paperback profits

Periodicals can be a slipperyslope for the convenience industry.A good magazine title can be justas powerful as an impulse item forteens and adults as well-placed candy itemsare for kids. But for every one shopper thatpicks up a title, dozens walk by without givingthe selection a second thought, and that’swhere the opportunity lies.

Retailers want to fill shoppers needs andpique their curiosity, but the wrong selectioncan be detrimental. Take, for instance, CircleK. The company carried a number of “adult”titles at one point and came under fiercescrutiny from parents and conservatives.While some feel that “no press is bad press,”the chain disagreed and quickly worked to limit its titles and repair any damage done.

But what offends one reader can be exactly what another reader is looking for, and, for some,purchasing those items in a c-store is a much more viable option than a subscription. According to a study by the Magazine Publishers ofAmerica, subscriptions accounted for 70% of the $10.5 million total circulation revenue in 2005, leaving single copies making up the remaining30%. That’s still a $3.1 million market convenience stores are competing closely withsupermarkets, mass merchandisers, bookstores and newsstands to capitalize on.

A selection to envy
When Valley Dairy opened its first store—nicknamed the milk carton store—in GrandFolks, N.D., back in the late 1963, there were no Barnes & Nobles nearby for customers toget their magazine fix. So they put into placeone of the more impressive selections for itscustomers—approximately 40 linear feet ofmagazines and paperback books.

Even after a Barnes & Noble moved intotown, this particular Valley Dairy had alreadybeen cemented as a destination for customers looking for a good read.

“The Barnes & Noble is on the other side oftown. While we don’t carry nearly the books they do, we still have a larger selectionof magazines and the store does verywell,” said Monica Schmidt-Musich, president of the seven-store chain. “Last year thisone store sold $180,000 worth of magazines,which is a lot for a c-store.”

Musich has since added a considerablemagazine selection to a second of her sevenstores—both locations do not offer gas. Whilethis store only has about 24 feet of publications, it is still a key profit driver.

“Periodicals are not overly profitable forus, our margins run from 19 to 20%. The thingthat helps is that most magazines retail for $4 to $6—the higher margin helps on those,”she said.

Musich’s strategy for this category is tosatisfy everyone. She says the company willcarry any title that her distributor, Saks News,is able to bring in. The manager of the milkcarton store will put titles aside for his customers, further personalizing the service atthat location. Saks tracks magazine sales forMusich and will trim down selections basedon movement, or will at least offer areaswhere she can trim, but she’s quick to givetitles a chance to perform.

“We get basically every magazine thatcomes into town unless it is subscription only.If we receive five titles and they don’t sell,we’ll send them back and that title mightget cut totally,” she said. “Some titles we mayonly sell one, which doesn’t sound like much,but there’s obviously interest. We’ll cut backon how many more we get in, but will resistgiving up on it. Saks is accommodating andwill just send us maybe two copies.”

In North Dakota, with its legendary outdoor sporting culture, Musich’s top sellers areany hunting, fishing, gun or sports magazine,along with magazines dedicated to fantasysports leagues or card collectors, like BeckettCard Magazine. Her female shoppers are bigfans of Better Homes and Gardens.

But Musich’s extensive magazine sections have also become a destination forher customers. She claims that customerswill often be in her store for hours perusingthe titles. One customer has a Saturday ritualwhere she comes in and selects her titles for the week.

A guaranteed category, meaning sheonly pays for what sells, Musich runs little riskstocking more than the typical c-store. But it’sher solid partnership with Saks that allowsher to be so confident—realizing they don’twant to waste their efforts shipping her product that won’t sell.

“We get magazines in every week andprobably about a quarter of our stock will goout each week,” she said. “Saks has our bestinterest in mind—they track our sales andhelp keep our selection optimal. But they tryto optimize themselves, too. They work hardfor us.”

Smart stocking
While periodicals may not be a top-10category for West Des Moines, Iowa-basedKum & Go, it has been a part of the company for 47 years, and it shows no signs ofgoing anywhere. With its local papers, USAToday, Wall Street Journal and popularmagazines like People, InTouch, US Weeklyand Truck Trader, the category has beena consistent contributor to the company’s bottom line.

Even though Kum & Go still carries men’stitles like Maxim, the company made a conscious decision to discontinue adult titles in2005.

“We have seven core values at Kum & Go:integrity, work ethic, professionalism, discipline, caring, teamwork and family,” said JackWilkie, senior vice president of marketing.”With a focus on family as a value, it would beinconsistent to have adult titles in the store.With the men’s titles we do carry, we’re careful to merchandise those responsibly andabove a child’s eye line.”

With 445 stores spanning 13 states, Kum &Go knows this isn’t a category destined for allits units. The company bases its mix on individual store sales and it is careful to keep itflavored with regional publications. But thekey to the company’s strategy is merchandising magazines as an impulse category.

“We keep our titles at the front in an impulse location with more weekly titles toincrease purchase frequency,” said Wilkie.”And it helps to tailor the store mix to the customers in that area.”

Kent News supplies Kum & Go’s selection and it is also helpful in tracking andreplacing slow-moving titles. The chain supplements internal scan data with its vendor’sreports, and it feels it has identified the mostoptimal situation by negotiating a guaranteed program like Musich’s.

“Kent News has been very helpful as wework to a profitable mix,” said Wilkie. “It willswitch titles out as often as needed to growthe category. We’ll put in a new product andgive it a few weeks since periodicals aremore of a monthly read.”

And sometimes the titles do the work forthe company. Kum & Go ran a promotionwith some localnewspapers, the Des MoinesRegister and the Springfield (Mo.) Newsleader,that the company would provide a freepaper with a minimum of eight gallons ofgasoline. While Wilkie declined to provide anydefinitive sales numbers, it was a success for the chain.

“Our gasoline and newspaper promotionis in its second year and has been widelyaccepted by our customers as evidenced bygas volumes and customer counts,” he said.”It’s a terrific value proposition and is recognized as such by our customers.”

css.php