Business Magazines

The evolution of bricks and mortar retail: implications for publishers

Many theories insist that the reason consumers are leaving bricks and mortar stores for web-based purchasing, is because of the Internet and online retailers like Amazon.com. In reality, these changes are nothing more than the continuing movement in retail shopping patterns for the last 50 years.

RETAIL METAMORPHOSIS

As a Baby Boomer, growing up in the Washington Heights – Inwood Section of Manhattan, we were living in the equivalent of one of the small towns we saw on television’s “Leave It to Beaver” or “Mayberry RFD”. The exception being there were no grass lawns or one-story public schools; our home was a 4-room apartment in a 5-story walkup with 50 other apartments. The elementary school was also a 5 story walkup that filled an entire city block, with no manicured lawns and ballfields.

We knew retailers by their first name and we had a choice of candy stores, delicatessens, pharmacies, clothing stores, meat markets and supermarkets within a 6 or 7 block area.

On opposite corners of my street were 2 candy stores, Moe’s and Murray’s. Each selling penny candy, egg cream sodas, magazines and comics. There were 2 delicatessens for fresh-made sandwiches and homemade salads. And on either of the main shopping streets that were less than 6 city blocks apart there was a Supermarket, pharmacy, independent furniture store, clothing store, shoe store, a movie theatre and a number of other independents.

All that is changed now. No more candy stores, only one bodega (a combination of a mini-mart and delicatessen) and a dry cleaner. The supermarkets have merged into a Super Center blocks away from the street where I grew up. Personal service, a loss of “specialty” products including magazines and penny candy has been lost in the current retail environment, and this retail metamorphosis has taken place in every town, village and city in the U.S.

KILLING THE INDEPENDENT SPECIALTY MARKET

The 1980s saw a surge in independent specialty stores (for example collectible Doll Stores, Archery Stores, and independent Health Food stores) opening in strip malls and old downtown neighborhoods across America. As interests in specialty markets grew, magazines were created by enthusiasts to provide information to new enthusiasts. These new titles had little or no distribution in mass market retailers, and many of the 400 remaining magazine wholesalers did not distribute these titles because they did not see a substantial market in their community.

From Bowhunter to Doll Reader; Vegetarian Times to PC Magazine, the independent retailers sold more copies of these specialty titles than “traditional” retailers, however mass-market retailers and cable TV home shopping networks saw these niche markets as a potential source of new revenue and created “alternate” products.

Many specialized products were duplicated at a cheaper price point (and quality) and sold to the captive cable TV home shopping audience. This changed, for example, the collectible doll market by expanding the market with less expensive dolls. As consumers bought low-cost items, the independent doll stores began to close their doors, and the collectible doll market lost value.

RESTRICTION OF CHOICES

In the late 1980s, the Moral Majority killed magazine sales targeted to the male teen and adult reader in the Convenience Store class of trade, the primary shopping venue for teens and adult males who wanted a quick shopping experience. C-Stores in the 1980s were the “Main Street Malt Shop” of the 1950s where kids hung out with their friends. 

These stores were not Dens of Iniquity as was presented by the Commission. Men’s sophisticate publishers, with copies polybagged at high expense, distributed to these stores and millions of dollars of magazines were sold. These magazines were behind the counter, out of reach from kids buying Slurpee’s. C-Stores stopped carrying adult titles for fear of reprisals from local evangelists and magazines became unprofitable for both the wholesalers that delivered them, and the retailers with empty store fixtures.

However, by killing the adult title sales, limiting magazine profits, teens could no longer buy Thrasher or Tiger Beat, the Automobile Category took a major loss in sale, and millions of dollars in magazine sales were lost. (Note: There are a handful of C-Store Franchisees that still carry a full line of magazines.)

Lastly, another factor in magazine demise is the retailer’s lack of respect for the magazine category.

While I was with a National Distributor, we managed a small sporting good chain (at the time), about 65 stores, with mini-mainline fixtures at each checkout. We were doing approx. $750,000 a year in retail sales. New management brought in soda coolers that paid the chain a very nice placement fee. We installed “saddle bag racks” on each cooler. The number of titles carried was reduced due to lost space, however magazines were selling.

After another chainwide redesign; new front-end fixtures with gift cards, candy and travel mugs replaced many of the soda coolers. Magazines no longer had a home.

A few weeks ago, it was announced Home Depot U.S. will stop carrying magazines in October. Another loss for the magazine brick and mortar business.

SOLUTIONS? 

For retailers, you know who your customer is and what shampoo they prefer and what fruit they buy. You can do the same with magazines. Don’t use the Internet or Amazon as an excuse for falling sales, you can bring customers back to the store with innovative programs and fresh displays. At the recent MBR meeting, Lise Wilson of Miller Zell presented the proposed supermarket magazine section of the future. It is inviting and has the potential to drive sales and make money. Go to WWW.MYMBR.ORG and see one example of how we can rebuild brick and mortar.

For wholesalers, re-establish jobbers in urban and tertiary communities. This week I unsuccessfully spent much of one afternoon attempting to get an independent retailer in a small town added to the distribution of a magazine I represent. I couldn’t get it done. The retailer was too small to be serviced, even by the direct distributors I spoke with. Wholesalers should re-introduce local jobbers. Let them work local markets and place magazines that match the demographics. The title mix will probably include targeted, high priced titles that have a great deal of potential as well as niche and ethnic titles. These jobbers can service local stores that do not fit into large wholesaler weekly billing.

This won’t replace Moe’s candy store but it has the potential to re-kindle the industry.

John Morthanos, President, Morthanos.com   @jmorthanos

About Morthanos.com: Having managed and developed the budgets and plans for America’s leading magazine and media cos, morthanos.com is an in-house resource for planning, budgeting, estimating and distribution management.

This commentary originally appeared on Bo Sacks daily newsletter and is re-published with kind permission. You can subscribe to Bo’s e-newsletter here.

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