A Look at Store-Level Data
Consider these figures: Stores receive 100 million copies of magazines per year that have an average sale of zero. Three hundred million copies (15 percent of the total) are distributed to stores with an average sale per store, per issue, of one copy or less. Industry sell-through averages hover around 30 percent.
These numbers indicate substantial "demand overshoot" says Richard Lawton, senior vice president of Comag Marketing Group, who also provided these figures. To counteract that waste in the pipeline, store-level data;data that is collected from retailers, compiled and made available to publishers;has the potential of making substantial efficiency improvements. Yet not many publishers are taking advantage of it.
What It Is
Richard Alleger, vice president of retail sales at Rodale, notes that store-level data has been used for years. "What's new is that now you can have it rolled up and look at it in one place," he says.
Management Science Associates, a Pittsburgh-based information management company, and Magnet LLC, a company jointly owned by a group of wholesalers includeing ANCO, News Group, Hudson, and Source Interlink, have been collecting the data, cleaning it and making it available to the national distributors who then roll it up as an added service to their publisher clients. "Most typical buyers are national distributors and a few very large publishers," says Alleger.
Publishers have varying levels of access to the data, priced accordingly, which could include competing title information. Alleger estimates information on 1,500 titles is available in the system, with data represented from 120,000 stores. This includes "key mapping points;store, address, class of trade, its division in the chain and the total wrap-up of the chain;with those data points per title, per issue," says Alleger, who adds that Rodale looks at data for its titles along with its competitors.
The data is made available via a Web-based interface, provided by the distributor, which generally rolls pricing for access to the data in with the rest of the menu of services it provides to the publisher. Lindsay Valk, Hearst's senior vice president, analysis and planning, ballparks the cost at one percent of revenue if it were broken out on an a la carte basis.
The data is generally available to all publishers, big and small, via their respective national distributors. Comag's Lawton says the adoption rate has been uneven, with larger publishers scaling the learning curve most quickly.
How It's Used
Will Michalopoulos, senior director, retail newsstand marketing, at Hachette Fillipacchi, likes store-level data for its ability to provide a "bucket analysis," which directly addresses the problem of low-sale issues in specific stores. "It looks at how many copies you're putting into those retailers by range of sale," he says. "It tracks any retailer selling .5 to one copy, one copy to two copies, and so on, and it allows you to see where you're allocating your copies and what kind of sales you're generating out of those," he says. This analysis allows him to target low-volume retailers and make a determination of whether to keep them or not.
Michalopoulos initiated store-level data analysis with Hachette's Woman's Day SIP titles, specifically using the data to look at stores by class-of-trade versus competing titles. "Our competitors were outperforming us in home centers and bookstores," he says. "We had gone through a number of years where our efficiency was declining. We took copies out of low-efficiency retailers, retired some draw and redirected some of that into areas we were under-penetrating. We traded up taking them out of retailers where they weren't selling and put some in where we didn't have a presence. We reduced draw and increased efficiency."
Similarly, Hearst's Valk was able to pull about 700,000 copies per month out of the marketplace by using the data provided through Comag to identify inefficient stores, without any appreciable impact on sales. "We believe we are losing less than one copy in terms of sales for every 10 copies we pull out," he says.
Alleger frequently uses the data for gap analysis;determining where other competing titles with similar demographics are doing well and where Rodale does not have any titles. "If they're selling enough copies at a logical ratio and you're not there, then it's a possible opportunity for you," he says.
Valk used the data for dealer expansion by pumping over 100,000 additional copies of Cosmopolitan into Wal-Mart stores over the last year, which resulted in 70 percent sell-through rates.
Both Michalopoulos and Alleger agree that the data has provided them with an avenue for communication with senior management and affected department heads. "It's a better way to communicate internally with, for example, the circulation department, direct mail and renewals," says Michalopoulos. "It gives you some concrete analysis on what you want to do."
He adds that store-level data is significantly large enough to warrant hiring a full-time staff person to handle it. "It's a lot of data and it's not easy to use," Michalopoulos says. "There's a lot of stuff to look at, do the analysis and put it into templates. We have brought in someone who has the analytical capabilities. I think publishers need to put a resource behind it just like direct mail has analysts behind it."
What's Still at Issue
A publisher may identify weak stores or potential stores that are not currently selling titles using store-level data, but initiating change from that point remains a challenge.
"You're loaded with data and you're making a sound argument to the wholesaler," says Michalopoulos. "You're not just coming in and saying, ďľ‘I want to be everywhere my competitor is.'" However, he adds, "We tend to get 50-65 percent of compliance by the wholesalers. They have specific criteria for accessing distribution;size of rack, whether you're number one or number two in a category. If you have 100 retailers that, based on your data, you have the opportunity to sell into, you might get 60 of those 100 added to the distribution."
Additionally, Lawton notes that some national distributors may need more convincing. "National distributors actually have a financial disincentive to help publishers improve sales percentages if only one copy of sale is lost for every 100 copies of print order saved. So, the misalignment of the publisher's and ND's financial incentive is a very significant structural barrier to improving sales percentage and the resulting profit gain for the publisher. Many NDs and newsstand consultants see store-level data as another tool to keep doing the same thing, just more effectively, rather than as an opportunity to fundamentally change how they manage the newsstand source."