Thursday, March 27, 2008
On Eve of Retail Conference, PBAA Survey Details Publisher Concerns
By John Harrington
The New Single Copy
The 2008 Retail Conference, with the theme, "Unleashing the Power of Print," will begin next Sunday, March 30, in Tampa, Florida. The conference is co-sponsored by the Magazine Publishers of America (MPA) and the International Periodical Distributors Association (IPDA). According to the results of survey by another publishing related trade group, the Periodical & Book Association of America (PBAA), the conference will take place in an atmosphere of uncertainty and concern; at least among the 38% of PBAA's members who participated in the survey, which was conducted in January and February.
The following findings of the PBAA report were excerpted from the association's publicity release of March 18:
"68% of publishers decreased or kept their draws flat in 2007 (in line with wholesaler initiatives).
"More than half of the publishers had decreased or flat sales.
"69% raised their cover prices (32% by a $1.00 or more). Publishers seem to be trying to make up revenue by cover price increases, since sales are flat or down.
"86% expect flat or declining sales in 2008. Note: Publishers are unhappy in general with wholesaler attitudes; copies have been taken out of the systems, efficiency is up, but publisher cost savings (of not printing the wasted copies) are eclipsed by rising paper, printing, binding, and distribution costs . . .
"Publishers are seeing continued resistance by wholesalers in general to the concept of 'returning copies to the system' by re-investing or 'trading up' copies to new outlets . . .
"75% of publishers saw no benefit in their participation in wholesaler incentives.
"65% of publishers perceive the national distributors are trying to 'fight the fight' but are not effective at this time . . .
"Wholesalers are perceived primarily as magazine distributors, not as sales partners (and need to be more aware of this widespread perception), leading to increasing publisher efforts to find additional sales channels."
Confirmation of Increased Tensions: Although the PBAA survey results are strongly attitudinal, and probably not a statistically valid representation of the entire business, they do confirm the increased levels of tension that are clearly present today in the magazine distribution channel. Although sales have improved, albeit only by minuscule levels, in each of the last four years; and efficiencies are up by six percent during that period, the levels of distrust between wholesalers and publishers and their national distributors is at a very dangerous level. More than a decade of financial distress at the wholesale level has driven the surviving companies to institute, particularly in the last few years, policies aimed at reducing costs. Although most wholesalers say they are also engaged in aggressive marketing, suppliers generally feel the policies emphasize cost savings at the expense of expanding sales. At the same time, the already mentioned fragile economic condition of wholesalers has driven some of them to demand higher margins and/or challenge national distributor payment terms. The tensions arising from these types of confrontations have led many in the business to consider the possibility of one or perhaps more major wholesalers leaving the business entirely. For any publisher or national distributor, the challenge of suddenly having to deal with the loss of 15% to 20% or more of its retail distribution is more than a daunting task. That scenario has always been a remote contingency, but only in the last six to nine months, has it matured into an imminent possibility.
Retail Conference Topics:In this somber atmosphere, MPA and IPDA have announced the subjects of a series of panels and workshops for next week's conference. They include:
"Consumers, Retail, and the Environment." Chaired by John Griffin, National Geographic and chairman of MPA. Panelists: Michela O'Connor Abrams, Dwell; Steve French, The Natural Marketing Institute; David Refkin, Time Inc.; and Dave Sherman, Blu Skye Sustainability.
"Inside Insight: Through the Eyes of Former Retailers." Moderated by Richard Lawton, CMG. Panelists: Steve Burbridge, T/WR; Tim Humanik, CMG; and Jerry Lynch, IPDA.
"Puzzled, Perplexed & Pondering.. . . . Why Publishers do the Things They Do." Moderator: Rob Gursha, T/WR. Panelists: Linda Brennan, Business Week; Ken Godshall, Hearst Magazines; Terry Day, National Geographic; and Suzanne Roman, The Taunton Press.
"Future of Magazines at Retail." Moderated by Peter Kreisky, The Kreisky Media Consultancy. Panelists: Jaime Carey, Barnes & Noble; Glen Clark, The News Group; Rich Jacobsen, T/WR; and John Loughlin, Heart Magazines.
"A Case for Magazines at Retail." Panelists: Jay Felts, CMG: Drew Wintemberg, T/WR; and Jay Wysong, DSI.
Other speakers will include Matt Cooper, Portfolio Magazine; Cindi Leive, Glamour; Wendy Liebmann, WSL Strategic Retail; Tom Griffith, Willard Bishop Consulting; Anne Zafian, Simon & Schuster; John Santanella, Nickelodeon; and J. Walker Smith, Yankelovich Partners.