Thursday, January 24, 2008
The Wal-Mart Magazine List. A Look at The Impact
By John Harrington
Since mid-December, it was widely known that Wal-Mart Stores had reduced its authorized magazine title list from around 2500 to just over 1100. However, most national distributors and publishers were advised only about their own titles, and a full list did not seem to be available. This past Friday, January 18, Keith Kelly, reporter for The New York Post, wrote about the retailer's action and noted some of the titles no longer available on the chain's racks. There is no question that it is major news when the world's largest retail seller of magazines reduces, by more than 50%, the list of titles it is willing to display. However, the actual impact of the move is not likely to change in any significant degree the overall state of magazine retail sales, or even sales in Wal-Mart itself.
Although Kelly noted Wal-Mart's share of all newsstand sales at over 20%, The New Single Copy estimates the number to be in the 15% to 18% range. It may be even less. At the 2005 American Magazine Conference, Time Inc. CEO, Ann Moore, when introducing Lee Scott, Wal-Mart's CEO, said that his stores accounted for 12% of her company's sales. Not only are Time publications such as People, Real Simple, and In Style, major sellers in Wal-Mart, the company also publishes All You, distributed exclusively in the chain. Time Inc. generates more retail dollars than any other publisher, and while some others may be more dependent on Wal-Mart sales, it is hard to calculate the retailer's share being very much greater than 15%.
While the elimination of more than half the titles grabs everyone's attention, most estimates are that the remaining 1100 plus account for over 95% of Wal-Mart's magazine sales. Some think the figure may be as high as 97% or 98%. Another fact to keep in mind, is that the size of Wal-Mart's revised authorized list is not that different from a number of other supermarket chains, all major competitors of the chain. In some instances, authorized lists of 1000 to 1200 have been developed with considerable direction from major publishers and national distributors, acting in a category manager role. It is no secret that larger publishers generally contend that crowded displays depress overall sales. Of course, that opinion is not universally shared, even by all wholesalers, let alone all publishers and national distributors.
Wal-Mart's list reduction should also be seen in the context of the chain's "Sustainability" initiative, which has identified specific goals for magazines: 1, a sales increase of 5.0%; 2, improving efficiencies to 50%; and 3, achieving waste reductions throughout the channel. (See The New Single Copy 10/29/07 and 11/5/07).
Another factor to keep in mind is that no single Wal-Mart display fixture is carrying much more than 300 different titles, forget 1100, at any one time. The larger figure represents the number of titles eligible for sale throughout the chain of more than 4000 stores, located in every part of North America. Many of the titles are only likely to be available in limited geographies, or at certain times of the year.
Much was also made of what seemed to be anomalies among the titles delisted by the Wal-Mart. Many of them are magazines targeting high-end customers, luxury markets, and smaller circulation (at least on the newsstand) social and literary titles. Given Wal-Mart's solidly middle-America demographics, many such publications would not reasonably be expected to produce viable numbers.
A few of the eliminated titles cited by Kelly deserve some explanation. The Economist was one. Actually, it has not been available at the chain for more than a year. When it raised its cover price by a dollar to $5.99, Wal-Mart refused to handle it as part of its overall policy of urging suppliers to keep their prices as low as possible. The publisher, who was selling only a few copies in the chain, stood by its decision. During the first half of the year, The Economist's single copy sales were up by more than 10%. Two well known Meredith titles, Better Homes & Gardens and Ladie's Home Journal, were also cited. Many people The New Single Copy talked to thought this might be the result of Meredith selling print overrun copies of the two magazines to a bargain store chain, where they were being sold at retail for a dollar. The policy was particularly irritating to Wal-Mart, which promotes itself to customers as the home of the lowest prices.
The New Single Copy is not dismissing the actions of Wal-Mart. Nor is it challenging the work of Keith Kelly, who is widely recognized as the most thorough and professional reporter covering media today (Note: Kelly did try and reach us while preparing his article, but we were not able to connect). The fact is that Wal-Mart is deeply committed to making magazines a key factor in its presentation. The list reduction should be viewed as a single step in the chain's goals for magazines. After the first "Sustainability" conference, Wal-Mart executives David Addison and Christy Jenkins said, "The summit was the first step in a very ambitious and audacious initiative that will increase profitability...and reduce waste. Everybody stands to gain by committing to this redesign of the magazine value chain."