“We have opportunities available to no one else”
By Linda Ruth
Winding up 2020, and our year of, our group—Joe Berger, Samir Husni, Bo Sacks, Sherin Pierce, Gemma Peckham, and me—hosted Jerry Lynch, President of MBR (Magazines and Books at Retail) to talk about what we’ve come through, and what lies ahead. Jerry Lynch talked about his faith in our industry, the unique opportunities available to us through ecommerce—and a big announcement he is almost ready to make.
Joe: We’ve spent the year reacting to the challenges that COVID threw at us; it seems, in general, we do a lot of reacting. Is there a chance for us to not be such a reactive industry?
Jerry: The challenge is going to be figuring out where retail, as a result of dealing with Covid is going to go, where it will end up, and when. Contrary to what you’d expect, we don’t fully know what’s going on. Consumer habits have changed, and some of those changes are going to stick, but perhaps not all of them. Some of the things that businesses put in place as the result of the pandemic might have to be unwound as consumers start to change again. And additional opportunities will arise.
Meanwhile, we’ve had some positive changes; mass market and grocery are the classes of trade that have done best for us..
Bo: People have to eat. Of all the necessary resources available to the public, grocery is paramount. We have to eat 3 times a day.
Sherin: The club stores, Sam’s and BJs have done well too, although Costco has stopped carrying magazines. Why is that?
Jerry: Costco has a unique way of judging performance. Magazines don’t fit nicely into their way of operating, and the resulting metrics don’t allow our performance, in my opinion, to be judged properly.
The timing of their decision—we had hoped the removal of magazines was temporary--did bump up against COVID, as well. We have some ground to regain there. Some retailers removed checkout entirely, seeing it as a distraction at the front end when they needed to move customers through for safety reasons. We’ve seen some good consumer feedback around the category, and that’s giving us an entry point back in.
Bo: People trust magazines more than any other medium.
Joe: What is the role MBR has in presenting magazines at retail?
Jerry: We see our role as overarching. Our involvement would be along the lines of providing good research, helping craft the story. COVID set us back.
Sherin: If a retailer walks away from magazines, as, for example, Home Depot did, do you strategize with wholesalers how to get them back on distribution?
Jerry: We do try to come up with a concerted effort, but remember that it’s driven by retailers in terms of who they want to talk to. That’s primarily the wholesalers and larger publishers. Our role would be to help coordinate, to make sure we’re delivering the same key messages having to do with the benefit of the entire magazine category in the store.
Sherin: The Old Farmer’s Almanac had a direct relationship with Home Depot before anyone else, then the wholesalers got involved and turned it into a category issue. When, after years, the whole chain was lost it was a big hit.
Jerry: Many times a decision about the category comes from higher up, executives other than the buyer of magazines. Those decision-makers may not have enough information or the correct information which doesn’t allow for a good understanding of the category. Where we can We work with the merchant to ensure they have the right information to take to upper management to help make our case.
Bo: My experience in our industry says there is great need for improvement, training and experience. How savvy are the buyers?
Jerry: Mixed. Book chains, terminal operators, for example, are great; in other classes of trade where publications used to have a dedicated buyer the category may now be one of many that the buyer/merchant has responsibility for or be treated as an add-on. It’s difficult to gain the expertise when the time isn’t there
Joe: and it can change in the same chain from one buyer to the next.
Sherin: Having those relationships was easier when you could go and see the buyer. They used to be happy to talk to you. Once the wholesalers took over the relationships, more of the communication went through them; the buyers have been harder to talk to. Our wholesalers need to stand up for the category and educate the retailer why magazines are important; it’s not just feeding your stomach, you need to feed your head.
Jerry: Other factors come into play as well: the decrease in sales volume, the pressures of consolidation at retail. Full service by wholesalers is seen as a real plus for retailers. That has been around for many years and recently SBT was an added big benefit for many. However, that has also allowed some retailers to be less vested/engaged in the category We need to build a love/passion for the category that gets us over those humps. That passion is built from the product itself, the actual content of a magazine.
Bo: The magazine business is in the communication business and as an industry, we’re horrible at communicating our own presence.
Jerry: Yes, we talk about our problems all day, yet we do less well talking about our successes. We have to talk to our retailers, with good data, in a retailer-friendly format, saying what magazines mean to our mutual customer. If we treated retailers the way we do advertisers we might get somewhere.
Samir: The impulse buy, going to the store to browse magazines, has dropped off with the worsening of placement and display of magazines. When I go into a store, I might find one lane open, ten lanes self-checkout. I tell them, if I wanted to do it myself I’d stay at home and order from Amazon.
Jerry: Labor at the front end is the largest expense line by far.
Joe: One of the opportunities we’ve been talking about is ecommerce.
Jerry: The MBR has been working with a small group of members to get ecommerce off the ground for publishers. It’s way more complex than you’d think. It’s becoming a critical item for most retailers, but there is a direct relationship between the retailer’s ecommerce sophistication and where magazines fall as a priority. As they get better at ecommerce, their interest in our category grows, so we can gauge where to put our resources based on how far along the road the retailers have traveled. Different retailers also handle ecommerce differently: in some cases, they have an ecommerce division that we need to approach; in other cases, the buyer is our link to the ecommerce people; it’s different from chain to chain.
Bo: Over the next few years we’ll continue to commodify ecommerce, making it simpler and smoother. At the end of the day, we’ll solve it, it will get more easy than it is today.
Samir: The increase of ecommerce even from Hearst, Meredith, and others, selling their own subscriptions, is up 40% YOY. How closely are you working with ANC?
Jerry: The wholesalers will be key in this. We need to work with them to ensure that, if a store offers say, 100 magazines via their online portal, every one of those 100 magazines are available in the store for pickup. You can turn items on and off at a store level. But—going back to SBT—without tracking inventory by the store the retailer won’t know how many copies they have.
Joe: Except we do through O/R. And we have more than enough inventory.
Jerry: But in an SBT environment, that O/R information often isn’t transmitted to the retailer. Long term, especially as we expand the selection, we need to solve this, because we don’t want to get sideways in operation and disappoint a customer. That will hurt us with the consumer and the retailer.
Joe: There is one additional customer to keep in mind that we don’t want to disappoint, and that’s the publisher. Too many of them are turning away from this business now.
Sherin: To that point, there are some forward-looking buyers. Harris Teeter, for example, is testing the OFA on its e-commerce site.
Joe: I keep coming back to the question of why wholesalers are not working with publishers to get a site up inclusive of all magazines in that warehouse. We have a few indy retailers that have it, but if I were a magazine wholesaler today I would use my warehouse as a source of eCommerce, and I’d set up affiliate relations as well.
Jerry: ecommerce provides a huge opportunity to link the two sides of publishing back together. Everyone in publishing, from all aspects of publishing, from circulation, from advertising, is looking at it. And the opportunities are enormous. Take one example: suppose people could buy a subscription for Prevention on the retailer eCommerce site, and next time they were in the store they could pick up that copy or have it added to their click and collect the order. That’s convenient. That opportunity doesn’t exist anywhere else. It only exists at retail.
Or, another example, imagine the possibilities of an eCommerce generated shopping list leading the consumer to the Food and Wine magazine next to the in-store wine display. Again, that’s an opportunity that exists nowhere else.
Sherin: Our industry has not kept up with our customers, what they want and need. Some of our customers are now buying from Amazon, or from specialty chains because newsstand hasn’t been able to provide the support to keep up with the demand.
Jerry: E-commerce has not been a high priority for retailers. But that is changing and has changed. Now it is.
Sherin: Walmart carries every one of our publications through our trade distributor because they got tired of waiting for the newsstand.
Joe: We as a group know many publishers who want seats at this table. They want to participate and help and make this happen. So how to do this?
Jerry: I expect to be able to make an announcement soon, of a step we have taken in the direction of making this happen. Let’s get together in six weeks and talk about it then.