Sponsored by Periodical Marketers of Canada with the support of Wholesalers, Distributors and Publishers . Benjamin News .

Coast to Coast Newsstand Services . Comag Marketing Group . International Periodical Distributors’ Assoc. . Metro News Ltd. . NewsWest Inc. . PBAA . Periodical Marketers of Canada . Rodale . Rogers Publishing Ltd. . St. Joseph Media . Sudbury News . TC Media . The News Group Canada . The Monahan Agency . Time Warner Retail Sales & Marketing

Leger Marketing Survey For Periodical Marketers of Canada National - February 2012 Canadian shoppers are heavy newsstand magazine buyers, purchasing some $700 million worth of titles per year at retail destinations in every city and town.
To measure consumer attitudes toward newsstand magazines, Periodical Marketers of Canada (PMC) commissioned Leger Marketing Inc. to carry out a nationwide survey of more than 1,500 Canadian magazine readers in January 2012. The survey represents an accurate cross-section of the population: The customers who shop at retail outlets coast to coast – by age, gender, income levels and geographic location. The PMC survey was completed on-line in January 2012 using Leger Marketing’s online panel, LegerWeb, with a sample of 1,583 Canadian magazine readers. A probability sample of the same size would yield a margin of error of 2.46%, 19 times out of 20. Leger Marketing’s online panel has approximately 400,000 members nationally – with between 10,000 and 20,000 new members added each month, and has a retention rate of 90%. To view the survey report in its entirety, go online to www.magretail.ca. This brochure also includes data from publishing industry sources.

Periodical Marketers of Canada | 175 Bloor St. E., South Tower, Ste. 1007 | Toronto, Ontario M4W 3R8 | www.magretail.ca

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Over half a billion dollar industry Print magazines retain strong popularity among those who read magazines. An immersive experience… on average, readers spend 43 minutes with a print magazine. Nearly one third of magazine readers purchase a print magazine once a month or more. 71% preferred the print experience. 19% had no preference. The number one reason consumers have reduced magazine purchases, is to save money. Magazine buyers rank among retail’s best customers. They tend to be more affluent with more discretionary income. Female readers are an important target market with over one third purchasing a print magazine once a month or more. 45% of females agree, they purchase more often when magazines are displayed at the checkout. Young readers are particularly influenced by the presence of a magazine display. Magazines provide higher “true profit” per unit than any other frontend category.

Highlights

Print magazines retain strong popularity among Canadian magazine readers, the survey shows.

Despite impressions to the contrary, print magazines remain relevant at the onset of a digital era. A strong majority of Canadian magazine readers still prefer a physical copy of their magazines over that of a digital format.
In recent years, new technology and new media have facilitated the proliferation of electronic-edition books and magazines. Presumed to be gaining popularity among readers, e-format magazines are believed to be competing with traditional print formats for supremacy in the marketplace. But, have consumers abandoned their traditional magazine purchasing habits in favour of electronic versions of their favourite magazines? Has the advent of e-media triggered, for print magazines, an inevitable march into obscurity? As it turns out, such a doomsday scenario is not only overstated, it simply does not exist, at least according to magazine readers in Canada. Despite impressions to the contrary, print magazines remain relevant at the onset of a digital era. A strong majority of Canadian magazine readers still prefer a physical copy of their magazines over a digital format. Among key markets and target demographics, this proportion runs even higher. Women, readers under the age of 34, and residents of Quebec – all of whom purchase magazines more often than most – exhibit strong preferences for print formats.

Prefer Print
No Preference 19%
2012 Leger Canadian Survey Result

71%

N/A 1%

Online 9%

Consumers spend an average of 43 minutes with each print magazine issue. In contrast, the digital editions of magazines are presenting less in-depth, quickertake, interactive content.

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Unlike books and newspapers, print magazines “are not being replaced by digital editions,” affirms Steve Burbridge, SVP sales and logistics for Time/Warner Retail. The number of consumers downloading copies of his company’s People magazine are so few as to represent not much more than a “rounding error” – 10,800 out of the average 3 million-plus copies of the magazine sold at retail each week. “If the #1 newsstand magazine isn’t getting impacted [by digital], that tells you something,” Burbridge said at a meeting of the International Periodical Distributors Association (IPDA). “Whereas the experiences of reading a book on a tablet device and reading it in print are virtually identical, magazines’ print and digital editions are not the same,” Burbridge added. He described print magazines as an immersive, “lean forward” experience in which consumers focus on absorbing useful information about their interests. He noted consumers spend an average of 43 minutes with each print magazine issue. In contrast, the digital editions of magazines are presenting less in-depth, quicker-take, interactive content. Burbridge reported that a study by the Chief Marketing Officers’ council found nearly 90% of readers say they prefer the print magazine format over digitally delivered magazine content.

The survey reveals a strong majority of Canadian readers prefer print to online editions when they read magazines. Women are more likely than men to prefer print (76%). Of those that prefer online, men made up a greater proportion of the 10%. Three quarters (76%) of French speaking magazine readers favour print editions, while English speaking readers are more likely than their French speaking counterparts to say they have no preference between print and online editions (20%). Readers, who prefer print, highlight the portability and tactile aspects of print magazines as two of the top reasons for their preference. One in six who prefer print say that their preference is based on the ease with which they can read and browse through the magazine.

“As long as there are human beings, we are going to have print media. There is no substitute for something audiences can feel and touch ~ something that they can call their own.” ~ Dr. Samir Husni

Female Readers are Heavy Magazine Consumers

Female readers are among the most voracious purchasers of print magazines. Their strong preference for print leads them to (nearly) universally shun e-editions of magazines.

Consumer Preferences in the Magazine Category

purchase magazines once a month or more often
8%

31%

Frequency of Purchase

23% 14%

23%

18%

6%

9%

Once a month Once a week Once every or so or more often couple of weeks

Once every few months

Once or twice a year

Rarely

Never

2012 Leger Canadian Survey Result

E-magazine purchases do not necessarily deter readers from also purchasing print copies.
Nearly a third of Canadian magazine readers purchase a print magazine once a month or more often. Women (34%) are more apt than men to say that they purchase a magazine at least once a month, as are younger magazine readers, particularly when compared to those who are older than 65. Magazine readers age 65 or more are among the least likely to have purchased a print magazine once a month or more, with only 23% indicating that they have done so – a proportion that ranks well below the national average. Interestingly, magazine purchases are particularly common in Quebec where 10% say that they purchase a magazine once a week or more. E-magazine purchases do not necessarily deter readers from also purchasing print copies – magazine readers who purchase e-magazines are more likely than those who do not to say that they purchase a print magazine once a month or more (43% vs. 30%).

Nearly half of Canadian magazine readers have purchased a magazine in the past month; a similar proportion plan on doing so in the coming month.
Despite only a third of magazine readers in Canada saying that they purchase magazines once a month or more, nearly half say that they have purchased a magazine in the past month. Women are more likely than men to say that they have purchased a magazine in that time-frame (50% vs. 40%). Magazine readers who are age 55 or older are the least likely to say the same, with 64% saying that they have not purchased a magazine in the past month. Similarly, female magazine readers most commonly say that they are likely to purchase a print magazine in the coming month (55% vs. 49% of men), while older readers above the age of 55 are the least likely to say they will purchase such a publication in the coming month (54% say they are unlikely to do so). Magazine readers who purchase e-magazines are more likely to have purchased a print magazine in the past month (56%), and more commonly state that they are likely to do so in the coming month (62%).

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Number of Magazines Purchased
N/A 1% Increased 12% 45% Remain the same 42% Decreased
2012 Leger Canadian Survey Result

Three in five magazine readers say that their rate of purchasing printed magazines has stayed the same in the past three years. For those that have decreased, the primary reason is to save money. Behind conserving money, switching to e-magazines constitutes the second most common reason for magazine readers’ decreasing print purchases. However, “less time for reading” was the third most common reason. Those who have increased their spending, on the other hand, tend to be women (14%) and, interestingly, younger readers between the ages of 18 and 34 (16%).

More than one in ten magazine readers have increased their print purchasing.

Economy at Work
A slower economy has affected magazine sales, as it has most other categories. As a consequence, according to Marshal Cohen of the NPD Group, “We’re moving from a conspicuous consumption to a calculated consumption. By offering merchandise that makes being at home more entertaining,” he says, “retailers are benefiting from the gravitation of consumers toward experiences and away from possessions. Consumers are opting to use their discretionary income for nights at home with family, watching movies, surfing the internet – or reading magazines and books.” Many retailing professionals, reports the New York Times, believe this trend is not a fad, but rather will represent “the new normal.”

The “new normal” is an environment where magazines belong.

Why They Appeal

The appeal of magazines, according to WSL Strategic Retail, is that they help consumers be better informed, help them keep up with trends, and are a source of ideas to make life simpler and easier. Almost half of magazine buyers, according to the survey, use magazines to research a subject or a product they wish to buy.

On the cost side, magazines require little retailer capital investment, thus freeing up working capital to support other categories.

Consumer Preferences in the Magazine Category

Survey Reveals Reasons for Purchasing
Read about news, politics & public affairs

51%

Keep up with trends in a particular category

47%
Inform myself about homemaking or fashion

Industry sources also point to the ability of magazines to capture public interest, as demonstrated by huge increases in sales when major events, celebrity milestones or political upheavals make the covers of current issues.

38%
Learn about what celebrities are doing Gain guidance in areas of love, marriage, hobby or career Read about business issues and money matters Be entertained Other

The publicity that magazines give to new products and consumer fashions also drives interest in other product lines in a store, according to consultants. This sets up many opportunities for cross-merchandising, generating increased visibility that leads to incremental purchases, such as gardening titles in the gardening department and men’s style magazines in men’s wear.

Major Events Provide Major Opportunities

27%

25%

23%

2% 6%
2012 Leger Canadian Survey Result

Influence of Magazines on Purchasing
have made a buying decision

59%

Magazines have the power to influence purchasing decisions among those who read them.

Magazine Buyers are Retail’s Best Customers
The profitability of magazines is substantially greater than often realized, say marketing consultants and industry experts who track the contribution of the category to the bottom line. With magazines generating revenue at both mainline displays and the checkout, retailers enjoy many opportunities to enhance sales, improve sellthrough, and increase profit. The WSL Strategic Retail survey on “The Role of Magazines at Retail in an Era of Anarchy” found that magazine buyers rank among retail’s best customers. They tend to be more affluent with more discretionary income, browse more and shop more, and are less price-sensitive.

2% don’t know

19% neither agree 20% disagree nor disagree
2012 Leger Canadian Survey Result

The Leger survey found a majority, almost 6 out of every 10 Canadian magazine readers, say that they have made a purchasing decision based upon information they read in a magazine. Those who have adopted technological innovations such as e-magazines (67%) and e-books (66%) are more likely to agree with this statement than those who have not.

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Chalking up substantial incremental retail magazine sales in Canada, by at least an extra $50 million a year.

Special Interest Issues add Healthy Profits
Call them by whatever name – Special Interest Publications (SIP) or Book-a-Zines – they’re chalking up substantial incremental retail magazine sales in Canada, by at least an extra $50 million a year. “Timely, dynamic and with high reader interest, special editions have proven a major boost to the magazine category,” reports Glenn Morgan, CEO of Coast to Coast Newsstand Services Partnership. The strong appeal of timely special titles at very high cover prices has resulted in impressive unit sales and dollar returns. Many SIPs come from the industry’s biggest publishers – Rodale, Rogers, St. Joseph Media, Time Warner, Transcontinental (TC Media), and Wenner to name only a few. “As an example,” Morgan reports, “the HELLO! Royal Wedding special sold 204,585 copies at retail with a sell-through of 78.5 percent. Between that issue and HELLO’s Royal Wedding commemorative, an additional $2.6 million in sales were rung up. People magazine’s Royal edition sold 2.18 million copies in the U.S. and Canada. Now, not every year brings a Royal wedding, however, each year growing numbers of SIPs are published.

di a mon d j u b i l e e edi t ion

R OYA L S P E C I A L

1952

i queen e lizabeth i

2012

a spectacular celebration of the queen over 60 years from loving daughter, wife and mother to majestic monarch

More Than 200 SIPs in 2011
Coast to Coast data shows that in 2010, the last year for which complete figures are available, about 200 SIPs were sold in Canada. They generated unit sales of more than five million copies and retail gross revenue in excess of $45 million. The first nine months of 2011 kept up the pace with 190 Specials generating 3.7 million units and revenue of $33.5 million. “These sales have, in a big way, helped to bolster total newsstand sales,” Morgan observes, “and have helped enormously to offset sales losses on many regular titles. We are now seeing many Canadian publishers aggressively developing more special editions. This trend is good news for the newsstand trade.” It is not unusual for special issues to sell 200 or 300 per cent more copies than regular issues of the same title. Not only is sell-through well above normal levels (around 44% for last year’s specials), with unit prices averaging $9.00, profitability is considerably higher per unit as well.

special commemorative issue

Steve Jobs
The Genius Who Changed Our World
DISPLAY UNTIL 1/13/12

TIME INC. SPECIALS

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Checking the Display
Never 5% Rarely 19% Always 17% Often 27%

Sometimes 32%
2012 Leger Canadian Survey Result

Check at least sometimes

77%

Location, location, location...Is as important in magazine sales as it is in real estate; the Michiganbased supercentre chain, Meijer’s, proved this last year.

Meijer’s Success Story

Magazine displays remain an important tool with which to generate magazines sales.
The survey uncovered, that three quarters of magazine readers check the magazine display when they are visiting a retailer. Women do so more frequently than men, with a quarter (24%) saying they always check the magazine rack. In addition, 27% of those who are likely to purchase a magazine in the next month say that they always check the magazine display, while 92% of that same group say they check it at least sometimes. Those who do check the magazine rack most commonly say they do so in order to read about news or to keep up with trends in a specific category of interest. A third of Canadian magazine readers still agree that they purchase magazines more often when they are prominently displayed at a retailer’s checkout. Eighteen to thirty-four year old consumers are particularly likely to be influenced by the placement of magazines at the checkout, with nearly half (46%) agreeing with this statement. Forty per cent of those who said that they were likely to purchase a magazine in the coming month agreed that a more prominent magazine display would positively influence their purchasing decision.

As a regional mass merchant with about 200 stores, Meijer has continued to buck the trend in same store sales of periodicals over the past several years. While the industry is down in books and magazine sales combined, Meijer Moving continues to exhibit positive sales the display growth. In 2009 Meijer moved more than half of its 24-foot media mainlines to the front of the store, resulting in an immediate upswing in sales of nearly 30%.

location results in sales gains of nearly 30%.

In 2010, Meijer completed a new checkout fixture design and moved the magazine positioning to a more visible and consistent space across all standard lanes. The display was re-configured to face customers entering the checkout area, resulting in an immediate sales lift. Self-scan display units were also introduced. Even with a reduction of nearly 25% of the magazine pockets, magazines maintained a positive year in Meijer, while all other major national retailers suffered losses in the category. Meijer also continues to challenge industry norms with its innovative cross-promotional opportunities. The News Group (supplier to the retail chain) reports that sales gains have been maintained well after implementation of the changes.

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Half of all shoppers surveyed by WSL (45-57 %) say they will buy more magazines if covers are visible, the display is neat and easy to reach, and titles are organized by subject. Something as basic as good lighting is also important, respondents said. More than half (55%) said they will buy a magazine on impulse when they see a title that interests them. Magazines provide an affordable treat in tough times and are the number one favourite checkout item for women shoppers, reported WSL Stra tegic Retail.

Display is Key

Costco Success Story
Small fixtures can generate big magazine sales, as warehouse club Costco Wholesale Canada, one of Canada’s leading retailers, has found out. Through careful planogram management and increased promotional support, Costco achieved a three per cent growth in magazine sales in 2011. The chain's sales per location put Costco in the top three Canadian performers, despite only having a 40-pocket fixture. Costco and its magazine supplier, CMMI, also took advantage of high profile special events that built interest in magazines during the year. The warehouse chain dedicated significant space to the promotion of issues covering the Royal Wedding and the subsequent tour of Prince William and Catherine Middleton. Endcap and pallet displays for both events featured HELLO! Canada magazine and Maclean's, with many warehouses selling more than 1,000 copies of each title and chain-wide sell-through exceeding 90%. An additional factor in 2011's strong magazine performance at Costco was the decision to increase the number of split pockets allowing display of more titles throughout the year. Through this effort and an aggressive feature pocket promotional program, titles such as Best Health, Chatelaine and Cooks Illustrated earned placement on the Costco magazine listing. "With five million Canadian members passing through Costco warehouses multiple times each month, splitting pockets to put in fresh titles every two weeks, has proven highly successful. In fact, our program outperforms Costco U.S by 300%." commented CMMI's Mike Martin.

The Leger Survey revealed that nearly half of women indicate that they make magazine purchases more frequently when they are displayed at a retailer’s checkout. Retailers can leverage female readers’ proclivity to purchase magazines on a regular basis by making their magazine displays more visible in order to increase sales.

The magazine category also offers low or no retail labour or transportation costs with direct-to-store delivery. Magazines, whether mainline or checkout, also occupy small footprints compared to the profits they deliver.

Consumer Preferences in the Magazine Category

Heavy Magazine Consumers
$.13 $-.13

True Profit of Magazines
$1.18 $.69 $.24

At the checkout, according to noted U.S. retail consultant Willard Bishop, magazines provide higher “true profit” per unit than any other front-end category. His company’s research pegs magazine checkout profitability at $1.18 per unit, compared to 69 cents for snack sales, 24 cents for gum, 13 cents for candy and a negative performance of -13 cents for carbonated beverages. Whether at checkout or mainline, magazines offer significant profit margins above and beyond the conventional discount on single copy sales. Depending on volume, many retailers benefit from higher than average discounts, incentives and rebates. Retail display allowance (RDA), of four to ten percent of the cover price, adds to the profit. Front-end or other display fees provide additional revenue streams.