1 / 19

The future of the magazine industry

The future of the magazine industry Consumer and retail trends - their impacts on the magazine sector Clare Harding Director, Technology, Media and Telecoms, Consulting 07748 182707. 30 th September 2004. Introduction. Consumer behaviour. Retail trends. Impact on magazine businesses.

jory
Télécharger la présentation

The future of the magazine industry

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The future of the magazine industry Consumer and retail trends - their impacts on the magazine sector Clare Harding Director, Technology, Media and Telecoms, Consulting 07748 182707 30th September 2004

  2. Introduction Consumer behaviour Retail trends Impact on magazine businesses Questions

  3. Non-food spending has increased by 53% since 1998 compared to 13% increase in food spending For every £1 of household expenditure in 2003 49p was spent in the major grocery retailers Dixons and M&S lead the market for non-food sales, but Tesco and Asda are close behind “Asda sold 1/3 of all DVD players in the 2003 christmas period” 33p was spent in the major supermarket groups FOOD REMAINS THE PRIMARY FOOTFALL DRIVER Non-food sales are increasing as they are built into the ONE-STOP-SHOP The UK consumer uses the supermarkets for day-to-day consumables

  4. The teenager, the single male and the grey pound are less supermarket focused Teenager Single male “Grey pound” • 96% not interested in food in supermarkets – don’t think of supermarkets as a place to buy anything other than food • 50% more likely to use c-stores than single women • Regular “top-up” shoppers, 43% shop more than once a week • More likely to plan shopping, therefore less need for “all under one roof” style supermarket • More likely to use specialist shops • Convenience is the most important factor in shopping location decisions • Daily Food purchases • Frequent users of c-stores • Price conscious • Use of internet • Non-food offers in supermarkets are not appealing to teenagers

  5. All consumers are becoming more price conscious and more discerning Current economic trends are resulting in… …a changing consumer Price conscious Increasingly discerning Short of time Increasing interest rates and Increasing consumer debt

  6. The UK grocery market is large relative to our population… • In 2003 the UK grocery market totalled £118 billion • The definition includes food and non-food • The UK grocery market is the 5th largest in the world, and the 2nd largest in Europe • Growth drivers are population change and increasing contribution of non-food • Circulation revenue from magazines is £2 billion, equivalent to 1.7% of the UK Grocery market Largest 10 grocery retail markets by country, 2003 US$ bn 1000 800 600 400 UK market worth US$ 213 bn or £118.1 bn* 200 0 USA Japan China Germany UK France India Italy Russia Mexico *IGD prediction on UK Grocery Retail Market

  7. ..and supermarket retailing generates the largest share of sales through a small proportion of the of outlets Total UK grocery market (2002) = £111.3bn1 Independents = £0.9bn 100% Multiples = £1.9bn Co-operatives = £3.2bn Multiples = £79.4bn Co-operatives = £2.0bn 80% Forecourts = £3.6bn Symbol groups = £5.2bn 60% Trad retailers = £6.3bn 40% Non-affiliated independents = £8.7bn 20% Traditional retailers and developing convenience retailers (43.1%) 0% Supermarket retailing = £83.5bn Traditional retail & developing convenience = £6.3bn Convenience retailing = £21.5bn Total UK grocery stores (2002) = 105,997 100% Coops (0.9%) Symbol groups (7.4%) Multiples (4.9%) Forecourts (8.5%)1 Non-affiliated independents (31%) 0% Source: IGD: Grocery Retailing 2003; Company accounts; Deloitte analysis

  8. The supermarket share of the market is dominated by the large multiple retailers, who account for 2/3 of all the supermarket sales Total UK grocery market (2002) = £111.3bn Independents (1%) 100% Other (including symbols, forecourts, co-operatives and multiples) (13%) Other multiples (6%) Other Co-operatives(1%) Big Food Group (Iceland) (1%) The Co-operative Group (2%) Waitrose(2%) Marks & Spencer(3%) 80% Somerfield (7%) Morrison (13%) 60% Other (5%) Asda (12%) 40% Sainsbury (12%) Londis (1%) Tesco (19%) T&S (1%) 20% The Co-operative Group (1%) Spar(3%) 0% Convenience retailing = £21.5bn Supermarket retailing = £83.5bn Trad ret & dev conv = £6.3bn Source: IGD: Grocery Retailing 2003; Company accounts; Deloitte analysis

  9. Supermarkets are less dominant in magazine sales, but overall sales are still dominated by a small number of retail chains… Total UK consumer magazine market (2003) = £2 billion1 100% Other supermarkets (2%) Other (including forecourts) (14%) Morrison= (4%) The Co-operative Group (4%) 80% Other (27%) Asda (4%) Spar (3%) 60% TM Retail (5%) Traditional news retailers and others (68%) Sainsbury (6%) WH Smith (16%) 40% Tesco (12%)2 20% 0% Independents and news-stands = £600 million Supermarket retailing = £646 million Specialist convenience and CTN multiples retailing = £762 million Total UK news and magazine outlets (2002) = 54,000 100% Super-markets (7%) Specialist convenience and CTN multiples (14%) Forecourts (11%) 0% Source: IGD: Grocery Retailing 2003; Company accounts; Deloitte analysis

  10. 135 120 130 100 125 80 120 60 115 40 110 20 105 100 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 So how is the retail landscape changing? The grocery market is mature, and has grown by 4.8% a year since 1993 Growth is expected to slow to 2.5% a year as a result of greater numbers of product categories reaching maturity, and increased price competition Forecast UK grocery market value and growth, 2003-2010 UK grocery market growth, 1993 - 2002 Market size £bn Market value £bn CAGR (1993 – 2002) = 4.8% CAGR 2002-2010 (nominal prices) = 2.5% Market size (nominal prices) = £113 bn 0.9% 1.4% 1.8% 2.4% 2.7% 3.3% Market size = £73 bn 2.5% 1.6% 1993 2002 Key: Nominal year-on-year growth rate (%) Key: CAGR = compound annual growth rate Source: IGD: Grocery Retailing 2003; Deloitte analysis

  11. 7% 6% 5% 4% 3% 2% 1% 0% 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 Operating margins have fallen in recent years, largely as a result of increased price competition Operating profit margin for magazine publishers and UK grocery retailers 2002 Operating profit margin for top 9 UK grocery retailers, 1996-2003 % For Tesco, Asda, & Morrison 20 For leading 9 retailers 10 0 IPC & Emap Top 4 mag pubs Tesco & Asda 9 top retailers Source: Company accounts; Deloitte analysis

  12. Tesco acquired T&S in 2002 (900 stores) Co-op acquired Balfour, Conveco and Alldays in 2002 (780 stores) Sainsbury’s acquired Jacksons and Bells 2004 (168 stores) With growth limited by regulation, supermarkets have diversified into “top-up” shopping and have targeted high performance c-stores… By splitting retail types by “one-stop” and “top-up” the Monopolies Commission and Office of Fair Trading gave the large retail multiples the go ahead to expand into c-stores. Tesco Metro / Sainsbury Local Symbol groups Increasing proportion of high margin products Low margin, price sensitive, basic foods High margin, low price comparison, complex foods Petrol forecourts M&S Simply Food Traditional “top-up & local” convenience store “Less effort” convenience store Farm store Meal solutions Examples of areas of focus

  13. …and the largest supermarkets and specialist retailers are already responsible for nearly 50% of magazine sales Retailer Share of the Magazine Retail Sales Value (%) 2003 Magazine Publisher Share of the Retail Sales Value (%) 2003 WH Smith = 16% IPC = 21% Tesco (inc T&S) =12% Emap = 13% Sainsbury’s = 6% % share of total TM Retail = 5% H Bauer = 11% Co - op = 4% BBC Worldwide =6% Asda = 4% % share of total Nat Mags = 4% Morrisons = 3% Other = 52% Others = 46% Source: PPA, ABC (All 2003), Deloitte data

  14. % share of % share of convenience sector forecourt sector 100% 100% Retail multiple Retail multiple Non - affiliated independents Non - affiliated independents Small chains and 50% petroleum company owned Small c - store 31% chains Potential c - store Potential forecourt All convenience All forecourt share available for share available for stores stores consolidation consolidation …however, the large retailers are expected to grow their market share and tip the balance of power in their favour. Growth potential from acquisition • Historic organic growth for the supermarkets stands at 3.3% p.a. • Growth will also be achieved in the future through c-store and forecourt acquisition Magazines’ “worst case” scenario • Worst case scenario for magazines, assumes that Tescos is the only acquisitive grocer • By 2009 Tesco’s share of total magazine spend could reach over 20%, more than the current largest magazine publisher 40% Organic growth plus c-store and petrol forecourt acquisition at constant rate 30% IPC share of magazines sale value % share of overall national consumer magazine sales value 20% Organic growth (CAGR = 3.3%) Tesco 10% 0% 1999 2004 2009

  15. Ultimately, this could result in a significant power base for the retail multiples and specialist retailers Magazine Publisher Share of the Retail Sales Value (%) 2009 Retailer Share of the Retail Sales Value (%) 2009 Retail Multiples and specialist retailers = 57% IPC = 21% Emap = 13% % share of total H Bauer = 11% BBC Worldwide =6% % share of total Nat Mags = 4% Other = 43% Others = 46% Source: PPA, ABC (All 2003), Deloitte data

  16. Supplier Distributor Retailer Share of value in supply chain Low retailer power Increasing retailer power Retailer dominant Based on experience of other products, the retail multiples are likely to use this power to their advantage. • Increased frequency of deliveries • Control over product ranges • EPOS driven sales based replenishment • Influence on size / shape / packaging of product • Vendor managed inventory • New technology, e.g. RFID • Greater buying power • Factory gate pricing

  17. This is consistent with expert forecasts on the future of the retailer-supplier relationship Activities in supply chain • Undertake activities traditionally the remit of the retailer • Category management Supplier Retailer Supplier acts like a retailer • Much better at procurement • Stretch into suppliers • Retailer control of brands • Growth of retailer private brands Supplier Retailer Retailer acts like a supplier • Communicate directly with the customer • Where locked out of the retailer “go direct” Supplier Supplier is a retailer

  18. In conclusion, publishers and major retailers should get closer to achieve mutual benefit from circulation Consumer and retail trends indicate the inevitable reliance of publishers on major retailers for circulation revenue and volume Publishers (and their distributors/wholesalers) need to act more like retailers The retailers will act more like publishers and move up the supply chain Publishers need to go direct to their customers especially when cut out by retailers

  19. A member firm of Deloitte Touche Tohmatsu Deloitte MCS Limited.

More Related