Vertical Drop Down CSS Menu

June 26, 2017

New SuperStudy: Magazines, Books Yield Strong Retail Profitability

by Karlene Lukovitz

The latest Willard Bishop SuperStudy, like previous ones, confirms that the magazine and book categories generate outstanding profitability and other financial payoffs for supermarket retailers.

The study also underlines the benefits of magazine buyers’ attractive demographics and basket-building power — and identifies significant opportunities for drawing new shoppers to the category.

During the 2017 MBR Retail Conference, Tom Griffith, director, Willard Bishop, presented a summary of the results for the magazine category, along with some highlights on the book category.

Bishop did a 52-week, full-store (all SKUs, categories, areas of the store) analysis of four stores in each of three chains: Kroger, Ahold and Safeway. Item-level profit and loss statements were produced for every item in the store.

The SuperStudy analysis goes considerably deeper than the typical gross profit metric used by retailers. Activity-based costs (ABCs) — including warehouse, transportation and in-store labor and display space costs — are calculated at the item level and used to calculate an SKU’s “true profit.

In addition, the study’s “cash flow” metric quantifies cash generated after excluding fixed costs (cash flow = true profit plus occupancy costs).


Both magazines and books show very strong per-unit and true-profit performance — and magazines are even stronger on a cash flow basis.

Magazines’ strong true profit and cash flow numbers reflect in part their minimal costs for retailers because of their direct store delivery (DSD) and scan-based trading (SBT) status. (See more on the value of DSD and SBT below.)

*Compared to key competitive categories, magazines have the highest true profit in dollar terms: $308, versus $288 for candy, $80 for gum and negative true profit (-$508) for carbonated beverages. Books’ true profit comes in close to gum, at $70.

*Magazines and books have the highest true profit margins: 18.3% and 13.9%, respectively, versus 6.4% for gum, 3.1% for candy and -3% for carbonated beverages.

*Books and magazines significantly outperform competitive categories on per-unit bases:

Magazines’ adjusted gross profit per unit sold is $1.70, and books’ is even higher, at $2.69. In comparison, per-unit adjusted profits for gum, candy and carbonated beverages are $0.58, $0.54 and $0.23, respectively.

Magazines’ true profit per unit sold is $0.97, and books’ is again even higher, at $1.13. In comparison, true profit per unit for gum, candy and carbonated beverages are $0.11, $0.06, and -$0.07, respectively.

* Magazines’ true profit per square foot of facing (SFF) is $1.12, and books’ is $0.78. In comparison, true profit per SFF is $1.06 for gum, $0.76 for candy, and -$0.84 for carbonated beverages. 

Magazines’ cash flow — $427 — is slightly above carbonated beverages’ $426, and more than double gum’s $202. Only candy has higher cashflow in dollars, at $908.


Magazines’ cash flow — $427 — is slightly above carbonated beverages’ $426, and more than double gum’s $202. Only candy has higher cashflow in dollars, at $908.

“But retail space optimization requires looking at the ‘tail’ of space productivity curves, to make space tradeoff decisions among categories,” pointed out Griffith. It’s critical that retailers identify the worth, in dollars and profit, of each foot of space of each category, to understand the true results of incremental space for each, he stressed.

Bishop’s analysis found that, in part because of their low costs/DSD and SBT advantages, both magazines and books continue to add cash flow and gross profit even as their footage is increased significantly.

In contrast, with candy, higher category costs mean that cash flow begins to decline — and eventually goes into negative territory — at fairly low thresholds when incremental space is added.


For retailers, selling even one more unit or copy of high true-profit products — like magazines — is “most impactful, because it goes right to the bottom line,” Griffith emphasized.

With magazines, raising unit volume by just 5% results in true profit dollars increasing by 9%, or $1,439 annually.



As noted above, as a DSD category, magazines incur very low labor costs for retailers. The average DSD product saves retailers $.07 ($0.178 versus $0.106) cents per unit in direct labor costs than warehouse-delivered items. Magazines incur only $0.051 in direct store labor per unit sold. 

In addition, as an SBT category, magazines save retailers $2,027 in store labor and $85 in inventory carrying costs per store. The Labor savings reflect reduced receiving and scan-outs in the store, and interest costs are actually negative because the retailer receives payment from customers before he pays the vendor.


Seven percent of all shoppers purchase magazines — and those shoppers produce 28% of total store revenues.

The average basket value when magazines are present is $68.29 compared to the average basket of $34.42.


Given magazines’ profitability metrics and their increased cash flow benefits with incremental space, retailers, as well as the category, stand to gain from collaborating to leverage opportunities to engage the other 93% of shoppers and get more magazines into small baskets, Griffith concluded.


MBR Publishing & Retail News
Original Articles
2018 Retail Conference
  MBR 2018 Wrap-Up
  Magazine, Book Shopper Research Lays Groundwork
  Common-Sense Lessons for Today’s Print Media
  Channel Leaders Report Innovation, Determination, Progress at Retail
  Publishers Talk SIP, Bookazine Opportunities
  Leveraging Everything, Part 1
  Leveraging Everything, Part 2
  Marketing Analytics Wiz Reveals Secrets
2018 Articles
  New Front End Focus Study Quantifies Profitability of Magazines, Other Power Categories
  First Priorities: Let’s Focus On Reinventing Our Marketing Approach
  What If We Leveraged Everything
2017 Retail Conference
  Newsstand Execs: It’s Time to Invest in Retail Partnership-Building
  Men’s Health’s Bean on Covers, Print’s Unique Value
  Achieving Relevance for Retail Success
  Books Going Strong, Even in Fragmented Retail Environment
  New SuperStudy: Magazines, Books Yield Strong Retail Profitability
  Channel Executives Focus on New Retail Opportunities
  Getting Attention in Today’s Retail World
  Mainline Study Finds ‘Huge’ Sales Opportunities

2016 Retail Conference
  PBAA, IPDA Agree to Merge
  Magazine Media Executives Propose Innovative Disruption at Retail
  Magazine Bright Spots at Retail
  Best Practices for Powerful Newsstand Covers
  Kantar Exec: Magazines Well-Positioned To Partner On Retail Solutions
  Print (And Digital) Books Are Doing Just Fine, Thank You
  Retailers, Channel Partners Discuss What Moves the Needle
  Research: Millennials Often Prefer Reading Print Vs. Screens

Nov. 30, 2015
  Fighting Back With Facts
2015 Retail Conference
  5 Things to Know About Newsstand Buyers' Economic Prospects
  How Magazines Engage and Turn Consumers Into Buyers
  How National Geo Leverages Social Media
  Takeaways from Day One of Conference
  Finding Opportunities in Retail's Transformation
Sept. 9, 2015
  IPDA Magazine Study, Article Summary
March 9, 2015
  Willard Bishop SuperStudy 2014
February 26, 2015
  John Cowley Q&A
December 17, 2014
  The Underlying Strength Revealed By Disruption
June 17, 2014
  Innovating at Retail: Recent Tests and Success Stories