Retailer Q&A: Meijer's Gerry Wilding

Meijer, a family-owned and operated grocery/general merchandise retailer, is credited with creating the supercenter concept in the 60’s. About half of its 181 stores are in Michigan, with additional locations in Illinois, Indiana, Ohio and Kentucky. Meijer is currently poised to open nine new stores in 2008. Supermarket News ranked Meijer #12 among its 2007 “Top 75 North American Food Retailers,” and in its 2006 rankings, Stores listed the chain 25^th among the nation’s top 100 retailers.

Gerry Wilding, who has been Meijer’s buyer/merchandiser for books, magazines, music and movies for six years, recently talked with Newsstand Forum’s Karlene Lukovitz about Meijer’s perspective on the magazine and book categories and his take on opportunities for further enhancing the categories’ performance.

How large are the magazine and book categories for Meijer in terms of revenue and share of overall sales?

GW:  As a private company, we don’t publicly discuss sales data. The book and magazine categories are an important offering for our customers, with book sales slightly eclipsing magazine sales in our stores.

How are magazines currently displayed and merchandised in your stores?

GW:  The magazine mainline is always located in the book department within the general merchandise area of the stores. Our average store has 26 checklanes spanning the whole front of the store, and each has a magazine rack. On average, we merchandise about 40 different titles at the checklanes.

How large are your mainlines? Has this changed over the years?

GW: The mainlines average 24 feet, and that’s probably been true for at least the past 10 years. We have a couple of stores with 52 feet of magazines, which we’ve done mainly for testing purposes, to see what’s really driving magazines and what we might be missing.

What about your number of authorized magazine titles?

GW: The number of titles has been pretty stable, as well. There’s been no great increase or decrease. In addition to the 40 or so titles at the checklanes, the mainline generally carries more than 300 titles. So the number of titles hasn’t changed. But we continue to change the look of the displays, how magazines are merchandised. For instance, going back about four years ago, we had a large selection of [checkout] magazines facing the rear of the store. Today, almost all checklane racks are customer left.

Do mainline titles have full facings?

GW: Yes, probably 99% of mainline titles have full facings. That’s pretty consistent with other mass merchandise chains.

What are the biggest strengths of the magazine category, from Meijer’s standpoint?

GW: Two things. First, customers come in to purchase magazines because they know we have the assortment and because they know that Meijer always has the weeklies pre-weekend. Weeklies, particularly the entertainment weeklies, are one of our strongest categories. We make sure those entertainment magazines are at our stores on Thursday, so that they’re up in the lanes by Friday. Also, much as we pride ourselves on making sure that our customers are “always next in line” at the checkout, customers do like having magazines at checklanes. It gives them that extra bonus of having something to do while they’re in the checklanes.

Have you quantified how many are buying once they browse?

GW: They’re definitely buying. I’ve never really known what the actual closure rate is on buying them after they pick them up, but we’ve had consistent sales in magazines. You hear some retailers say that the category is a little bit stagnant and maybe seeing a downward trend, but we’ve not seen that trend at all over the years. We’ve continued to see strong sales in the category.

What’s driven magazines’ continued strong performance for Meijer?

GW:  Again, having the weeklies pre-weekend is probably the biggest factor. People know that they can get the latest information from us on Friday and Saturday, our two busiest days. If you’re not a pre-weekend store, you’re in trouble, because the information is old if you don’t have it there on Friday, Saturday and Sunday.

With books, you’ve got to make sure the product is out on Tuesday, when most of the new releases come out. Probably 15% of overall weekly book sales happen first thing Tuesday, so if you miss that, you’re missing those sales.

We may have around a quarter million items in our stores, and the categories I have—music and movies, as well as magazines and books—are very item-intensive. So I use outside services for all of those categories, because it’s so important to have people who are looking at that one category and geared to making sure that it’s complete.

What are your thoughts on magazine efficiency levels?

GW:  Everyone looks at efficiency levels, because of the labor costs. We consistently look at the efficiency of the product that’s at the checkout. Obviously, when you have 26 checklanes across the front of your store, it can be a problem to keep every one of those racks full. So we work on that constantly, and the planogram changes to reflect what’s working and not working.

Every publisher wants to be on the checklanes. But being on the checklanes means bringing in a lot of magazines, and if you’re not selling them, it’s not worth doing. And just because a magazine doesn’t do well at the checkout doesn’t mean that it won’t do well on the mainline. There are some titles that I think customers look for on the mainline. They don’t expect them to be on the checklane.

How long have your magazines been on SBT? What are the benefits from your standpoint?

GW: About five years. The biggest advantage is labor savings during the check-in and returns processes. Before magazines were scan base-traded, the [wholesaler] would bring in the weekly delivery, and it might take anywhere from an hour to two hours to check in every one of those magazines. Then on the way out, it was even worse, because of the need to keep them all organized. Now, the truck driver brings them in, they’re all palletized, they go down to a position within the back room, and the magazine person can get on it immediately and get them out on the checklanes. It’s much more efficient.

What are the biggest strengths of the book category for you?

GW:  The great assortment. There’s something for everybody. I just came back from a toy fair where there were new releases ranging from coloring books to activity books. The number of new releases, the continual supply of new and inviting product, is amazing. For instance, who would have thought that political books would become a regular read for people? Yet, that’s what’s happened, with the releases of books like Obama’s “The Audacity of Hope” and Bill Clinton’s “Giving.” The category as a whole has done very well. Book sales have been increasing.

How many books do you carry? What are your biggest-selling categories?

GW:  The number varies greatly. Some of our smaller stores probably have 500 titles; some of our large stores probably have 5,000. Bestsellers are always going to be your #1 retail driver, of course. But we do a big business in paperback series—romances, westerns, mysteries and so forth. And cookbooks are our third best-selling category. We probably have 250 different cookbooks. The variety of categories has really grown.

Does Meijer carry trade, as well as mass, paperbacks? If so, how has the trade format performed?

GW:  Yes, we carry trade paperbacks. They’ve been good, because they bring the price down by as much as 40% versus the $20 charged for most hardcovers. That’s a level that more people are willing to pay. And they also have the larger fonts, so they’re easier to read.

What would like to see happen with the magazine category that’s not happening now?

GW:  With scanning being as accurate as it is, I think it’s foolish that we send back returns at all. It’s wasteful from a labor standpoint, and from a fuel standpoint, trucking those heavy magazines around.

The other thing is that I don’t know that the publishers or wholesalers have a good handle on what RFID is going to do to the category at some point. Since probably 65% to 70% of our magazines are sold off the checklanes, what happens when all of the products have RFID’s on them, and your order is automatically rung up as you walk out the door? Where does the magazine category go?

I don’t know if it’s three, five or seven years from now, but at some point there is not going to be a need for that checkout, just as we’ve seen the evolvement of self checkout lanes. Originally, publishers thought that magazines would not sell very well at the self checkout lanes. Instead, magazines are selling as well at the self checkouts as they do at the other checkouts. But there wasn’t enough study done beforehand. Publishers seemed mostly concerned that there was going to be any change at all. But we know that there’s always going to be change in the checkout counter procedure, because it’s very labor-intensive, and that’s where you either make customers happy or not, depending on how long they have to wait.

The question of where magazines will be placed when the checkout goes away is something that the publisher, wholesaler and retailer all need to work together on. And we should be studying that now.

What would you like to see happen with the book category?

GW:  Probably the biggest thing is that I’d like to see publishers start looking at the SBT relationship and trying to build on that. Because again, the labor involved in bringing product in, returning it, bringing it in and returning it is just huge. And the ability to bring in an assortment and get it right out on the shelf, rather than go through a check-in process that take hours, is huge. There has to be a way that would make sense for retailers, publishers and distributors. I think people just need to get together.

How would you describe your relationship with publishers? Is there enough communication?

GW:  We probably don’t have as good a relationship and as much face time with the publishers as you probably should. For the most part, once a year, you have the [ABA] Book Expo, and once a year the [MPA/IPDA] Retail Conference, where you can get some face time with the publishers.

That time is important, so that everybody’s on the same page in terms of goals. What is the goal for a particular magazine?

For instance, there’s not enough conversation about where a given magazine should be merchandised. Everybody feels that every magazine should be merchandised at the checkout. That may not be the case. If you’re a crafting magazine, maybe you should be in the crafts aisle. If you’re a dog magazine, maybe you’ll do best in the pet food aisle. There needs to be a lot more conversation between the magazine publisher and the retailer to get a really good handle on where the best location is in terms of actually seeing that closure rate go up.

So you would welcome more magazine cross-merchandising.

Yes. It’s a matter of working out a process that’s feasible. You can’t add a whole bunch of labor for the wholesaler; they have their labor constraints, too. It’s a matter of working it out together. The more you sell, the more you’re going to make. You can bring in a lot of magazines, but if they don’t sell, you’re not making anything.