MPA Retail Conference Speaker: Self-Checkouts Hurt Newsstand Sales
Consumer magazines compete heavily for a coveted spot at the checkout counter in supermarkets, drug stores and general merchandisers. But the replacement of human cashiers with self-checkout machines is cutting into magazine sales and could ultimately reduce checkout profitability margins, said Michael Porche, CEO of Distribution Services Inc.
There is a 40 percent decrease in magazine sales among people who use self-checkouts, said Porche, speaking Tuesday at the Magazine Publishers of America Retail Conference in Orlando. “Self-checkouts are shifting the consumer’s focus away from magazines,”he said. “Retailers are increasingly turning to self-checkout models, which lower the cost of their most important focus: labor. But retailers need to recognize the impact of self-checkout centers on magazines. They may reduce costs, but they also reduce the opportunity for impulse and other sales at the checkout.”
Currently, 27 percent of shoppers use self-checkouts on 70 percent of their shopping trips, said Porche. But self-checkouts are not the only thing cutting into front-end sales. Publishers are also facing increased competition for checkout space from non-magazine products, such as candy, soda, lip balm and health and beauty products. “The number of grocery trips is down 70 percent since 1990,” Porche said. “Every category in the store wants to be at the checkout. Publishers spend $50 million annually at the checkout, but there is a huge push by confection and other companies that want to be at the checkout and the number of snacks and coolers at the checkout is growing.”
Porche said publishers and distributors must make clear to retailers the importance of having magazines at the checkout. “Why are magazines at the checkout?” Porche said. “Because they deserve to be. Magazines perform better than any other category. They have a 35.7 percent profitability margin at the checkout. They represent five of the Top 10 skews at the checkout and they have less space than confection, but they perform better.”
Porche and others at the conference also recommended that publishers seek out nontraditional retailers, such as dollar stores, for newsstand opportunities. The dollar store category is growing quickly with 6,924 new stores opening since 2001, said David McConnell, CEO of the General Merchandise Distributors Council. “Grocery and traditional mass marketers are losing trips to clubs, dollar stores and supercenters,” McConnell said. “We’ve got to find a way to leverage these stores.”