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Costco now sells magazines in Australia and other magazine retailers will not be happy

I am not sure when this happened but US warehouse retailer Costco is now selling magazines in Australia. Their price is 20% off the cover price. Yes, 20% off. Here is a photo I have been sent from someone visiting a local Costco store.

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Costco currently has eight locations in Australia with plans to grow to 25 sores within four years. While it would be easy to dismiss eight stores as not a large enough footprint to hurt magazine sales in other retailers, with revenue of $1.3B in 2015 (source: SMH), Costco is a force to be reckoned with.

While I have never shopped in a Costco, I am told some days the warehouse is packed with shoppers. Each person passing a magazine rack promoting 20% off is being told magazines can be discounted. If these people see the discounted magazines occasionally in supermarkets and regularly at the airports, the message soon sticks to not pay full price of magazines.

Magazines being available in Costco and at 20% off cover price ought to concern us. It demands a response, in-store.

From what I can tell, Costco US started selling magazines around ten years ago. I found this photo promoting 20% off cover price in the US at the Time is Money Mommy blog.

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FYI, here is the blogger’s comment:

I used to subscribe to several magazines, but have cut back over the years since I don’t have time to read them. I’ve realized even though subscriptions are cheaper, it makes more sense to just buy the issues I’m interested in. Costco is the place to do it, as they give a 30% discount off the cover price. And yes, I totally bought the US Weekly with Princess Kate on the cover. Chase is golfing tomorrow, and I’m going to sit in the yard and relax while the kids nap!

While we can be angry about what is happening at Costco, that would achieve little. We are better off responding commercially, in our businesses.

I good response from newsagents would be to actively and consistently promote their discount voucher, magazine club card or similar good-value loyalty program. This is what I do in my newsagency. I mention discount vouchers and magazine club cards as they are differentiating offers whereas loyalty points are not – they are not understood and of dubious value, and shoppers get that.

The Costco range is small and magazine purchases will be on impulse. Our best pitch remains to be the destination magazine specialist and to to this in cost effective and commercially viable ways.

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  1. eric

    I guess for the final phase of magazine era , publishers will discount all mags in supermarkets.

    0 likes

  2. Jon

    Scoop publishing in WA have announced they are closing their doors. They account for 5% of my magazine sales and i think will be the final straw for me. I don’t see magazines in my store by 2018.

    3 likes

  3. Brendan Mason

    If the magazine companies can supply to COSCO at a price where they can afford permanent discounts of this magnitude, then I feel screwed over by them. We should be rewarded over the majors for being specialist that carry the broad range we do.

    6 likes

  4. Colin

    Costco is a destination supermarket, it is far more of a worry to the supermarket chains than to local service stores. I have an Aldi opening near me soon, it will also ramp up the price war between the supermarkets.

    I am not interested in competing on price, my stance applies to gifts, books, stationery, cards, wrap …. but especially magazines which even at full price give an unacceptable profit return.

    I will continue to reduce the magazine offering, I will not be discounting them. I am quite happy to follow the magazine distributor’s lead. I am sure they will find the supermarkets loyal customers who develop sales (NOT LOL).

    I agree with Jon and 2018 is just 2 years away . The end game is nigh. At some point the magazine publishers are going to hit the brick wall with the printed copy. Either they want a sector of specialist magazine outlets or they don’t. I suspect; like the book publishers, they will eventually cotton on to needing the specialists. When they do, we will see who is left standing and who is interested. At 25%, I sure as hell will not be.

    3 likes

  5. Peter B

    Are publishers devaluing their own product by doing deals or are Costco devaluing the product themselves. If it is the latter publishers should withdraw their product.

    Either way the lack of support and respect by publishers and distributors to the newsagency channel is ridiculous and I agree with comments above, magazines are doomed over the next few years and we will take the opportunity whenever it arises to reduce magazines.

    4 likes

  6. Tania

    I agree Peter, it just devalues their product and why would they want to do that? Makes you wonder why we work the hours we do.

    0 likes

  7. Mark Fletcher

    I doubt the magazine publishers are discounting or if they are it is not the full 20% off the cover price.

    0 likes

  8. Colin

    A new development in Adelaide appears to be magazines appearing in Gift Stores. I have noticed Adore and Fete recently for sale in lifestyle stores. Is this happening elsewhere, maybe I just never noticed before.

    0 likes

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