Over the counter magazine sales in the US and Canada were down 14.2% for the first quarter of 2015 compared to the same quarter a year earlier. While better than the 15.6 decline for the fourth quarter of 2014, the Q1 2015 decline is concerning.

I have taken results from a news release from Magnet an organisation formed by magazine wholesalers representing 99% of magazines sold.

If you read the release there is a claim that the sales decline is being driven by short supply. The release also documents challenges being faced by stakeholders including the reduction in retail space:

While there were some titles as well as entire publishing lines that had sales increases in the first quarter, overall the sales trend continues to decline. MagNet, like other interested industry participants, has continually recommended that the industry find a way to work together, with major publishers, distributors and wholesalers developing a strategic plan to engage retailers to again focus on our category. But currently, we see no signs that indicate this is happening. Instead,  we see some retailers removing checkout pockets and reducing the size of mainline fixtures. Without a concerted effort by the major industry leaders to sell the overall value of our products to retailers, the loss of retailer real estate dedicated to magazines will continue as sales decline. Magazines at retail are an impulsive purchase. If consumers can’t find our product, they can’t purchase it.

This is happening in Australia too. Publishers and distributors need to understand the economics of retail and to fully understand the cost of each magazine pocket where the cost includes the space, services, labour and opportunity cost.

If the MPA was smart they would have undertaken this research before commencing testing new supply rules as I don’t think they understand why newsagents do what they do with magazines. There is bo point in testing a solution until this is understood. Key to achieving understanding is to be certain as to the costs points and what the costs actually are.

In the typical Australian newsagency today, magazines are primarily a destination purchase in my view. To maintain that space we need to range destination titles. If we had control over supply, smart newsagents would increase their range in pursuit of increased sales. Unfortunately, the paternalistic approach to magazine supply in our country is the key factor in driving magazine sales down.

But back to the North American results. While their situation is different, it is interesting to see suppliers being targeted for their role in the sales outcome.

This photo shows the typical range of magazine titles you will see in a drug store in the US, the type of retail business which most closely resembles a newsagency. The unit holds 156 regular sides titles. In Australia, where subscriptions account for a lower proportion of overall circulation than in the US, I think 156 titles is too few for a destination magazine store.

Australian supermarkets carry around this number, sometimes up too 200 titles while convenience and petrol outlets carry considerably fewer.

Considering sell through rates, the cost of retail space and the opportunity cost of this, my feeling is that the ideal range for a city or suburban newsagency is between 500 and 700 titles – around four of the units in the photo. In regional and rural areas the number could be somewhere between 800 and 1,000 titles depending on the costs of the business.

A good step we can take to controlling supply is controlling space allocation. This is best done with flexible deep magazine shelves on which we allocate one pocket per title and advising the distributors in writing of the total number of their titles we have space for. The type of fixture in the photo is ideal for this. It is what I use in my shops.