• by Michael Shields , November 10, 2004

While magazine publishers sometimes complain that newsstand shelf space is harder to come by, particularly in supermarkets, supermarket vendors may have some new incentive to expand such space. It turns out that magazines represent a much higher profit margin for such retailers than conventional groceries and packaged goods.

According to an unusual report released Tuesday by the Magazine Publishers of America, magazines deliver a high gross profit margin to supermarket vendors compared with overall product performance. The study found that magazines yield a gross profit margin level of 33.6 percent versus a supermarket industry average of 27.6 percent.

Besides showing magazines to be profit generators, the study also found that magazines as a commodity are less labor intensive for supermarket owners, given that wholesalers supply supermarkets with magazines, and generally stock supermarket shelves and displays.

The study was conducted by Boston-based Kreisky Media Consultancy through gathering data from various publishers, wholesalers, databases as well as published information. The MPA says that the information will likely be used by publishers when negotiating with major supermarket chains.

Given the magazine medium's potential as a cash cow for food retailers, the MPA is lobbying supermarkets to increase the amount of product they stock, thus opening up single-copy sale outlets for more publishers.

"The information that we've collected shows that magazines are an attractive and valuable category for supermarkets," said Michael Pashby, the MPA's executive vice president and general manager. "They are an exciting and relevant part of the supermarket retail experience attracting key customers who spend more money. Magazines drive sales. When merchandised effectively, magazines can be a strong growth category."

Among the study's other noteworthy findings:

* Magazines "inventory' turns over 17.4 times per year on average, versus typical supermarket inventory turns 8.5 times per year, which further lowers the costs involved with stocking magazines.

* Magazine buyers spend more in supermarkets: According to the study, when magazines were included in a shopper's "market basket," the total purchase amount was $67 compared with $39 when a shopper didn't buy a magazine.