Discovering Magazine Profit in Sustainability

Discovering Magazine Profit in Sustainability
Wal-Mart has saved billions of dollars-can't we?
By Bob Sacks
http://www.pubexec.com
Does the current magazine business model have anything to do with sustainability? Not the ability to sustain ourselves as a business, but rather the new-age definition of environmental sustainability as defined by Wal-Mart. You remember Wal-Mart-the conglomerate that distributes nearly 25 percent of all newsstand titles? Oh, yes, you remember Wal-Mart-the mega-discount retailer that recently cut 1,000 magazine titles from its roster. But did you ever wonder why it did that?

As I found on the Wal-Mart Web site, "through sustainability, Wal-Mart has saved billions of dollars in costs and has begun to drive profitable product innovation. Our goal: Offer our customers an increasing volume of affordable, sustainable products that help them live better every day."

Wal-Mart wants to improve the quality of life for people on a global basis. Wal-Mart is preaching and insisting on accountability for sustainability with all vendors.

This may sound like corporate rhetoric, but it isn't. Wal-Mart is serious. It has discovered profit in the new mantra of sustainability. It has saved $10 billion in improved, sustainable packaging. It has increased efficiency in its truck fleets by 15 percent. It is in hot pursuit for two reasons. One, it makes good business sense. The savings that it is experiencing are dramatic and have been achieved by many other companies as well. Two, the public has come around to the concept and now is starting to demand sustainability in the products it buys.

The U.S. Environmental Protection Agency states that sustainable development marries two important themes:

1. environmental protection does not preclude economic development; and

2. economic development must be ecologically viable now and in the long run.

What does this have to do with magazines? Everything! We are not yet a sustainable business under Wal-Mart's definitions. This is an important concept for us to recognize. I have been ranting for years about our inefficient distribution system. I have also said that if we don't fix it from the inside, outside forces will fix it for us. Well, there you have it; those forces are in action as we speak. Do you think this sustainability movement will just go away? Do you wish to continue with business as usual? Are you developing a distribution plan for the future? And by the future, I don't mean your next issue-I mean next year and the years after that.

Proven sustainability may be legislated and forced upon all businesses. There is legislation circulating in Washington, D.C. right now that demands an 80-percent reduction of carbon footprints. How would you accomplish that reduction? Wal-Mart, the distributor of 25 percent of our newsstand product, is demanding efficiencies, and now the government is, too.

The future of print publishing, if we are to have one, must address sustainability issues. How "green" or environmentally friendly is a publishing process that prints 10 magazines, sells three and then sends seven to landfills, or at best, re-trucks the unsold copies to a pulping facility to be re-trucked back to a mill, to be converted to paper and re-trucked back to a printing plant? Deleted digits (as in digital 1s and 0s) do not require diesel-burning trucks to haul them away, and old digits do not fill up landfills.

I hope you can agree that from a "green" perspective, publishing is not yet a sustainable business.

So with the rising costs and earth-unfriendly nature of our manufacturing and distribution of formerly living trees, and with the increased acceptability and functionality of digital products like e-paper, the path to successful publishing is very clear. To me, the quick route to a drastic reduction in our carbon footprint is adopting the philosophy of 100-percent retail sell-through-a no-return, newsstand-based business. This concept horrifies some professionals. (It's more the fear of the unknown than the actual facts of the process. Jobs will change, responsibilities will change and business models will change, and people abhor change.) But at the end of the day, and before the end of our business and our planet as we know it, it is an inevitable and eco-friendly distribution model. After the horror of this transformation is over, we will save billions of dollars and perhaps the industry as well.

Bob Sacks (aka BoSacks) is a printing/publishing industry consultant and president of The Precision Media Group (BoSacks.com). He is also the co-founder of the research company Media-Ideas (Media-Ideas.net), and publisher and editor of a daily international e-newsletter, Heard on the Web. Sacks has held posts as director of manufacturing and distribution, senior sales manager (paper), chief of operations, pressman, circulator and almost every other job this industry has to offer.

Why Wal-Mart Cut 1,000 Magazines

BoSacks Speaks Out; Anyone who is surprised by this move needs to stand up and leave the room. Wal-Mart is totally about efficiency and moving product(s). We, on the other hand with our much touted sell through ratios of 30% or less, are anything but efficient. You do the math. The biggest single magazine retailer is lopping off heads. This is just the begining of a new era of refined distribution. Are you ready?
"When science finally locates the center of the universe, some people will be surprised to learn they're not it."
- Bernard Bailey

Why Wal-Mart Cut 1,000 Magazines
Company's green initiative, lagging sales among factors.
Kristina Joukhadar and Dylan Stableford

After months of speculation by wholesalers and publishers, Wal-Mart is moving ahead with cutting close to 1,000 magazines from its shelves, and it appears the company's recent commitment to being "green" is a factor.

Representatives from the Bentonville, Arkansas-based company did not respond to calls and e-mails seeking comment. But according to industry sources with knowledge of Wal-Mart's plans, the company's Sustainability Committee-and its commitment to reducing waste-played a key role in its decision.

According to one Sustainability Committee member, the formula Wal-Mart used to determine the cut list was based on a ranking of magazine titles by sales. Any title that was not in the top half of sales in any Wal-Mart store was cut from the list.

Another source says that of the 1,000 magazines, the number of active titles cut was closer to 800-representing three percent of copies sold by the retailer. Wal-Mart accounts for more than 15 percent of total U.S. magazine retail sales.

According to the New York Post [1], the cuts affected virtually all of the major consumer magazine publishers. Meredith Publishing, which as recently as December had denied rumors that it was being cut out of Wal-Mart, was hit particularly hard, with Better Homes & Gardens and Ladies Home Journal being shown the door.

Other axed titles include Town & Country, Home and Metropolitan Home (Hachette), Cookie, The New Yorker and W (Conde Nast), the Robb Report (CurtCo Media), The Economist, BusinessWeek (McGraw-Hill), Forbes and Fortune (Time Inc.), as well as a number of niche titles such as Boar Hunter Magazine, Spirituality & Health, Cabin Life and Log Home Living, according to the paper.

Long-Time Coming
The cuts should come as no surprise. As far back as in October of 2006, Anderson News, the largest distributor to Wal-Mart, began telling publishers it intended to cut the draw on some of the magazines it distributes by up to 25 to 30 percent.

At that time, Anderson said it had "analyzed sales performances by title for every individual retail store and calculated the appropriate allocation for each store to support sales and minimize returns." The stated goal was to cut its financial losses by reducing the number of magazines with low unit sales, low efficiencies and/or low cover prices.

According to one industry expert, out of the 4,000 titles on the newsstand today (including annuals and one-shots), wholesalers say they lose money on at least half of those titles.

--------------------------------

CLEANING THE RACKS
Keith Kelly
http://www.nypost.com/seven/01182008/business/cleaning_the_racks_368974.htm

January 18, 2008 -- RETAIL behemoth Wal-Mart is tossing more than 1,000 magazines from the racks in its stores, sending yet another shock wave through the battered publishing industry.
Most of the magazines are small, and more than a few of the victims are titles that have long since stopped publishing, including Child, Celebrity Living, Elle Girl, Teen People, Suede, Shop Etc., Weekend and FHM. However, virtually no major publisher was spared.

Wal-Mart, which released its official purge list on Jan. 15, is believed to be responsible for generating more than 20 percent of all retail magazine sales in the US.

Wal-Mart had not returned calls by presstime.

The move is likely to hurt new magazines, which take time to nurture and develop a following.

But one magazine executive said it might actually help magazines that made the cut, because it will remove some of the clutter and give the survivors more visibility on the racks inside Wal-Mart's 4,000 stores.

One of the biggest corporate losers appears to be Meredith Publishing.

Its flagship Better Homes & Gardens is out, as is its sister service magazine Ladies Home Journal. Family Circle stays, however.

Fitness, which Meredith picked up from the defunct Gruner + Jahr, is out, though rivals Shape and Self are still in.

Time Inc.'s In Style will remain, though its spin-off title In Style Home is out. The main Sports Illustrated will remain on shelves, but Sports Illustrated for Kids is getting the heave-ho.

Hearst's Town & Country is out, as is Hachette's Home and Metropolitan Home.

Condé Nast lost space on Wal-Mart's racks for upscale parenting magazine Cookie, the urbane and sophisticated The New Yorker and the glitzy oversized W. Self magazine made the cut, but some slower-selling special interest spin-offs got the ax.

Several titles owned by Swedish publishing giant Bonnier, which less than a year ago paid $220 million for 16 Time Inc. titles, are being left behind. Among them: Parenting, Ski, Skiing, Yachting and Salt Water Sportsman.

Wal-Mart also tossed out some of longstanding titles, including foodie mag Saveur and Caribbean Travel & Life. And a number of business titles, including The Economist, BusinessWeek, Forbes and Fortune, are also getting the boot.

Perhaps not unexpectedly, a title aimed at the very wealthy - Robb Report - is losing shelf space.

The retailing giant prides itself on meticulously tracking inventory, but the purge list suggests there were a few glitches.

Several of the magazines on Wal-Mart's hit list were shuttered titles that the chain hadn't sold in months, but none of the wizards at Wal-Mart's Bentonville, Ark., headquarters appear to have deleted the names from their system - a surprising oversight given several titles haven't been around for as long as two years.

Even magazines that one might think fit with Wal- Mart's conservative and working- class image were left out in the cold. Among them: Boar Hunter Magazine, Spirituality & Health, Cabin Life and Log Home Living. Even the Saturday Evening Post is being spurned.