The economics of grocery store magazine sales

Every large grocery store, at least in the U.S., has a magazine section, with the standard news and sports publications, and specialty stuff like autos, etc…

The thing is, I don’t recall ever seeing anyone buying a magazine. Maybe it happens once in a while, but it seems that most of the product is put on the shelf, sits there for a while, and is replaced at the end of the week or month.

People do occasionally look at the magazines, so the ads get some exposure, but there must be more to it that that.

Am I missing something?

My wife and I buy a few mags there once in a while.

They do sell, trust me.

I’ve never seen a person actually purchase one of them. I think they’re really for perusing if you are in a long and slow line. My favorite front page of all time was a picture of Hillary and a picture of a “gray” (alien) with the caption, “Hillary’s Area 51 Lover”.

I’ve wondered this as well. Every now and then I’ll see the magazine stocker changing out the magazines for the next month. It seems like he’s taking down a lot of unread magazines and putting out just about as many new ones. And the racks are always well stocked, so it doesn’t look like any magazine is selling out or anything. Maybe he stocks during the month as well and that’s why the rack always seems full.

(Here I’m talking about the dedicated magazine section of the store, not the racks by the registers).

I used to, a long time ago.

The demand for magazines used to be a lot higher, before the internet, smartphones, and social media.

Supermarkets in general are actually the biggest seller of magazines, by far (see the 3rd table, “Class of Trade Ranking”). Only about 10 years ago the market share was closer to 50%.

Several points:

  • they are high-profit items, compared to groceries (which have quite low mark-ups).
  • unsold magazines can be returned for credit; unsold groceries (especially produce!) is just a loss.
  • it takes a small amount of space, and often not prime space.
  • they are dense – a stack of a dozen Sports Illustrated is about $60 retail; how much space would it take to display $60 worth of bread or pasta or potatoes?

I do sometimes though about the magazine aisle section a lot of supermarkets have, as opposed to the ones at the checkout counter. I’m not much into reading about celebrities and entertainment, yet still find myself curious about some of the cover stories of the ones at the checkout, so not hard to believe people bored in the checkout line and a little more interested in that topic buy them. I wonder more about having to go to the aisle with the bigger selection and buy one there.

But the explanation explains it a good deal. The economics of never ending up selling a significant % of the stock can differ significantly among products. Also further back up the chain presumably the economics of publishing a magazine factor in a significant % of returns of those distributed through retail outlets, not only supermarkets, as opposed to subscriptions. The business is the the overall cash flow of subscription plus net retail outlet sales and advertising revenue (a function of net sales not magazines produced? maybe somebody knows) v paying external content providers, overhead of the operation and physically producing some gross number of magazines. But it presumably doesn’t cost anywhere near the cover price per unit to physically produce a magazine in quantity, so the money wasted on gross minus net sales volume is a relatively minor factor I’d guess if net isn’t a disastrously small % of gross.

I sometimes buy magazines at the grocery store and the drugstore.

There’s a continual analysis of the profit generated by every inch of shelf space in the store. If magazines weren’t selling, they’d fill that space with something else that made money. It’s a ruthless fight for shelf inches among suppliers, every week.

From the link that DCnDC provided:

One of my best friends is in commercial printing/publishing. From what I understand, it’s surprisingly cheap to print media, magazines being more expensive than books (for books, it’s like $0.25 or 25 cents, yes cents). For a typical magazine (not sure how to quantify typical, but I guess regularly found in the checkout aisle), they compete for space on that aisle, but make most of their revenue through ads. Then, subscriptions is a far second, then physical sales. For credit, I don’t know if this is still the case, the distributor only asks for the front page to count credit. For a store, it can soon be “free” (costs + revenue) to stock magazines. Ad revenue is a function of circulation, the more circulation the more you can charge for ad revenue. If circulation is high enough, then ad revenue can be independent of sales. The more interesting question in my mind is how does a magazine successfully increase circulation but still have enough revenue to survive?

My mom bought a magazine from the grocery store last week. It is a magazine full of recipes, from the writer known as “Hungry Girl.” She no doubt saw some foods on the cover, flipped through it and decided it was full of stuff she’d like to cook. My dad (who apparently scans receipts) pointed out that it was $10.95 for this magazine. Mom was a little embarrassed - back in the day she used to buy a lot of magazines from the grocery store, usually every week when she went shopping. I’m sure she assumed the price of this mag was about the same $3-4 that magazines used to be.

I don’t know if she got the mag from the “magazine aisle” rack or next to the checkout. I can say though that if magazines run $11 on average, nobody is crying over unsold issues!

The supermarkets and pharmacies I’m familiar with have cut back their magazine sections dramatically from even a decade ago, so sales are certainly plummeting, as Paxx cited. Magazines are dying as ad revenues disappear.

Those ad rates are based on a guaranteed circulation, a number composed of both subscriptions and individual store sales. Say the guarantee is for 1,000,000. If total circulation falls below that, the magazine has to do “make goods”, i.e. give pages away for free. Fewer ad pages mean fewer content pages which means fewer readers which means fewer advertisers, a vicious cycle. To keep circulation up to the guarantee they used to focus on increasing individual impulse buys with covers that grabbed readers, the previous equivalent of clickbait. That’s not working anymore so they’ve been raising cover prices drastically, but cutting subscriptions as low as possible. That’s not working too good either. There doesn’t seem to be any solution. But supermarket sales of any magazine not sold at checkout is a dead end.

The rest of your points are great, but if the space right at the register isn’t the highest-value space in a grocery store, what is?

I suspect the OP is referring to a display of magazines in one of the supermarket aisles. The checkout line certainly offers magazines - but not an extensive selection, and seemingly pitched at women.

And I sure hope the latter persists - without it, I’d be woefully uninformed about the latest exploits of the Kardashians.

This is what I see in my local Tesco. The two whole aisles that used to be devoted to magazines is now reduced to one and a half. The ‘one’ is devoted to an amazing (to me) number of mags aimed at women - cooking, fashion, and most of all, celebrities. The ‘half’ is loosely aimed at men - hobbies, computers and cars mainly.

I worked for a brief time in the marketing department of a magazine back in the eighties. It may well vary by the type of magazine (this was a woman’s ‘service’ magazine: articles mostly about housekeeping/childcare/décor/cooking) but we looked at retail sales mostly as a way to get blow-in cards into the hands of future subscribers.

Nothing was as valuable as a locked-in, absolutely unquestionable by the CAC auditors, ‘paid’ subscription sale when it came to setting your advertising rates.

As a cashier at a large store I can truthfully say that people do buy those magazines. Not a lot of them (although a few customers buy a bunch at once) but they do move in a steady if slow fashion. I ring up some every day I’m at work.

I worked in the confectionary business for many years and:

  1. Impulse purchasing is huge, the checkout line, where people are waiting around, is ground zero. So yes, the most valuable space in any store is the area around the checkout.

  2. in Canada (and much of the US) manufacturers pay retailers for that space. Payment is based on either the linear inches that a product takes up or the square inches.

15 years ago when I was in this business, we paid in the range of $1 per linear inch per checkout per store. Our annual contracts would be in the range of a couple hundred thousand dollars per chain of stores.

  1. Space allocation is determined by overall share of sales: If magazines generate 40% of sales, they get 40% of space. This continues through the gum, chocolate bar, batteries etc. Every product you see at the checkout area has paid fees (over an above the profit they generate) to be there.

Of course this is a negotiation, but also a bit of an auction. If Hershey’s is launching a new flavour of chocolate bar and they want extra space, they pony up. In the end the company with the deepest pockets gets the most space.

  1. Magazines are: a) highly impulsive. b) high profit for the manufacturers & retailers. c) a “commission sale” meaning retailers only pay for what is sold. d) usually low labour costs since they send in their own reps to restock their shelves.

All this makes them attractive (and appropriate) for front ends.

BTW- although there are many magazine brands / publishers, there are usually main distributors in a given geographic area. That distributor does the negotriaon on behalf of the magazine brands they represent

For aisle space, magazines are treated just like anybody else. They get a performance review every year to justify the space they take up versus the sales, profit and opportunity cost of having other items there. Although, ponying up more cash mitigates most performance issues.

Its all a negotiation.

One reason is for browsing, to keep you there longer to buy other things. You get thirsty, you deviate from your shopping plan to buy more convenience items with higher profit.

One idiotic side to this is when store employees harass and discourage people from browsing them. I had that experience at least a few times back in the day. Reminds me of a local book store with similar treatment. I sure wasn’t sad when Barnes and Noble moved in.