NEW YORK -- An initial finding from a category-management pilot program implemented for the magazine departments at Wegmans Food Markets, Ralphs Grocery Co. and Harris Teeter indicates life stage and demographics heavily influence purchases.
After 16 months of running the project, termed "Cover Story," at more than 450 stores of the three major chains, Time Distribution Services here, the sales and retail marketing arm of Time Warner, released its findings.
TDS, working with Dechert-Hampe & Co., a Mission Viejo, Calif.-based consultant, developed magazine planograms based upon the chains' point-of-sale data and store-level demographics.
In the case of Harris Teeter, Charlotte, N.C., two different planograms were developed for checkout and mainline racks using authorized titles according to store demographics and scan data, Bill Mansfield, director of nonfood, told SN.
"Category management helps you target your core customer and measure how each magazine sells within demographic classes," Mansfield stressed.
Although the total number of 1,250 titles that Harris Teeter merchandises remained the same after the project was completed, publications not selling were eliminated and adjustments were made in individual segments.
"It's really up to the retailer to manage the mix in the most profitable fashion," said Mansfield, because retailers generally don't share store specific demographic information with news wholesalers.
It was interesting for Mansfield to find that in higher-income areas Harris Teeter sold almost as many copies of Architectural Digest off one facing on the mainline as other titles displayed on as many as 12 checkout fixtures.
He said they tested Architectural Digest positioned at the additional front-end checkout racks. Preliminary results showed "after two weeks of measurement, impulse movement increased and we made more money, even without retail display allowance funds," said Mansfield. Unlike popular selling publications that are usually merchandised at checkout with RDA money, specialized titles like Architectural Digest, which carries a $5 retail, usually aren't marketed with RDA funds.
However, before making any permanent change with this title, Manfield said he will first measure what effect boosting that title's display locations would have on gross profit dollar contribution without an RDA.
"We'd first look at some type of projected movement based on the added facings, and compare that to existing titles on the checkout at a significantly lower retail with a significantly less gross profit contribution, including their RDA payment," he said.
Wegmans, Rochester, N.Y., declined to comment on the program. Officials at Ralphs, Compton, Calif., were not available for comment.
According to trade observers, Tops Friendly Markets, Buffalo, N.Y.; First National Stores, Cleveland; and the Houston Kroger Marketing Area are considering applying the magazine category-management program to their reading sections.
"We're working with retailers for them to understand the dynamics of the store-level customer so that the proper assortment can be recommended for the mainline reading center and front end," said Cameron Cloeter, senior vice president of TDS.
TDS is also developing a best practices model that supermarkets can use to hone their magazine mainline and checkout racks. This will be an ongoing effort that TDS will be sharing with its retailer alliance partners, said Cloeter.
The major focus areas are: optimizing checkout and mainline assortments; driving incremental sales with special-interest publications; maximizing profits from promotions and displays; and identifying cross-merchandising opportunities.
