Magazine stores the latest casualties of online media

BY JENNY LEE AND MANORI RAVINDRAN

http://www.canada.com

When Kent McKenzie closes his Vancouver magazine store for the last time this Sunday, he`ll join the quiet ranks of independent video, music and book retailers who have fallen casualty to the online world.

``I`ve been digging a hole for the last five years,'' said McKenzie, 50. Over 13 years, McKenzie and partner Dennis Topp built Does Your Mother Know? into a much-loved neighbourhood haunt, but sales have plummeted as social media and online content have grown.

``It`s a different world than it was 13 years ago,'' McKenzie said. ``Not everybody had a computer.''

Sales of celebrity gossip magazines such as People and Us have dropped dramatically as consumers pull their news off websites such as TMZ.com. ``It`s no longer viable. It just can`t work,'' McKenzie said. ``All around, sales are down.'' Even sales of mainstream glossy magazines such as Cosmopolitan and Glamour have dropped by more than half, McKenzie said.

``The smaller, independently owned neighbourhood magazine store might be in trouble,'' said Kate White, associate professor of marketing at the Sauder School of Business at the University of B.C.

Consumers are getting their entertainment news from instant social-media sources rather than waiting a week for print magazines, and when they do shop at physical stores, they`re more likely to shop at volume sellers such as grocery stores, or airport stores with a captive audience.

While many magazines such as Fast Company and Elle are successfully offering integrated online and physical content, neighbourhood magazine stores are still focused on print media and that`s no longer enough, White said.

All retailers of media products that can be delivered digitally have been hurt whether they are the corner video rental store, bookstore or music store, said Milan Roy, Deloitte senior sector specialist for consumer products. Yet a December 2011 Deloitte study of 16,000 consumers in the U.K. found that 88 per cent of respondents who read magazine content prefer to do so in printed hard copy and only one-third of tablet users had read a magazine on their device.

``The magazine format and editorial content is still valued,'' Roy said. ``It`s whether the magazine retailer is adding enough value to the consumer that they are willing to go in and shop.''

The retail magazine store`s value as a place to browse and purchase has been diminished by the Internet and mobile-media sources, Roy said. The introduction of e-readers and tablets has accelerated the effect. The magazine retailer`s only hope now is to find a new way to add value, Roy said.

McKenzie brought in chocolate bars and greeting cards about eight years ago to help stem the flow.

``If you sell a greeting card for $4, that`s $2 for the bank whereas chocolate bars are a 35-per-cent margin,'' McKenzie said. ``For me to sell a $4 card is like selling a $10 magazine.''

Grocery chains selling magazines are able to spread their risk, deal in volume and attract the impulse buy.

Karen Lee, owner of 15-year-old Mayfair News in Vancouver diversified by putting in a Canada Post outlet seven years ago. ``So we`re not just selling magazines, we do have a Canada Post franchise. Otherwise we would have closed a long time ago, too,'' Lee said.

``Costco is selling magazines at 25 per cent off, and we only make a 20 per cent commission, and they`re selling 25 per cent off and it`s much cheaper there, right? So it`s very difficult.''

Sales of American magazines have dropped 50 per cent compared with seven years ago, Lee said, but specialty import magazines are still doing well because they are hard to get. McKenzie said specialty niches such as photography, high-end fashion, cycling, architecture and design are still selling, but without the volume needed to sustain a neighbourhood store.

Meanwhile, consumer mentality has also changed. ``In the old days, people would rip a page out of a magazine and steal it,'' McKenzie said. Today, ``they`ll take an iPhone picture and not think of it as stealing. I`ve said `No, you can`t take a picture.` and they`ll say ``Yes you can, I have it here. It turned out fine!`''

Lee said she`s ``kind of worried. We`re wondering whether we`ll be next. Right now, we`re starting to do other business to subsidize the loss of the sales. So we`re doing printing and mail services. It`s starting to pick up.''

Sylvia Skene, Magazine Association of B.C. executive director, sees room for retailers to partner with online services such as Vimeo and Newspaper Direct. ``It would be wonderful to have small portable kiosks the same way that we now have a variety of food vendors,'' Skene said. ``I think the models need to be developed to offer magazines both in print and online in an easy way.''

Rent at McKenzie`s 1,100 square foot store has at least doubled over his tenure in trendy Kitsilano.

``It was exciting. It was an adventure. You couldn`t make a lot, but could pay the bills,'' said McKenzie who plans to start looking for a job. He looked into selling his three-employee business, but no one was interested.

``I`ve made so many friends. This is like a bar, a local bar, only nobody`s drinking. It`s part of the community, it really is. I`ve got people actually welling up in tears.''

Vancouver Sun