What is the optimum magazine range for your newsagency? This question is more important in 2011 than ever before.
With magazine sales flat, publishers actively pursuing other distribution channels (tablet computers) and with the cost of retail space increasing, newsagents need to carefully consider their space allocation for magazines.
Magazines are vitally important to newsagencies in that the range we carry is, for many of us, our only point of difference. The challenge is that the point of difference comes at a considerable cost.
The poor margin on magazines, the continued gross over supply, the challenging rules around returning unsold stock and the poor business processes of the magazine distributors leave newsagents with a cost for the product category which is higher than for most other items in the store.
The financial and operational terms around magazines is one reason newsagents in shopping centres pay too much rent.
In considering whether to adjust the space allocation for magazines, newsagents need to thoroughly assess the following for their business:
- The return on investment delivered by magazines.
- The return on floorspace for magazines compared to other departments in the business.
- The shopper traffic generated by magazines.
- The efficiency of magazines – what else do you sell to magazine customers?
- How you would use space reclaimed from magazines?
The 2010 model of magazine supply increasing while retail sales are falling is unsustainable. Now is the time for newsagents to consider their space allocation plans for this year.
In my experience, the best way to reduce magazine supply is to reallocate space. Magazine distributors must respond if you advise that your magazine department is not as big as it used to be. In some states, there are channels through which newsagents can pressure the distributor to be compliant.
I would consider 600 titles to be the minimum range necessary in a newsagency to offer a point of difference over a supermarket. This would need around 700 pockets to reasonably display. Of course, there are newsagencies where the minimum range, given their location, should be 1,000 (or even more) titles.
The challenge for the newsagency channel is that if many newsagents do cut magazine range, magazine distributors may look elsewhere (Australia Post?)to keep their trucks full. They are freight companies more than they are magazine specialists. Having full trucks is the central goal of their business plans.
We each need to make the decision on the basis of what works for our business rather out of fear for how a supplier might react.
The space freed could be used for better margin products which are complimentary to existing newsagency product categories. Products like gifts, ink, books, a service centre or toys.
What magazine distributors will rely on is that most newsagents will not re-evaluate their magazine space allocation. These newsagents are happy with not having to take control of this part of their business, risk bringing in stock on a firm sale basis or to refit part of the store for what they will most likely see as risky business. They like the magazine model because they are told what to do and when.
Newsagents who do make a fact-based decision to cut magazine range and floorspace can expect to achieve a higher return for the magazine department as a result. This is good not only for the newsagency but also for magazine distributors and publishers.
Unfortunately, magazine distributors and publishers will not see it this way based on their past inaction on the magazine range and oversupply issues. There will be the usual fights over local titles versus imported titles, specialist titles versus spoiler product from larger publishers and the wringing of hands between the distributors who say they cannot work together to create an efficient title assortment for newsagents.
This is what has happened in the past. It is why newsagents need to take control of their own destiny as our suppliers will not do it for us.
The start of 2011 is the time for newsagents to act on the floorspace allocation in their business. I’d be happy to talk with any newsagents considering this, to look at the data necessary for guiding decisions and to share experiences. I have done this in two of my stores with success.
If I can help in any way I can be reached on 0418 321 338.
