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March 22, 2019

Publishing News

Hearst Names New CIO
Release: Hearst has named Mahendra Durai chief information officer. Durai starts in the new role on March 25 and will report to Hearst EVP and COO Mark Aldam. From 2011 to 2019, Durai served as SVP and chief information technology officer of CA Technologies, an information technology management software and solutions company. CA Technologies was acquired by Broadcom Inc. in 2018. "We’ve been focused on optimizing our enterprise technology, securing our data and prioritizing AI and machine learning across our operations at Hearst,” Aldam said. “Mahendra has been on the front lines of digital transformation and with his leadership, we’ll accelerate our efforts in these arenas.”

Vanity Fair Names New Editor for The Hive
WWD: John Homans has been named editor of Vanity Fair's "widely read media, business and technology sub-section The Hive, directing daily breaking news coverage of Washington, Wall Street and Silicon Valley. He succeeds Jon Kelly, the well-liked former editor of the vertical who abruptly left his position last week.While Homans is taking on a new role, Vanity Fair editor in chief Radhika Jones is still counting on him to serve as top editor of feature stories across platforms and subjects at the magazine, something he’s been doing since he joined in 2017. With The Hive “on a fantastic course,” Homans said Thursday, “[Hive editor] Jon Kelly, Graydon [Carter] and now Radhika have created a great product that reflects the magazine but now has a distinctive voice online, and I’m going to continue that. By trade, I’m a magazine editor. I worked with Clay Felker, Peter Kaplan and The New York Observer so some of those values I have brought to the job and I’m going to continue to bring those values to the job — conflict and personality in telling the story, the politics and business view through these giant personalities. That’s what I’m excited about. Conflict and personality — that’s the Felkerian motto.” As for his own style, Homans said, “I’m interested in gossip and I’m in interested in literature — and other things. But my own style is probably somewhere in between as a mixture of those poles. I’m not a tweeter, but I’m an avid follower of Twitter, and an avid reader. I’m following the news and the human comedy moment to moment.”Homans joined VF nearly two years ago, after punching the clock at Bloomberg Politics and Bloomberg Businessweek. In the past year, he has edited VF’s cover stories on Michael B. Jordan and presidential hopeful Beto O’Rourke, as well as others about the untold truths of Meghan Markle’s fractured American family and a look at the knuckle-bearing battle at Fox News. Homans also served as executive editor at New York magazine for 20 years and worked at Harper’s, the New York Observer, Details and Esquire"...

Conde Nast International's Losses Declined in 2017
WWD: "Condé Nast International, holding company for the European editions of Vogue, GQ, Vanity Fair and other titles, has lifted the veil on some of its 2017 financials, which will be published on Companies House, the official register of U.K. businesses, within the next week. In fiscal 2017, the London-based company saw losses, after exceptional items, shrink to 25.2M pounds, compared with 37.7M pounds in the previous year. CNI said losses stemmed from “continuing investment” in digital assets and capabilities aimed at accelerating future growth; business restructuring; property rationalization; the disposal of the women’s title Myself Germany, and the closure of Comag, the magazine distribution company co-owned by Condé Nast and Hearst. CNI, which oversees Western European markets as well as the group’s operations in China, Japan, Taiwan, India, Russia and Mexico, publishes 30 brands and runs a licensing and restaurant division with local partners in 17 markets. Stripping out the exceptional costs, Condé Nast International said it was profitable in 2017 and in 2016 and that it anticipated “significant further growth” in 2018. The company said total, underlying profit in 2017 was 3.2M pounds, nearly double that of the previous year at 1.7M pounds, “despite the challenging commercial conditions.” Counting sales in all the CNI markets such as China, Taiwan, India, Russia, Japan and Spain, where the group has wholly owned properties or joint deals with local partners, Condé Nast International said underlying profit was 39 ?million pounds.CNI did not provide a revenue figure for 2017.The company said it held 54.2M pounds in cash as of Dec. 31, 2017, down slightly from the previous year, “a reflection of our investment in digital assets and growth capabilities.” Group net assets amounted to 199M pounds in 2017, slightly down on the previous year. In terms of digital, the company said Vogue remains “the dominant fashion media voice,” with a combined worldwide readership of 29M, up from 25M in 2016. In 2017, it had 89M unique digital users, up from 77M in 2016. In 2017, the company also relaunched Vogue Portugal under a license agreement with Lighthouse Publishing and opened the Condé Nast Social Academy in Italy, which aims to train and educate market influencers. The company said that, going forward, “diversification of non-core activities” into both business-to-consumer and business-to-business products and services was also a key area of focus. As reported in January, Condé Nast Britain, which oversees the media group’s British titles, lost just under 14M pounds in 2017, according to Companies House. It was the first loss for the Condé division since 1995 and was attributed to an internal reorganization."

Folio Digital Awards Honor WWD, ESPN, Meredith, Others
WWD: Folio: held its third annual digital awards ceremony on Thursday. "Winners included WWD for best digital product for its Digital Daily and for Paul Jowdy, the publication’s chief business officer, who was named digital executive of the year for his leadership in growing WWD’s subscription audience and expanding its revenue streams... Among the other winners were ESPN, which took home two awards, one for its digital photo archive and another for best integration with print for its World Fame 100 list; Meredith Corp. which also won two awards, both for its branded content agency The Foundry; Slate won for best redesign/relaunch of its web site; Bloomberg for best product team of the year, and Bustle Digital Group won for best digital brand extension.Four executives also received Hall of Fame awards. Honorees were Jason Fox, vice president and chief digital officer of Consumer Reports; Margaret Mannix, vice president and editor in chief of digital for AARP; Stan Pavlovsky, president of digital for Meredith (he’s actually leaving the company next week for a c-suite role at Shutterstock), and Clarissa Matthews, director of product management and planning of The Atlantic"...

NY Times CEO Warns Publishers About Apple's Coming News Service
Reuters: "Apple Inc is expected to launch an ambitious new entertainment and paid digital news service on Monday, as the iPhone maker pushes back against streaming video leader Netflix Inc. But it likely will not feature the New York Times Co. Mark Thompson, chief executive of the biggest U.S. newspaper by subscribers, warned that relying on third-party distribution can be dangerous for publishers who risk losing control over their own product.“We tend to be quite leery about the idea of almost habituating people to find our journalism somewhere else,” he told Reuters in an interview on Thursday. “We’re also generically worried about our journalism being scrambled in a kind of Magimix (blender) with everyone else’s journalism.”Thompson, who took over as New York Times CEO in 2012 and has overseen a massive expansion in its online readership, warned publishers that they may suffer the same fate as television and film makers in the face of Netflix’s Hollywood insurgence.“If I was an American broadcast network, I would have thought twice about giving all of my library to Netflix,” Thompson said in response to questions about any talks with Apple to participate in the iPhone maker’s new news service.Thompson declined to comment on any conversations with Apple. But he used the tale of how Netflix made huge inroads into Hollywood to explain why the Times has avoided striking deals with digital platforms in which it had little control over relationships with customers or its content. “Even if Netflix offered you quite a lot of money. ... Does it really make sense to help Netflix build a gigantic base of subscribers to the point where they could actually spend $9 billion a year making their own content and will pay me less and less for my library?” he asked... In exchange for billions of dollars, studios helped Netflix launch a fledgling streaming video service by licensing their libraries of shows and movies, but that decision may have sown the seeds of their own demise.By 2016, Time Warner Inc was forced to sell itself to AT&T Inc and Rupert Murdoch sold his 21st Century Fox film and TV studios to Walt Disney Co.Apple is the latest company to offer a direct-to-consumer streaming video, along with a news subscription service, by leveraging the power of its more than 1 billion devices.Through its subscription news service, Apple will charge about $10 monthly for access to a variety of magazine and newspaper content, according to media reports. Apple is expected to take 50 percent of the revenue. The Wall Street Journal has agreed to join Apple’s service, according to a recent New York Times report. News Corp, owner of the Journal, was not immediately reachable for comment.A monthly digital subscription to the New York Times costs $15, and Thompson said he has no plans to give that up to participate on other platforms such as Apple’s"...

Q&A: GQ EIC Will Welch
Excerpts from a Welch Q&A with Samir Husni: "I really believe that we have come out of the era of broad general interest being a place of power for magazines. So, instead of trying to be everything to everyone, I want to be really clear about what GQ does better than anyone else on earth and I want to focus on those things... One of the first things that I wanted to establish in a really strong way when I started this role was rebuilding a core community for GQ. And that means identifying all of these people in our world. And they’re writers, photographers, stylists, and actors; some of them are super-famous, some are not famous at all and may have more of a creative director role or a guy-behind-the-guy role. This is the community of core people, and not only should they be in the core pages of GQ, but they need to be our first readers and they need to be our community that we’re talking to every day... The moves that we’ve been making in this new era are not specifically inspired by the relationship between GQ and Esquire from the past. I have been at GQ since 2007 [as editor of spinoff title GQ Style], so I’ve been here a long time and have fully metabolized the history of the brand and what it stands for. But I also think that a brand as strong as GQ is incredibly flexible. And I feel completely empowered to really push it to a new place... I think with print we are leaving a different kind of record behind in that it is a documentation of a moment"...

Scholastic Q3 Revenue Boosted by Trade Group
PW: "Another good quarter at Scholastic's children’s book publishing and distribution division helped increase total revenue at the publisher by 4% in the third quarter ended February 28, 2019, over the comparable period in fiscal 2018. Revenue in the most recent quarter was $360.1 million, up from $344.7 million a year ago. The publisher also cut its net loss to $12.6M, from $49.2M in the comparable period in fiscal 2018. Still, it wasn’t all good news for the company"... Article offers more specifics about segments' performance.


Retail News

Target Piloting Grab-and-Go Snack Bars
RetailWire: "Target is experimenting with a new section at the front of the store to speed up shopping for grab-and-go snackers.Target will pilot its new “Snack Bar” section in a few locations nationwide, and one is already in operation at a store in Northeast Minneapolis, according to the Minneapolis/St. Paul Business Journal. The location features Pizza Hut products, self-serve Icees, popcorn, beef jerky and the like. Customers pay at a self-service kiosk, circumventing the grocery line. The Snack Bar sections are distinct from the Starbucks locations found in some Targets and may replace restaurants like Freshii, which briefly occupied the front of some stores. arget’s Snack Bar may make for a quicker trip, but that may not always be a positive given the potential loss of other purchases that come with reduced dwell time. The move demonstrates an ongoing willingness by the chain to test different ideas. Just a few years ago, Target was focusing on driving healthier impulse buys at the checkout by replacing candy with better-for-you snack options. The retailer has been experimenting with multiple store concepts to meet disparate shopper needs for the past few years. The chain has experienced a great deal of success with its small, localized concept stores. It also announced the rollout of a “re-imagined” concept for its larger stores in 2017, which feature two different entrances leading to sections of the stores intended for different customer moods. One side features merchandise and a layout geared towards customers planning to shop longer. The other is aimed at customers who want to get in and out of the store quickly.A separate article in the Minneapolis/St. Paul Business Journal from late 2018 stated that Target plans to redesign a total of 1,000 stores by the end of 2020, a goal that it’s more than one-third of the way toward reaching. Target will draw from the piloted stores to determine which new features to incorporate into a given redesigned location."

Walmart's 'Secret Weapon' Vs. Amazon Prime: An AI-Driven Personal Shopping Service
WSJ reports on Jetblack, a personal shopping service owned by Walmart, targeted at moms, being tested in New York City with the goal of actually leapfrogging the success of Amazon Prime. "A few hundred shoppers in NYC pay $600 a year to order anything by text message except for fresh food. Members were invited by Walmart, or referred by current members, and need to have a doorman to join," reports WSJ. "Their orders go to Jetblack HQ where dozens of agents sit at computers and field requests... Couriers fetch the items and bring them back to a Manhattan delivery hub, where they're wrapped in black packaging and hand delivered, usually the same day. It’s a labor-intensive operation that loses money. But making money isn’t the goal, at least not right away." Walmart is betting that Jetblack will become "a powerful weapon in an escalating technological ground war with Inc., as the two companies battle over shoppers who are increasingly making all sorts of purchases online"… Walmart is using Jetblack’s human agents "to train an artificial intelligence system that could someday power an automated personal-shopping service, preparing Walmart for a time when the search bar disappears and more shopping is done through voice-activated devices...' WSJ reports impressive average purchasing stats to date for the service.
Wall St. Journal (paid sub req.)

Gartner: Amazon, Walmart at 'Genius' Level in Online Grocery
SN: "Amazon and Walmart stand above other food retailers as “geniuses” in online grocery, an area that has become the industry’s top growth catalyst, according to Gartner L2’s Grocery U.S. 2019 Digital IQ Index.The only two grocery retailers achieving the Genius level in this year’s index, Amazon and Walmart earned respective scores of 144 and 140. Online grocery players making the Gifted tier included Target (score of 139), Kroger (134), H-E-B (127), Sam’s Club (125), Walgreens (124), CVS Pharmacy (119), Whole Foods Market (119), Publix (113), ShopRite (112), Safeway (111), Instacart (110) and Thrive Market (110). “Digital grocery still only makes up a small portion of total sales in the U.S., but it’s the leading driver of growth in an industry with famously narrow margins. However, customers are hesitant to buy their groceries online, and consistent survey data identifies concerns about product freshness and price as the main obstacles,” Gartner L2 said in the Grocery U.S. 2019 Digital IQ Index report.“Retailers have a long way to go before their digital offerings replace weekly shopping trips, but an increasing share are investing in key tools like pickup windows and freshness guarantees,” the New York-based research firm noted. “Leaders in the space have invested strategically in fulfillment and digital tools to improve the store experience and stem the loss of customers.” In assigning an index score, Gartner L2 rated grocery retailers on websites and e-commerce, digital marketing, mobile and social media, with the first three areas accounting for 30% of the score and social representing 10%. Depending on their score, companies were classified as Genius (140 or higher), Gifted (110-139), Average (90-109), Challenged (70-89) and Feeble (below 70).“This year’s Index closely matches that of 2018, with Amazon and Walmart leading in the Genius category due to their exceptional fulfillment capabilities and massive marketing across platforms,” Gartner L2’s study said, adding that the two companies’ scores only include their performance in selling and promoting grocery fulfillment. “Notably, each still has major steps to take to achieve a seamless online grocery experience. Both have an excess of platforms for customers to navigate, with Amazon offering fulfillment across, Amazon Fresh, Prime Now and Pantry, and Walmart splitting Walmart Grocery from its main offering on both its sites and apps.”Of the 62 online grocery players in the index, 3% were classified as Gifted, 19% as Gifted, 40% as Average, 16% as Challenged and 21% as Feeble. The Gifted category shrank from 2018, when it accounted for 37% of companies, and this year’s index includes for the first time chain drug retailers Walgreens, CVS and Rite Aid because of their growing presence in retail grocery. Both Walgreens and CVS were classified as Gifted"...

Associated Food Stores to Use AI
PG: "Associated Food Stores is partnering with CB4 to use artificial intelligence (AI) to improve the store experience.CB4's patented artificial intelligence technology uses pre-existing POS data to identify when physical issues in a store are holding back sales and hurting the customer experience. These issues include products that aren't easily visible, ticketing issues, and out of stocks. Product selection in typical grocery stores has ballooned to 40,000 SKUs, making this issues associated with proper stocking harder to control. By accurately projecting how much sales will increase after fixing an issue, CB4 helps store managers identify the exact SKUs in their stores that need the most attention and guides them on how to fix potential issues. Because the software requires no in-store hardware or external data sources, implementation and onboarding can be done in a few days"...

Followup: Walmart's CTO Headed to Pinterest
Yesterday, it was reported that Walmart announced that Jeremy King, EVP and chief technology officer for Walmart, was leaving for a "new adventure." It turns out, according to an SN report, that King is leaving for Pinterest: "San Francisco-based Pinterest said Thursday that King will oversee the team that manages its visual discovery engine, which provides recommendations to more than 250 million people in product segments such as home, food, style and beauty"...

Schnucks Enhances Rewards App
SN: "Schnuck Markets has expanded the functionality of its Schnucks Rewards loyalty app with the addition of shopping lists and a wellness guide. The St. Louis-based grocer said Friday that the in-app shopping list automatically organizes the order of customers’ lists according to the layout of their designated Schnucks store. Shoppers can add items to their list by typing in the product name, scanning a barcode or clicking on an item in the Schnucks digital ad. Once a product is on a shopping list, the Schnucks Rewards app clips any available digital coupons — called “Schnupons” — for instant savings. Schnucks noted that the app updates the list in real time, enabling customers who share the same rewards account to leave a note for a family member or to cross off items that already purchased. In addition, the app makes it easier to view each item’s price, the retailer said.With the new wellness guide, customers can view nutritional information and labels, including attributes such as “heart smart,” gluten-free, high protein and organic. The Schnucks Rewards app also now indicates products approved for the USDA’s Women, Infants and Children (WIC) health and nutrition program"...

FDA Chief: New Legislation Is Better CBD Solution Than FDA Regs
SN: Retiring FDA commissioner Scott Gottlieb "said on Tuesday that a rule-making process by the FDA to deal with the booming—and controversial—CBD market would take more than three years to complete, and the most efficient way to deal with marijuana’s non-intoxicating cousin would be through legislation that would focus on CBD only. The FDA has posted comments declaring that CBD is illegal in dietary supplements because it violates the federal Food Drug and Cosmetic Act, which gives exclusive market access to ingredients the agency approves as a drug over supplements. The FDA approved a CBD isolate, Epidiolex, in 2018, and the pharmaceutical company responsible for the ingredient, GW Pharmaceuticals, had been conducting research into the CBD isolate since before CBD as a supplement made it to market, according to the FDA. The market has summarily ignored that advice, and today there may be 1,000 different brands marketing CBD, including Martha Stewart and Coca-Cola. The December 2018 passage of the Farm Bill made clear that Congress wants CBD to be available to the public—a piece of legislation that is at odds with both the federal FD&C Act as well as the modus operandi of drug-warrioring agencies like the Drug Enforcement Agency (DEA)… Gottlieb stated that the FDA can finalize an “average” rule in two to three years. He suggested it would be much longer for CBD because it would be a “highly novel rulemaking to do a complex rule like this"... Already, most observers believe too much toothpaste has come out of the CBD tube for the agency to put it back in—especially because of the ingredient’s clean safety profile and broad base of consumer support including “epilepsy moms.” Several more years is too long to leave CBD products in a state of regulatory uncertainty... Gottlieb said he believes that the most efficient way for a regulatory pathway for CBD would be through legislation, which would probably focus on CBD only. He said FDA is getting started “now” on this and has been briefing staff on Capitol Hill around its thinking"...


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