most part) from the rest Is Tattersall’s but for how much longer? While i don’t think their move into 7-eleven stores has adversely affected us too much thus far, they’ve recently purchased 295 Mobil service stations around the country. You can suspect it’s only a matter of time until Tattersall’s products are sold through these outlets as well and i don’t think it’s far away in the coming years that they’ll be using the very same terminals we have as opposed to the restrictive ones product wise they are now. That’s not to mention the threat of online sales that will only continue to grow exponentially in the future.
I have it on good authority that Intralot won’t be around very much longer after the next state election so i would suspect that again once Tatt’s have a monoply of lotteries in this state that they’ll take up Intralot’s model of putting their products into any business that will pay for the privilege to do so.
I don’t mean to be a downer guys but i think it’s inevitable that newsagencies the way we’ve known them and grown up with will become more and more insignificant in the coming years which is just plain sad. I say grown up with because we always went to a newsagency for all the things i mentioned but the current generation and the future generation will go to the place most convenient for them because everyone sells the things they’re after. We’ve been in the game for over 10 years and the difference to how things were then to how they are now is remarkable and i don’t mean that in a good way.
It’ll be with a heavy heart and with great sadness we’ll put our shop on the market next month. As hard as this game has been at times, it’s one that’s been so very rewarding, have loved and one we haven’t regretted for a second. It’s because of that we’ve wrestled long and hard with the decision to whether we sell or not but with all the things mentioned above we thought it’d be the best thing for us to get out. I’d love nothing more to be proven wrong because i want the newsagency chain to last for eras to come but reading this latset report just re-inforces to us the time is right to move on.
I am reducing magazines by 40%. I see no sense in continuing to be the “magazine specialist” whilst it is inefficient, unfair and unprofitable. In the years ahead the demise of their access to our channel as they know it will be lamented by those that caused it. For 12 years I have listened to the rhetoric from publishers and distributors about improving allocation systems, and I have heard lots and seen little. Time for a change.
I would be interested to know if anyone is going to the acp conference in fiji?
why do you think they are having it in fiji!!!!
Hi, I am about to publish a new animal-themed magazine for girls aged 8-13 years. I’m a bit concerned about how low sales might be in newsagents and have actually be told that this is a tough market and one in which I’m unlikely to make money. Is it better for me to give it away free? And if I did, where would the best venue be, any ideas? I’m thinking girls’ schools.
Cheryl,
It’s a tough magazine market at the moment and your niche is particularly challenges. Unless you can commit a reasonable marketing budget I do think you will struggle to make any money. Look at the Crikey magazine, it has the Irwin name behind it and sales are not great.
Why not bypass print and create an online business – website, iPhone app etc.
Better Terms and Conditions from Publishers/Distributors is paramount if newsagents are to carry the breadth of range and volume.
This is a must, and if those Publishers / Distributors donot come to the party then they will hang themselves.
The value of the investment paid to Packer by the private equity firm will be decimated!!! Time is running out as more and more newsagents Cut the range of magazine pockets they are carrying.
Chris
Reservoir