FEATURE 

Magazines in a Recession

One of the many annoying things about a recession is that customers spend less and spend differently, meaning that businesses need to rethink their marketing plans and question the assumptions on which they were made. Christina Lucas looks at how changing consumer behaviour may affect magazine buying habits and what publishers need to do to stay relevant.

By Christina Sequeira

As we are all aware, since the middle of 2008 and accelerating in Q4, the UK has faced significant economic challenges. This has been a combination of real financial pressures for consumers and businesses alike, compounded by negative media reporting. The effect on consumer confidence and spending has been disastrous for many industries, and we at Marketforce recognise the need to advise and support publishers through these unchartered waters. Furthermore, we want to assure retailers of the continuing value of magazines to both their revenues and their customers.

The economy

The changing pace of the economy is rapid and there are a handful of influential statistics that are worth tracking:

* Interest rates are 0.5% - their lowest level ever.

* After a significant spike in mid-2008, petrol prices are now lower than they were a year ago.

* The cost of essentials, housing, utilities and food are falling but still considered high by most consumers.

* RPI is negative at -1.1% – which includes housing – but CPI still stands at 2.2%.

* The pound is weak against the dollar and the euro.

All of these have negative effects on consumers and businesses:

* As growth slows and prices fall, it is impossible for some retailers to survive especially those with fragile cash flow or an over-reliance on bank lending. The list of high street casualties grows monthly from the big names of MFI, Woolworths and Zavvi to smaller businesses who have disappeared. This is leading to a serious reshaping of the economy, high street and UK workforce.

* As unemployment moves over the 2.2 million mark compounded by falling vacancies and earning, falling interest rates and consumer goods prices have not yet encouraged spending as consumer confidence is the lowest for over a decade.

* The pound’s continued fall is making international business expensive and international travel less appealing.

Consumer behaviour

Let’s look further at how consumer behaviour is changing. There are four identified dynamics. Some of which will have a direct impact on magazine sales, while others will indirectly affect consumer attitudes. Either way, publishers need to consider how to adapt to maintain relevancy to readers.

1. Portfolio shopping

Firstly, we are now seeing portfolio shopping, whereby the days of one-stop-shopping are receding and customers are willing to spend time and effort looking around. The boom years created the “cash rich, time poor” culture and so people looked to make their lives more “efficient” – whatever the cost. This has changed. Shoppers will now explore a variety of options: supermarket, discounter, upmarket store and online.

The rise in discount stores like Aldi and Lidl has been outstanding, not least fuelled by their very effective PR machines. And it’s notable that research shows that shoppers buy more than intended, indicating high impulse behaviour.

For magazines, portfolio shopping is important as the usual, habitual purchasing outlet used by buyers may no longer exist. The impulse opportunity at discounters is good news given that 26% of magazine purchases have been shown to be unplanned.

2. Looking for value

The second dynamic is best illustrated through a PricewaterhouseCoopers study, which asked how shopping habits are changing, or are likely to change. They found that even if shoppers aren’t going to the discounters, they are buying less and buying cheaper; or at least, being more conscious of differing prices than before. The high level of tactical pricing and sales promotion activity across categories is drawing in new consumers because they now question whether to remain brand loyal. The key dynamic is “looking for value” – but value, of course, is subjective, weighing up price and quality.

Magazine publishers need to be conscious that shoppers are likely to be scanning the newsstand examining covers, offers and promotions and perhaps trialling cheaper – or what they consider better value – alternatives.

3. Cutting back

Thirdly, consumers are actively cutting back on some purchases, generally being more careful than in the boom years. This may mean eating out less or more cheaply; repairing and delaying purchase, rather than replacing household goods; foregoing designer labels, and cutting back on long haul or short city break holidays.

Thankfully, the relative low price of magazines means that they are rarely mentioned in such surveys. Due to the advisory nature of magazines, publishers can help guide consumers through uncertain times, helping them to decide where to save and where to spend.

4. Little luxuries

The fourth dynamic places the category in a more optimistic shopping basket. When times are tough, people tend to focus on looking after themselves and their families. This means cutting back on some ethical purchasing and increasingly buying goods that offer a treat, comfort or a little luxury. This includes lipsticks, cinema tickets, confectionery, wine and lottery tickets. Given that the words “indulgence” and “impulse” are often put in the same sentence as magazines by readers, it’s a good sign for publishers.

Some categories have positively benefited in the last few months, such as those associated with home cooking, entertaining and growing your own food. Editorial content focusing on how to make the most of every pound spent, through say home-based crafts or DIY, will be welcomed by readers now.

Research findings

In December 2008, Marketforce conducted an online, qualitative survey asking consumers whether they would keep buying magazines in today’s financial climate. The results showed that many believe that magazines are of even more value in a recession than otherwise. For example, one respondent said, “In the current financial climate, it’s important to have a treat now and then. Life becomes very mundane, we all deserve a treat.” Others commented on how useful and important magazine are to their lives, seeing them as essential purchases: “I have one magazine about poultry because I keep chickens; the information is invaluable in helping solve any problems – I consider it a necessity not a luxury.” There were some less positive views given, primarily around sharing magazines and cutting back. Because of the tangible nature and longevity of magazines, purchasers feel they can extend their value through multiple readers. “I believe they may be a luxury but if you pass them on to friends and family then you are getting your money’s worth.” Those that are cutting back are choosing cheaper brands, or ones that satisfy multiple needs or have temporarily stopping buying whilst they’re cash strapped: “I still buy magazines but have downgraded from expensive gossip mags to cheaper ones, which I think are a bargain.”

A strong category

Overall as a category, magazines should fare well in the challenging months ahead because of the type of people that buy them and the reasons they do so. For example, over 80% of 15-24 year old women read magazines and those under 25 are less aware and affected by recessionary changes. Magazines are relatively inexpensive and have a certain amount of longevity compared to say a bottle of wine or a box of chocolates. There is also little guilt and much feel-good factor associated with them! As a nation, we’re more into hobbies than ever and that means magazines can be more integral to how people spend their time. You can also buy a magazine almost anywhere, in a shopping centre, supermarket or petrol station, so the demise of some stores may not be too harmful for publishers. Experience through a decade of rising prices has proved that, in general, people still buy magazines despite increasing cover prices.

Publisher reaction

The critical element for publishers is to ensure that each brand is strong and 100% relevant to people now. As shoppers are questioning whether they need to buy a magazine, publishers need to ensure there’s a compelling message that shouts out the reasons why they should. We’re lucky to work with products that change on a weekly or monthly basis because it means that we can alter the content to reflect the new attitudes – retailers should recognise that few other products can do that. Moreover, in uncertain times, people draw close to what they trust, and magazines can capitalise on the faith readers have in their editorial.

Not all consumers behave the same in a recession. Some will cut back on non-essentials, others will choose to maintain their luxuries while a few will take advantage of sales to actually buy more. So, how specific magazines fare in circulation sales – advertising revenue aside – will depend on the answers to a number of questions:

* What’s your audience’s likely behaviour in a recession?

* Where do magazines fit in the scale of their weekly expenditure?

* Where do they normally buy your magazine, and will their change in shopping habits affect their opportunity to buy?

* What’s the role of the title for them; do they see it as a luxury or part of their lifestyle?

Promotional activity

Whatever the answers, it will be of growing importance to forthrightly market to potential purchasers. This is no time for subtlety! Even the master of “understatement”, Waitrose, is blatantly price promoting through its Essentials range. Titles have to grab their attention and standout from the competitors. Use in-store communication to bluntly tell consumers what your magazine offers them. Shoppers are looking around and browsing the newsstand more, so a focussed effort on using limited marketing budgets effectively is critical. Even the perception of an offer can work as it may simply introduce readers to your title where they have not previously considered it.

Final words

The economy is in trouble; the outlook is tough, and consumers are looking for value more now than ever. Compared to many categories, magazines are one of the strongest consumer offers in a downturn. We have highly trusted brands that present great entertainment, information and advice for a relatively small amount of money. In times of uncertainty, consumers will be drawn to what they know provides an escape or useful direction. On the 150th anniversary of the publication of Darwin’s On the Origin of Species, the sentiment that “it is not the strongest of the species that survives, but the one that is the most adaptable to change” is more relevant than ever. Magazines have the benefit of being a new product every week or month and so have an advantage over other FMCG products. Editorial relevancy, in-store creativity and strong brand communication will help publishers survive the challenges ahead.